New French Pres Hollande Plans Fight with Automakers

New French president Francois Hollande will have his inauguration on May 15, and he plans to arrive in a Citroën DS5DS DS5 e-HDi 110 SoChic EGS6France, 2011 > present1 photo
diesel hybrid. That might be the last time that Hollande and the French auto industry are so close. 

PSA/PeugeotPeugeotFrance, 1882 > present120 models
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-CitroënCitroënFrance, 1919 > present94 models
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and RenaultRenaultFrance, 1898 > present189 models
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have been threatening to close factories and lay off workers due to lower sales and fewer buyers. A document leaked prior to the election that Peugeot planned to close the factory in Aulnay, but it was postponing the the decision until after the election to prevent blow-back.

With current sales, there are too many European auto factories building too many cars too expensively. To stay profitable, French automakers want to close those facilities down. PSA and Renault have shrunk their workforce in France by 20% over the past four years  

"We're not going to let our arrival be the trigger for redundancies. We won't accept them without reacting," said Hollande.

The automakers want France to cut employment taxes to compete better with German automakers. The German automakers stay profitable despite German taxes because they can ask higher prices and generally sell more cars.

Hollande wants to raise taxes on employers even further. He believes that labor costs are not a factor in French competitiveness. 

Peugeot builds 40.8% of its cars in France, a 3.3% improvement over last year. However, almost half of its production capacity sits idle. The company will have to lay off workers to stay profitable, but the cuts will be difficult to get past the unions. Prior to the election, the PSA union picketed a Sarkozy rally and won a meeting with Hollande. The union believes the government is on its side. 

Renault CEO Carlos Ghosn confirmed that when one automaker in France starts laying off workers others will follow.

Source: Automotive News