Renault, Adjusting to Europe’s Declining Market, Will Cut 7,500 Jobs

New York Times ^ | 15 January 2013 | Dilly Jolly and Vindu Goel

[Cronos]

France’s ailing industrial sector took another blow on Tuesday when Renault said it planned to cut 7,500 domestic jobs by 2016, or about 17 percent of its French labor force, as it adjusts production capacity to the crushing downturn in the European car market.

The plan, which the company said in a statement would save 400 million euros, or $540 million, in annual fixed costs, is needed to lower its break-even point — the amount of revenue needed to cover all outlays — and to “clear the way for the new hiring needed for the future.”

The company said that if unions agreed to the plan, it hoped to reach its job target without any plant closings, layoffs or buyouts. It would accomplish its goal, it said, mainly by not replacing retiring workers and by offering early retirement.

.. Of the 135,000 people Renault employs worldwide, more than 44,600 work in France. Ms. Chantegay said the plan to reduce jobs would affect only the French work force.

Over all, France has lost three-quarters of a million industrial jobs in the last decade, and President François Hollande has made it a priority to try to stop the hemorrhaging.

Like its larger rival, PSA Peugeot Citroën, Renault has suffered from having too much capacity in a weak market. But compared with Peugeot, which generates most of its sales in Europe, Renault has held up relatively well, partly as a result of international operations that include important alliances with Nissan Motor of Japan and Avtovaz of Russia.

Mr. Ghosn said on Monday that Renault and Nissan would work together on new, inexpensive cars, which Renault would sell in Europe and Nissan would sell under the Datsun brand in India, Russia Indonesia. The new common production platform will produce its first cars in 2015.

[Cronos]

Renault is still in good nick, it just needs to shed these jobs

[Gen.Blather]

They have projected what the numbers will be out to 2016. Having been involved in these fanciful projections at various companies I can tell you that they seldom represent reality. They’re driven by what the top approver believes is politically acceptable to his boss. In other words they’re tinted rose colored. In some cases they’re candy-coated and spray-painted rose. Almost always reality is much worse.

If they’re projecting they need to get rid of 6500, it will probably be many more than 6500. Typically, they fail to take into account the other market players who will sense blood in the water and attack. VW, for example, seems much more capable than Renault and has developed a common platform from which all their future models will be made, thus reducing costs and increasing profits. I’ve read of nothing similar from Renault. So they may lose even more marketshare, thus moving their breakeven point. The socialist government and the unions will want them to keep hiring and paying workers even if those workers don’t work. This could break Renault.