Renault restructures French factories in an effort to cut costs

Renault restructures French factories in an effort to cut costs

Renault said Friday it is starting talks with unions to restructure several French car factories, which could lead to their closure, as the automaker confirmed its plans to cut around 15,000 jobs worldwide..

Faced with a slump in demand exacerbated by the coronavirus crisis, Renault plans to save $ 2 billion euros ($ 2.22 billion) over the next three years by cutting production and focusing on key car models.

«We thought the sales were too big», – interim CEO said at the conference Clotilde Delbos, adding that the firm «returns to their bases» after investing and spending too much in recent years.

The company plans to reduce global manufacturing capacity to 3.3 million vehicles in 2024 from 4 million currently, focusing on segments such as small vans or electric vehicles. This will stop the expansion of production in countries such as Romania.

In July, ex-head of Volkswagen took over as CEO Luca de Meo. The company said it would lower costs by reducing the number of subcontractors in areas such as engineering, reducing the number of components used and phasing out production of gearboxes worldwide..

Renault restructures French factories in an effort to cut costs

Nissan’s Japanese partner also hopes to save money by co-producing more vehicles. The automaker also charted a plan to cut production and improve efficiency this week..

Renault said restructuring measures, including job cuts, which will affect just under 10% of its global workforce, will cost 1.2 billion euros..

The group, which is 15% owned by the French state, said some factories, such as the plant in Flins, near Paris, where the company makes its electric Zoe models, could stop assembling cars and focus on recycling..

A total of six sites will be considered, including a component plant in Brittany and a plant in Dieppe, where Alpine cars are produced..

French unions have said they fear these measures could lead to the closure of four facilities, although their outright closure could lead to public backlash..

The government said it would not sign a planned € 5bn government loan for Renault until management and trade unions finalize talks on jobs and factories in France..

Renault restructures French factories in an effort to cut costs

Renault has been under pressure since the start of the coronavirus pandemic, posting its first losses in a decade in 2019. Like other market players, the company is trying to offset the decline in revenues through industry-wide changes, such as investments needed to produce cleaner vehicles..

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