Renault to cut 6,000 jobs in France and Europe

Some 10 years after the Renault manufacturer closed under strong protests its plant in Vilvoorde, Belgium, the company announced its decision to cut a further 6,000 jobs across Europe. In October 2008, the company put forward its restructuring plan, which it describes as a three-fold incentive plan for voluntary redundancies. However, the measures have met with strong opposition, particularly from workers and trade union representatives at the Sandouville factory, where 1,000 jobs are to be cut.

Background to job cuts

On 24 July 2008, the Chief Executive Officer (CEO) of Renault, Carlos Ghosn, announced that the company intends to cut at least 5,000 jobs in Europe due to the deteriorating macroeconomic climate (see European Restructuring Monitor (ERM) factsheet). The geographical distribution of the planned job losses was only specified after the summer. On 9 September, management presented a programme of voluntary redundancies, which envisages the loss of 4,000 jobs in France, about 3,000 of which will concern ‘structural staff’ such as engineers, technicians and commercial executives (see details in ERM factsheet). In the Sandouville factory in the Normandy region in northern France, 1,000 production jobs will be cut out of a total 3,800 jobs.

Subsequently, on 25 September, management announced to the European Works Council (EWC) that an additional 2,000 jobs will be cut in the subsidiaries, 900 of which will be in France and 1,100 in the rest of Europe. The job cuts come 10 years after Renault closed its Vilvoorde plant in Belgium (FR9803195N); on this occasion, however, the job cuts will be more widespread, with a total of 4,900 jobs being lost in France and 1,100 in 19 other European countries.

The announced job cuts came as a surprise, particularly as in February 2006, Renault had launched an ambitious plan called the ‘Renault Contract 2009’, which had three main objectives, namely to:

  • increase production;
  • increase profitability;
  • launch the Laguna 3 – a high-quality luxury car model – at its Sandouville plant.

Moreover, in July 2008 – in spite of the significant decline in the European car industry – Renault had at first kept its profitability target: a 4.5% operational margin in 2008 and 6% in 2009.

Restructuring plan

By announcing its restructuring plan in July, Renault was simply coming into line with its competitors’ practices. Peugeot SA had already cut 14,000 jobs in Europe over a period of 18 months, without generating strong public opinion.

Renault’s management announced straight away its intention to implement its restructuring programme in France on a voluntary basis, without resorting to compulsory redundancies or closures. In October, it outlined its three-fold incentive plan for voluntary redundancies, comprising:

  • financial incentives for voluntary redundancies;
  • financial assistance for early retirement;
  • leave for training or retraining.

Reactions to announced job cuts

The trade unions have reacted strongly to the proposed restructuring plan. Moreover, on 3 October, Renault’s central works council criticised the voluntary redundancy incentive plan. Representatives of the General Confederation of Labour (Confédération générale du travail, CGT) did not take part in the referendum for the plan. CGT considers that Renault is taking advantage of the current economic crisis and that the restructuring measure is in reality a redundancy plan. The trade union confederation has therefore taken the matter to the courts. For its part, the EWC demanded bargaining on a ‘European agreement on methods’ concerning the implementation of a European restructuring plan without redundancies and a timetable for each country.

The strongest reactions came from the workers at the Sandouville plant and from CGT, which is the majority trade union at Sandouville. As soon as the plan was announced, CGT called for work stoppages and organised demonstrations. It received the strongest support from the Sandouville factory, which was blocked on several occasions. Workers at Sandouville feel betrayed by the manufacturer’s management, insisting that they had met quality targets for production of the Laguna 3 model, although the latter was deemed a commercial failure. CGT denounced Renault’s industrial strategy, which it argues is based on ‘unbridled maximisation of margins’, and is demanding the production of a more low-cost car at the Sandouville plant. In November, only 38% of Sandouville’s capacity was being used with just one shift and the frequent use of temporary lay-offs, which is starting to affect other sites as well as subcontractors.

French president reassures Sandouville workers

The case also quickly attracted political attention. Several leaders of left-wing parties visited the Sandouville factory, as did the French President, Nicolas Sarkozy, on 6 October. Although the workers gave him a poor reception, President Sarkozy reassured them that the factory would not be closed, highlighting that the state still has a 15% stake in Renault’s capital and would meet its social and economic responsibilities. The president also announced a series of additional measures – in particular, ‘occupational transition contracts’ for workers, as well as public support for research and tax cuts for the car industry.

Udo Rehfeldt, Institute for Economic and Social Research (IRES)

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