July 26, 2012 / 3:30 PM / 5 years ago

Peugeot urges broader pay deal after Sevelnord win

PARIS (Reuters) - French automaker PSA Peugeot Citroen (PEUP.PA) won a pay freeze and other concessions from workers after threatening to close a second plant, and said the deal could be a model for other sites.

Peugeot, already cutting more than 10,000 domestic jobs and shuttering a factory near Paris, also persuaded most unions at its northern French Sevelnord plant on Thursday to accept reduced leave and increased working-time flexibility.

Without the concessions, the company had said it would choose a Spanish factory to build a replacement for the Peugeot Expert and Citroen Jumpy commercial vans assembled at Sevelnord - leading to the French plant’s likely closure in 2016.

“We now hope to get a commitment for the new vehicle very quickly,” said Pascal Lucas, an official with the CFE-CGC union.

“Given the pressure they put on us to sign, the announcement ought to come soon.”

Peugeot spokesman Jonathan Goodman welcomed the agreement with Sevelnord unions but declined to comment on the new vehicle plans. “We can now work on finalizing the dossier,” he said.

Europe’s no.2 car maker is bearing the brunt of a long, deep sales slump that has squeezed automakers’ earnings between a glut of excess industrial capacity and ultra-competitive discounting in the region.

The Sevelnord agreement is a further sign that cuts by Peugeot - including the Aulnay plant closure announced for 2014 - may prompt similar moves from rivals and suppliers.

Addressing French parliamentarians just before the deal was signed, Chief Executive Philippe Varin said it could serve as a template for the rest of the auto sector.

“If we get an agreement, we’re ready to share our experience so that the entire industry can learn from it,” Varin said.

“I’ve discussed this with the (national) union federations and understand they are ready to look at the issue.”

The agreement on Sevelnord, which employs 2,700 workers, has already led to splits between France’s main industrial unions that may deepen with attempts to apply it to other factories.

“We’re absolutely scandalized,” said Ludovic Bouvier of the left-wing CGT, which voted against the accord and pressed for a staff ballot. Its opposition failed to block the deal, endorsed by three other unions representing a majority of workers.

“It’s unthinkable to sign up to something like this without all the staff having a say,” Bouvier said.

    But an official with center-left Force Ouvriere, which backed the plan along with the CFE-CGC and STI unions, said it was a “good compromise” that would save the plant.

    “Our comrades at Aulnay would have preferred an accord like this to the closure of their site,” Jean-Francois Fabre said.

    The agreement “may well be followed elsewhere,” Fabre said. “It was negotiated mainly by our national federation and legal service, precisely for that reason.”

    Besides the two-year pay freeze and reduced leave, the concessions allow workers to be transferred to lower-ranking jobs within Peugeot or “lent” to other companies. Some leave days can be determined by production needs and limited overtime imposed at two hours’ notice.

    Peugeot currently operates the Sevelnord factory with Fiat FIA.MI, but the Italian automaker is exiting the venture and phasing out production of its Scudo model.

    Under plans announced with Toyota (7203.T) on Monday, Peugeot will build a variant of its midsize vans and their future replacements for the Japanese automaker.

    Located near the city of Valenciennes, Sevelnord assembled 94,000 vans last year, of which 20,000 were for Fiat and the remainder for the Peugeot and Citroen brands.

    Peugeot is also seeking state support in the form of regional aid and tax breaks for Sevelnord, Varin said on Wednesday.

    Editing by James Regan and David Cowell

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