PSA Peugeot Citroen to Reach Deal With Labor Unions image

PSA Peugeot Citroen finally reached a deal with labor unions over plan to cut its workforce in France by 17%.

Five labor unions, which account for 76% of the total number of workers, have agreed with Peugeot’s plan to cut 11,200 jobs in France and close a plant in Aulnay, according to Denis Martin, industrial operations chief. In 2012 Peugeot reported an operating loss of 576 million-euro ($747 million) and it expects to drop further more as the auto industry in Europe will fall in 2013 for the 6th straight year.

The full implementation of the restructuring strategy also requires a final works council meeting that will take place very soon, according to Martin. Last week Peugeot also cut two executives from its board as CEO Philippe Varin plans to end losses. Last month Peugeot promised to reduce cash-consumption rate by 50% this year and breakeven by 2014, after is has burned 3 billion euro ($3.9 billion) in 2012.

“To ensure the efficient implementation of the group’s strategy, a leaner management board has been set up” around Varin, the Paris-based company said in a statement.

“It’s not a bad thing that they streamlined the top management,” said Jens Schattner, an analyst at Macquarie Europe Ltd. in Frankfurt. “But this is just a reshuffling.”