Renault said it was launching talks with unions to reorganize plants in France, potentially leading to closures, as it cuts capacity and shrinks its workforce.
The automaker will eliminate about 14,600 jobs worldwide and lower production capacity by almost a fifth in a move to dramatically reduce costs following the downturn that has rocked the global auto industry.
The plan includes the politically delicate task of trimming 4,600 positions in France, or about 10 percent of Renault’s total in its home country, through voluntary retirement and retraining, according to a news release on Friday.
More than 10,000 further jobs will be scrapped in the rest of the world, pruning a global workforce of about 180,000 people.
Renault said it will reduce its global production capacity to 3.3. million vehicles in 2024 from 4 million in 2019. Planned capacity increases in Morocco and Romania will be suspended. The company flagged possible adjustments to capacity in Russia.
“We have spent and invested too much and will now come back to our base,” CEO Clotilde Delbos said on a call with analysts. “We are facing reality, not looking to be on top of the world.”
The company will turn its focus to profitability and away from the race for volumes at any cost, she said, citing a successful revamp at cross-town rival PSA Group, which makes Peugeot and Citroen brands.
Renault’s poor 2019 results provided a necessary wake up call that shocked employees into changing their mindset and working more closely with Japanese partners, Delbos said.
Under former chairman Carlos Ghosn, Renault had a sales target of 5 million sales annually by 2022, which has since been abandoned.
To achieve savings of more than 2 billion euros ($2.2 billion) over three years, Renault’s plan will cost about 1.2 billion euros to implement. While it “may not be enough” it can be put in place quickly, Delbos said.
The automaker held off on decisions about the future of sites in France amid political furor and union opposition, saying that talks will begin on various scenarios including phasing out car assembly at Flins, where it produces the Renault Zoe and Nissan Micra, and Dieppe, which builds the Alpine A110 sports car.
Some plants such as in Flins, near Paris, could center on recycling activities instead of building cars, Renault said.
The Douai and Maubeuge plants in northern France would become “centers of excellence” for electric vehicles and light commercial vehicles, respectively, the automaker said.
Six sites out of 14 in France, including component factories, will be under review. Unions in France have said they feared the measures could lead four sites to shut.
€5B loan
The French government has said it will not sign off on a planned 5 billion euro state loan for Renault until management and unions conclude talks over jobs and factories in France.
French Finance Minister Bruno Le Maire said on Thursday he would not sign the check until he had examined the company’s strategy “site by site, job by job,” with closures being “a last resort.”
At the same time, he said Renault’s manufacturing capacity is roughly three times what’s needed this year. Delbos said the credit facility has been agreed and would be available within days.
The government is Renault’s most powerful shareholder with a 15 percent stake and has representation on its board. In exchange for the auto-industry stimulus package, the state has called for manufacturers to commit to keeping production and research in France. Renault and PSA have pledged to increase local production of electrified vehicles and components.
The government is seeking further clarity on how some big factories will be reorganized and further guarantees on jobs before it gives the green light, according to a source familiar with the matter.
French unions expressed frustration. “This plan is unbalanced, at the expense of French activities,” the moderate CFDT union said on Friday, adding that other countries had been less affected.
Engineering cuts
Renault said it would reduce costs by cutting the number of subcontractors in areas such as engineering, reducing the number of components it uses and shrinking gearbox manufacturing worldwide.
The automaker aims to generate savings from the engineering division of about 800 million euros and save 700 million euros in marketing and support activities.
Renault’s unveiling of its new business plan on Friday capped a decisive week for the automaker and its Japanese partners Nissan and Mitsubishi Motors as they navigate a slump in consumer demand and factory shutdowns spurred by the coronavirus pandemic
Renault’s proposals come on top of a new business plan announced on Wednesday by the three-company alliance to lower development and production costs, abandoning the emphasis on growth that marked the era of Ghosn, who led the alliance for almost two decades before his arrest in late 2018.
Nissan announced its turnaround plan on Thursday. It includes closing its car factory in Barcelona in Spain and focusing European production at its plant in Sunderland, England.
