French carmaker PSA Peugeot Citroen shocked France on Thursday with an announcement that it would cut 8000 jobs, sparking union anger and underlining the country's competitiveness problems.
Unions slammed the news as a “declaration of war” and an “earthquake”, while prime minister Jean-Marc Ayrault said the layoffs were “a real shock” and announced that the government would present its rescue plan for the struggling auto industry on July 25.
The auto industry is strongly unionised and a major employer, with job losses there having a knock-on effect on the wider economy.
PSA, France's biggest carmaker and second in Europe to Germany's Volkswagen, said it expected the European market to shrink eight percent this year and had to adjust its business.
For 2007-12, the market is down 23 percent, it said, compounding problems which left its plants operating at just 76 percent of capacity in the first half of this year.
FIRST CAR FACTORY CLOSURE IN 20 YEARS
PSA said it would cease production at its historic Aulnay site north of Paris which employs 3000 people, with 1400 jobs also going at its Rennes plant in Brittany.
Another 3600 jobs are to be cut across the corporate structure.
The company employed 100 000 people in France at the end of 2011.
The Aulnay closure is the first of a car factory in France since Renault's iconic plant at Boulogne-Billancourt closed 20 years ago.
Peugeot boss Philippe Varin told French television the decisons “were very serious, very painful to take,” but “they had to be taken.”
PSA, trying to cut overcapacity, earlier this year announced a tie-up with US giant General Motors to cut costs.
Previously released figures showed PSA's first half European sales down 18 percent to 980 000 cars and commercial vehicles, with its market share falling from 13.9 to 12.9 percent.
“We are a social and political bomb.”
Outside the plant, angry employees said they would fight the layoffs.
Union delegate Jean-Pierre Mercier said: “I don't know to what extent we can make them back down, but we will cost them very dearly.” - AFP