Peugeot Promises Investment in France in Exchange For Pay Cut image

PSA Peugeot Citroen promised to increase investments and production in France in the following three years if unions agree with reduced overtime pay and salary freeze.

PSA Peugeot Citroen, the second largest automaker in Europe, said it will invest 1.5 billion euro through 2016 to upgrade plants in France, part of its strategy to increase output 7.5% to around 1 million vehicles. Peugeot promised to manufacture at least one new model in each of its five factories in France in the following three years, a move which will help maintain work at foundries and components plants.

Peugeot’s operating loss in its automotive division during the first half of the year reached 510 million euro. The French automaker has begun negotiations with unions in May after signing a deal on a cost-reduction agreement, which includes the closing of the Aulnay plant, near Paris and the elimination of 11,200 jobs in the country by 2015. As part of the latest round of negotiations the automaker pledges not to close any other French plant.

“This is the minimum we were asking for,” said Anne Valleron, one of two employee representatives on the company’s board. “But this is not sufficient. We still need to discuss all the details of these very broad proposals and see what will be their actual impacts on jobs in each factory.”

Source: Bloomberg