Peugeot Surpasses Target with 5,700 Job Cuts in France
PSA Peugeot Citroën has eliminated 5,700 jobs in its French operations, exceeding its initial voluntary departure target as part of a wider cost-cutting drive.
PSA Peugeot Citroën has cut 5,700 jobs in France, outstripping its initial target of 3,550 voluntary departures as the carmaker accelerates cost-saving measures. The reduction, confirmed by company spokesman Pierre-Olivier Salmon, is part of a broader strategy to close the profit gap with competitors including Volkswagen and Daimler.
The largest impact has been felt at the Rennes plant in western France, where 1,700 workers have departed following the closure of an assembly line. This figure is double the 850 buyouts initially targeted for the site. The voluntary departure scheme at Rennes remains open until the end of March, giving remaining staff the option to leave under the current terms.
Cost-cutting to address profitability gap
Peugeot’s global workforce stood at 104,465 as of June 2009, with French employees making up 55 percent of the total. The company aims to reduce its global headcount by 10 percent without resorting to compulsory redundancies. Chief Executive Philippe Varin set a savings target of €3.3 billion by 2012, with more than half expected to come from reduced spending and workforce adjustments.
The move is part of Peugeot’s response to a five-point profit margin gap with key rivals, based on 2008 financial results. The company is under pressure to improve competitiveness as European carmakers face persistent overcapacity and tough market conditions. The latest round of job cuts follows earlier announcements and is in line with broader restructuring efforts across the sector.
Rennes plant bears the brunt
The Rennes facility has seen the deepest cuts, reflecting Peugeot’s decision to scale back production at sites with lower utilisation. The closure of an assembly line at Rennes last year triggered the largest number of departures at a single location. Across the rest of Peugeot’s French operations, around 4,000 positions have been eliminated through the voluntary departure scheme.
Market reaction and ongoing restructuring
Shares in Peugeot closed at €25.81 in Paris, down 0.6 percent on the day of the announcement. Despite the ongoing restructuring, Peugeot’s share price had almost doubled over the previous 12 months, giving the company a market capitalisation of €6 billion at the time. The voluntary job cut programme forms part of a wider trend among European manufacturers seeking to adjust capacity and costs in response to market realities.
The scale of the job reductions at Peugeot’s French plants highlights the depth of the company’s restructuring effort. With the voluntary departure scheme still open at Rennes, further reductions remain possible as Peugeot continues to align its operations with demand.
