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| Peugeot cuts 8,000 jobs, Opel axes CEO |
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| Struggling with mounting losses & pursuing restructuring plans, which may spark political tension in Europe |
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By : Reuters | Published : July 13, 2012 |
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The woes confronting Europe's auto industry surfaced dramatically Thursday when France's PSA Peugeot Citroen announced 8,000 job cuts and a plant closure and Germany's Opel got its fourth CEO in less than three years.
The two automakers - one a French national icon and the other the principal European subsidiary of General Motors Co. - are struggling with mounting losses and pursuing restructuring plans likely to spark political tension in austerity-strapped Europe.
Ironically, just five months ago, Peugeot and Opel announced a product-development and procurement alliance aimed at producing substantial cost efficiencies for both companies.
GM bought a 7% stake in Peugeot to underpin the alliance. But most of the projected savings won't kick in for several years, and meanwhile the companies are plagued with plunging sales as Europe's economy flirts with recession.
The announcements at the two firms highlight fundamental differences between the methods the US government used to restructure Detroit's auto industry three years ago and European governments' strategies of propping up their auto sectors.
Detroit won state aid on the condition that it close factories and cut jobs to restore financial health, a recipe that has produced strong corporate comebacks.
European governments, by contrast, insisted automakers - including Peugeot and Opel - not close factories or fire workers - leaving many firms mired in losses that now threaten thousands of the jobs those governments had tried to save.
Peugeot's Aulnay plant near Paris, which employs more than 3,000 workers to build the Citroen C3 subcompact, will end production in 2014 as Peugeot reorganises its under-used domestic capacity.
Aulnay will become the first French car plant to close in two decades. The announcement undermines new Socialist President Francois Hollande's pledge to revive domestic industrial production.
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