By on February 18, 2020

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.”

[Image: josefkubes/Shutterstock]

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16 Comments on “French Government Warns Renault Against Job Cuts, Factory Closures...”

  • avatar

    Gee, I wonder if a merger with a financially strong partner with complimentary market placement would have helped achieve the synergies and cost sharing required to weather this coming storm?

    *stares at French government in Marchionnese*

    Then again, maybe FCA dodged a bullet.

  • avatar

    So, keep everyone on, twiddling their thumbs? Okay.

  • avatar
    DOHC 106

    I think the government is late to the party. Maintain our share, but dont cut jobs and hurt the economy. Once you signed on to electrification, that was the beginning of the losses. Well at least America has not gone all eco because we still dont have the infrastructure.

    • 0 avatar

      “America has not gone all eco because we still dont have the infrastructure.”

      What infrastructure you talking about? Are there places in America where electricity is not attainable? Soviet Union solved this problem back in 1930s.

      • 0 avatar

        Have you never been to Kansas? Nebraska? Texas outside the east? I could go through the rest of the western states that have plenty of areas you should think twice about passing a gas station, let alone have charging stations already built.
        Because, as you are aware I know, it’s not just electricity you need, you need the charging stations built too. They ain’t free either.

      • 0 avatar

        @Inside Looking Out

        And it only took the murder of tens of millions of people to achieve.

        /only half joking

  • avatar

    A wonderful case study why government needs to stay out of businesses. When you have a government that cannot run itself efficiently telling a business how to do its business, you are already in more trouble than you can handle.

    • 0 avatar

      Haha. French gov has its country being destroyed every week. And daily protests for months now. This is what happens when you abuse liberalism, and destroy capitalism.

      “We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
      W. Churchill.
      How times have changed

      • 0 avatar

        Liberalism is the capitalism or liberal capitalism vs socialism. French government if anything is socialist, liberalism would mean that government stays away from economy. But France is in trouble if young and smart people emigrate out of country.

  • avatar

    A €141 million loss is peanuts. When the Big Three head into the mud, it’s in the Billions.

    A €2 billion restructuring program is also peanuts. Ford’s forward guidance a year ago was for $11B in restructuring charges. Ford just wrote off over $2B, just in pension fund costs.

    If Renault sold off it’s Nissan holdings, it wouldn’t have a problem funding things over the short term, but would lose the economies of scale it has realized by sharing platforms with Nissan.

    Ultimately, if Renault went BK, it wouldn’t be the first time the French government nationalized the company. Renault did considerably better in the 60s and 70s when it was completely nationalized, vs now, when it has to pander to the short term interests of stockholders.

    If Renault used the cash from the sale of it’s Nissan stake, it could buy the European and S American Ford ops…actually, they could probably by the S American Ford ops for $1. That would make Renault, with it’s cheap Dacia platforms, a player in Brazil on an equal footing with GM and VW and keep Renault in the game with PSA and VW in Europe.

    • 0 avatar

      Why to buy Ford and not VW? Or first try to swallow Nissan or Mitsubishi?

      • 0 avatar

        >>Why to buy Ford and not VW? Or first try to swallow Nissan or Mitsubishi?<<

        VAG holds something like 24% of the EU market, largest by a significant margin. iirc, once the deal with FCA closes, PSA will hold over 20%.

        Renault Group has something like a 10% share, Renault and Dacia brands combined, but not Nissan.

        I can't see VAG being allowed to combine with any other mass market brand, because it is already so large. VAG already has VW, Seat and Skoda in that segment.

        Renault combining it's 10% share with Ford's 6% share will keep it in the hunt, though still trailing PSA and VAG.

        Renault has been trying to swallow Nissan, and has met fierce pushback from Japanese interests.

  • avatar

    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.

  • avatar

    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….

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