French political leaders and unions were in a state of shock on Thursday after carmaker PSA Peugeot Citroën announced it was shedding 8,000 jobs and closing a production line in a huge shakeup.
The revelation of the unexpected "restructuring plan" from one of the pillars of French industry prompted an instant response from François Hollande's Socialist government.
Prime minister Jean-Marc Ayrault said he was "extremely concerned by the unprecedented scale" of the company's reorganisation which he added was a "real shock" for staff, the communities affected and "for the entire car industry".
"Given the social consequences of the proposed plan, we need to have a good look at causes of company's current situation that have led to this plan, the consequences to the regions and to the automobile sector, as well as the guarantees the group can offer regarding the long term industrial activity of the group's [other] sites," said the PM's office in a statement.
"PSA has specifically promised to find an employment solution for every member of staff. The government intends to verify the implementation of this engagement and will expect these proposed solutions to be credible and ongoing."
The company, which faces a first-half loss of €700m (£550m) this year, is trying to save €1bn as it struggles to compete in Europe's fiercely competitive car market. It is suffering particularly amid a slump in sales in the recession-hit south of Europe. Its sales plunged 20% in Europe in the first quarter.
"I am fully aware of the seriousness of today's announcements," chief executive Philippe Varin said. "The depth and persistence of the crisis impacting our business in Europe have now made this reorganisation project indispensable."
"The project presented today should allow the automobile division, which is the heart of our business to find a balance and allow us to put into effect our strategy that will guarantee the future of the group and strengthen the base of our automobile production in France," Varin added.
Ayrault instructed the company to begin immediate talks with workers' unions and called company and union leaders to meet with Arnaud Montebourg, the minister for re-industrialisation before the end of July.
Union leaders have reacted with fury to PSA's decision. Jean-Pierre Mercier, representative of the CGT union at PSA, described it as a "declaration of war against the workers".
"War has been declared on the Aulnay factory. We are several hundred workers and we are determined to defend our jobs," Mercier said.
The restructuring plan involves the closure of the PSA factory and production line at Aulnay-sous-Bois in the Paris suburb of Seine-Saint-Denis in 2014. Until Thursday, company bosses had denied plans to shut down the site. The factory, which produced 135,700 vehicles last year, was established in 1973 by Citroën before it was bought out by Peugeot three years later. It is home to the company's anti-pollution unit, which measures the emissions of all new vehicles. It will be closed in two months and rebuilt at another PSA factory in eastern France. The site is also home to the company's collection of every Citroën model ever produced.
The news came as a blow across France's political spectrum.
Benoît Hamon, the junior economy minister, said it was "very, very bad news" adding that he found it "unbearable to see such bloodletting in the industrial workforce".
Jean-François Copé, head of the opposition right-of-centre UMP party told France Info he was "extremely worried" by PSA's announcement. He also dismissed reports from Michel Sapin, the employment minister, that former president Nicolas Sarkozy had asked PSA to delay the reorganisation until after May's presidential election as "ridiculous polemic".
Bernard Thibault, secretary general of the main CGT union at the plant described it as an "earthquake", while Marine Le Pen, president of the far-right Front National called for a "national support plan".
The social affairs minister, Marisol Touraine, told Europe 1 the government would be asking hard questions of PSA, which, she said, had received €4bn of taxpayers' money in recent years.
"It was a government, therefore a collective, investment … we need to perhaps question the strategic choices that have been made. The state will be looking at how the company's policies have been reached," she said.
Voluntary redundancies and redeployments
PSA has 100,000 workers in France and is the country's number one carmaker. It employs 209,000 people worldwide.
Of the 8,000 job losses, 6,500 are expected to be voluntary redundancies and 1,500 workers will be redeployed elsewhere in the company, PSA said.
Three thousand jobs will go at the company's Aulnay production line and research and development centre outside Paris, along with 1,400 posts at Rennes and 3,600 non-production jobs – including 1,407 in research and development, 1,325 jobs in industrial management, 570 jobs from brand management and 284 other managers.
In November PSA announced it was shedding 6,000 jobs across Europe, including 1,900 full-time jobs in France – more than half from the production line – and 2,100 from subsidiary firms. The latest announcement takes the total loss of PSA jobs to just under 10,000.
PSA's carmaking division has suffered a drop in vehicle sales since last summer, particularly in southern Europe, and is on track to post an operating loss of €700m for the first quarter of the year.
The firm has revised the forecast slump in demand for its vehicles from 5% to 8%.
Peugeot and Citroën sold 3.5m cars in 2011, 42% of them outside Europe. The company is Europe's second biggest carmaker and posted a turnover of €59.9bn last year.
