June 30, 2012 / 12:07 PM / 6 years ago

France urges Peugeot to tell plant plans

PARIS (Reuters) - French Industry Minister Arnaud Montebourg called on the management of struggling car maker PSA Peugeot Citroën (PEUP.PA) to divulge its intentions for the future of several of its plants quickly, as fears mount over future job cuts.

The Logo of French carmaker Peugeot is seen on a car in Paris January 13, 2009. REUTERS/Charles Platiau

Europe’s second-biggest automaker is looking for ways to make more cost savings this year and preparing to shut down one of its two Paris plants, union officials said on June 28.

“The decisions that you could take would undoubtedly have consequences on the entire car industry and especially outsourcing,” Montebourg said in a letter addressed to Peugeot Chief Executive Philippe Varin that was emailed to Reuters on Saturday.

“I would like as a result that the PSA’s management makes its intentions known as quickly as possible.”

Unemployment has risen for thirteen months in France with the number of jobless people hitting the highest level in April since August 1999, the last month for which figures are available.

The new Socialist government has taken an active role in managing the situation as it tries to avoid a wave of factory closures. French President Francois Hollande has handed Montebourg the task of reversing the industrial sector’s decline.

In his letter, Montebourg called on PSA to begin “social dialogue to create a collective weapon to face its potential difficulties with regard to its employees.”

PSA also briefed staff last week on plans to reduce production of the Peugeot 208 small car at Poissy, west of Paris, a move seen as paving the way for the closure of Peugeot’s long-threatened factory in the northern Paris suburb of Aulnay sous Bois.

Montebourg said he had appointed a government expert to establish a detailed and rigorous diagnosis on the real situation at PSA and the possible measures the group was planning to take.

The minister also said he planned to create an action plan for the future of the French automobile sector.

PSA declined to comment.

Peugeot’s situation has deteriorated since last year, when the core autos division swung to a loss, punished by the company’s exposure to France and other European markets badly hit by the region’s debt crisis.

The Peugeot and Citroen brands’ combined share of European car sales dropped a percentage point to 12 percent in the first five months, as their plunging sales more than doubled the broader market’s 7.3 percent contraction. (Reporting By John Irish and Gilles Guillaume; Editing by Sophie Walker)

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