Toyota announces plans for the construction of assembly plant in France

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In December 1997, the leading Japanese car manufacturer, Toyota, announced that it had chosen the northern French town of Valenciennes as the site for its new car assembly plant. This will create between 1,500 and 2,000 new jobs.

In its bid to conquer the southern European market, Toyota's management announced on 10 December 1997 that it had decided on Valenciennes in northern France as the site for the construction of its new car assembly plant. In the initial phase, scheduled to begin in 2001, the plant will assemble 100,000 small-size cars per year using engines and body shells manufactured in the United Kingdom and Poland respectively. This investment should create around 2,000 direct jobs and a further 3,000 to 4,000 associated ones. Beginning in 2005, a second development phase is planned, which will double the plant's output capacity to 200,000 and create a further 1,000 jobs.

The French Government has agreed to provide around 10% of the initial investment, estimated at FRF 3.5 billion. This was a key factor in the Japanese manufacturer's choice of location for its new factory. However, the company was also attracted by the highly qualified local labour force, the quality of infrastructure and network of subcontractors, in addition to the scale of the potential French market.

The trade unions greeted the news with scepticism, fearing that the arrival of Toyota would lead to redundancies among French car manufacturers (Renault and Peugeot), which are faced with a European context of overproduction (estimated at 30%) and acute competition. Renault and Peugeot managements' reaction was much the same as the unions'. These companies are "handicapped" by the age structure of their workforce, which puts them at a disadvantage in relation to Toyota. A series of redundancy programmes aimed at workforce reduction and early retirement plans offered to workers, who were not replaced by younger ones, has reinforced this phenomenon over the past few years.

For a UK perspective on this issue, see UK9712188N.

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