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Economy

ORIGINAL FRENCH ARTICLE: PSA provoque un séisme social et politique

by Loan Nguyen

PSA’s Restructuring Plan Spells a Social And Political Upheaval

Translated Monday 16 July 2012, by Isabelle Métral

PSA made public a "restructuring" plan yesterday that entails the closing down of one of its historic sites in Aulnay-sous-Bois near Paris and the slashing of 8,000 jobs. But taking in all its suppliers and sub-contractors, three or four times as many jobs would be lost: the news came as a bombshell on the social scene

The sentence fell early yesterday morning. At eight o’clock, no sooner had the extraordinary meeting of the group’s central committee opened than the announcement of the closing down of the Aulnay-sous-Bois car-plant by the directorate’s president Philippe Varin brought an end to the nominal suspense that had lasted for over a year after the CGT ( the General Confederation of Trade Unions) revealed in June 2011 a management’s memo that planned the closing down of the site. Such a social disaster has had no precedent in the car industry since the closing down of the Renault car plant in Boulogne Billancourt in 1992. Beyond the 3,000 permanent jobs in the Aulnay plant, 1,400 will be cut in Rennes, plus 3,600 non-manufacturing jobs, 1,400 of these in R&D. All in all, 8,000 jobs will be slashed by the second biggest European car manufacturer by 2014, in the name of a "come-back to the balance of the operational cash-flow" according to PSA . Taking in PSA’s suppliers and subcontractors, three or four times as many jobs will be lost, the CGT points out.

Illusory promises of external redeployment
To pamper its public image the group commits itself to implementing a plan for revitalizing the Aulnay site and redeploying 1,500 workers in its own plants, mainly on the Poissy site that will now be in charge of producing the Citroën C3 that has so far been assembled in Aulnay. As concerns the other jobs, a plan for volontary resignations will be opened and an illusory deployment in the "Aulnay labour pool" (where unemployment runs at 12.2%) is planned. Such propsects were found unconvincing by the Aulnay and Rennes workforce, to whom the management’s announcement was a shock. "I am aware of the painful dimension of the planned job cuts, above all for those concerned and their families, and of the emotion that they cause, far beyond the Group," Philippe Varin thought it advisable to add. He justified the "re-structuring plan" as being the only way out of "the area of turbulence" under which the car manufacturer is labouring.

For the management, this is no doubt only a difficult time that must simply be gone through, and is no doubt soon to be forgotten thanks to the promising bullish tremors on the stock markets where the PSA stock went up by 3 points as soon as the annoucement was made - its second biggest rise ever recorded.

The thing is that the year 2012 has seen a bad start for the Group’s stock-holders, who had to go without any dividends after the manufacturer’s profit was cut by half following the 2011 financial year that was markedly down on a record 2010 in spite of the crisis. The management tries to justify this drastic plan by invoking the fall on the stock exchanges ( down by 6.5% in Europe, by 1.5% globally) in 2011. It says it is expecting a new 10% fall in its sales in Europe in 2012, but says nothing of its sales predictions globally. And it naturally glosses over the fact that the slump comes after an exceptional result in 2010 that saw its sales jump by 13% globally.

The Group invokes its productive over-capacity in Europe. But its arguments are fiercely contested, as they ill conceal a strategy that is mainly aimed at ensuring a fall in costs in order to please shareholders. Those 8,000 jobs may well be only the beginning of a far heavier drain in the car industry. For PSA itself, on the Sevelnord (Hordain) site (also mentioned in the management’s memo that planned the closing down of the Aulnay plant) and the La Janais plant (in Brittany) . And Renault itself, its competitor might well enter the race for greater "competitiveness" , actually intended to increase production outside Europe. In the last month the diamond-logo car-maker already announced the loss of 300 jobs its Flins factory.

The government faces its first social test
Confronted with the massive redundancies announced by the PSA management, the CGT’s general ssecretary Bernard Thibault yesterday demanded that the government take measures in order not to be "a mere spectator of the groups’ decisions, like PSA’s". Faced with its first big social test, the government seems more disposed to implement a new assistance plan for the car industry (on the agenda of the ministers’ council on July 25) - four billion euros were given by the previous government in 2008 - and to soften PSA’s restructuring plan rather than opposing it. This passivity is fiercely contested by the Left: the French Communist Party’s national secretary Pierre Laurent demanded "that the government clearly intervene in favour of the salaried workers" and called for a suspensive moratorium on the plan’s social dispositions. As concerns the Aulnay workers themselves, the CGT promises "a fierce struggle in September".


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