French Government Warns Renault Against Job Cuts, Factory Closures
Last week, Renault reported its first significant loss in a decade (€141 million) and a 3.3-percent decline in annual sales for 2019. It now expects a flat 2020 and claims it needs to commit itself to a €2 billion restructuring program over the next three years. Alliance partner Nissan also anticipates a weak year, and is doubling down on its own restructuring efforts by showcasing an eagerness to do whatever it takes to restore profitability.
However, the French government wants Renault to slow down and think about things before it starts shuttering local factories. Owner of a 15-percent stake in the automaker, it doesn’t wish to see its investment doing anything embarrassing. As such, French Finance Minister Bruno Le Maire warned the company to be exceedingly careful with how it handles business in France, urging it to avoid any measures that might negatively impact domestic employment rates.
“The state will play its role as shareholder in Renault to make sure that the choices which will be made will not go against jobs and factories in France,” he explained to Reuters.
Renault Chairman Jean-Dominique Senard has reportedly already gone over the company’s cost-cutting strategy with Le Maire via phone. The finance minister said this would become a regular occurrence, with the government wanting to keep close tabs on the restructuring process. Yet the manufacturer may have to disappoint its home country all the same.
While China is one of the largest problem areas for Renault, acting CEO Clotilde Delbos has already said the automaker would have to consider plant closures outside of Asia. When asked about the possibility of closing factories in France, she indicated that the company couldn’t rule anything out.
“Our 2019 is where we told you it would be, but it’s not where we want it to be,” she to explained. “We are not satisfied with our results.”
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It's another form of protectionism. If Renault wants to be be French company and enjoy cordial relations with the French government, it will sacrifice workers in foreign countries before Frenchmen regardless of the business case. They used to tell the Foreign Legion that they saved the lives of Frenchmen by dying in their place. Years ago, I read that France effectively froze out VCRs from the Far East. They claimed that, for safety, it was necessary to physically inspect each and every VCR imported into the country. Only one customs employee was assigned to the job and nobody complained if he came in late, left early and took long lunches. France has a real problem with its employee protection laws. Once someone is hired, it's nearly impossible to get rid of him. The result is that employers are very cautious about taking on new employees. That doesn't help unemployment numbers.
In some ways, I wish we were more like the French.... willing to turn out en masse to protest terrible government decisions, being educated/aware of issues and basing opinions on facts and not vice versa, etc. And then there are things like this that lay bare FrancoFoolishness that's hard to get your head wrapped around....