PSA Peugeot Citroen:  new plant in Brazil, 6000 jobs cut in Europe image

France’s largest and Europe’s second-largest carmaker PSA Peugeot Citroen announced that it will invest around 240 million dollars per year, for a total investment of 940 million by 2015, in order to double production in Brazil. Recently, the company stated that around 6000 jobs will be cut at its European plants. This measures comes as part of a major switch towards emerging economies amid the auto market slowdown in Europe and the United States.

According to the head of Latin American operations, Carlos Gomes, the Brazil plant will have an extended output of 300 000 vehicles per year and will increase its production of engines from 280 000 to 400 000 per year by 2015.

Currently, the company is the fifth largest auto producer from Brazil, behind Fiat, Volkswagen, General Motors and Ford.

Brazil gathers five percent of the company’s world sales and is forecasted to reach between seven and eight percent by 2015, according to Gomes. Also, unitl same year, the sales outside Europe are expected to represent around half the company’s.

On the other hand, PSA Peugeot Citroen is planning to cut nearly 6800 jobs in Europe among group employees and sub-contractors , in its efforts of implementing a €800m cost-cutting plan amid a flat and uncertain EU auto market.

PSA said: “The competitive environment has become more challenging due to pricing pressure, which has intensified in Europe since September. In this tougher environment, recurrent operating income for the automotive division is now expected to be close to break-even for the full year.”

The company already announced the unions that 800 temporary positions would be cut by the end of 2011.

Union representative Bruno Lemerle condemnes the plan, stating: “Logically when the results are good, the company should employ people, try to develop. Our workload is excessive as it is, we don’t need a reduction in the workforce.”

In 2012, a further 1000 manufacturing jobs would be restructured through voluntary departures, followed by the cut of 2500 non-production positions and another 2500 terminated by ending outsourcing contracts.

PSA Peugeot Citroen employs more than 205 000 people worldwide, including 167 000 in Europe.