French Government Indicates PSA Job Cuts Unavoidable

The French government has finally released its report on whether the factory closing and job cuts at PSA PeugeotPeugeotFrance, 1882 > present120 models
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-CitroenCitroënFrance, 1919 > present94 models
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are necessary. And the government's verdict is that the losses are a necessity for the company to survive.

The government's appointed researcher did criticize PSA for deciding to shutter the Aulnay factory instead of one its factories outside of France. 

"This study has shown that PSA is currently in a difficult situation, resulting both from economic and structural reasons. The closure of an assembly line is therefore inevitable," said the report.

The government began investigating PSA when it publicized that it would fire 8,000 employees and close its Aulnay factory in 2014. Yesterday, NYSE Euronext announced that it would remove PSA from the French CAC 40 index because of its poor performance. 

PSA was Europe's second largest automaker but had focused on European sales. As the Euro crisis deepens, its sales have fallen. Its major competitor VW AG has large markets in China, South America and North America, which have shielded it Europe's problems. As the European market has fallen, PSA has been strapped with more workers and factories than it needs. Even as of 2012, PSA was running at 61% capacity. 

"In the medium-to-long term, the solution lies in an alliance with a major carmaker," said the report. 

Earlier this year, GMGMUnited States of America, 1998 > present8 models
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who has been facing its own problems in Europe bought 8% of the company, but so far it has not seemed to have spurned PSA's losses. 

Source: Automotive News Europe