PSA To Cut Labor Costs By Moving More Production Out Of France

Derek Kreindler
by Derek Kreindler
psa to cut labor costs by moving more production out of france

PSA will consolidate their small car production at a factory in Slovakia, as the struggling auto maker looks to cut labor costs and increase margins on small cars.

Reuters and Automotive News Europe report that the next-generation Citroen C3, the brand’s best-selling model, will be built in Slovakia, alongside the C3 Picasso minivan and the Peugeot 208.

Although the 208 and C3 are currently built at PSA’s Poissy plant as well as in Slovakia, moving them eastward would allow PSA to slash their hourly wage costs, from 57 euros an hour in France, down to 15.50 euros in Slovakia. Lowering labor costs is critical for PSA, as it struggles to regain profitability and reap greater margins on their small cars, which are both unprofitable and PSA’s most popular cars.

Closing any French plant will be fraught with difficulty. Complex labor laws and cultural factors will make closing a plant a political nightmare for PSA – but the economics of Europe’s car market can no longer sustain it.

Join the conversation
  • Old Man Pants Old Man Pants on May 23, 2014

    Thanks for the link to your earlier article on this topic. Very interesting stuff, the direct interface between France and its North African labor pool. What puzzles me is how Slovakia offers any benefits over the factories already established in North Africa. Has the race to the bottom suddenly veered north?

    • See 3 previous
    • 28-Cars-Later 28-Cars-Later on May 23, 2014

      @Asdf They said the same thing about selling Mexican built cars in the US thirty years ago.

  • Scwmcan Scwmcan on May 23, 2014

    Wow 57 euros per hour, no wonder they are not making profits, and people complain about the North amaerican auto worker's wages.