Renault seeks to restructure French factories to slash costs

Workers attend the general assembly of strikers in a workshop of the former Renault factory on the Ile Seguin near Paris in April 1953. (AFP)
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Updated 30 May 2020

Renault seeks to restructure French factories to slash costs

  • Company in talks with unions over plans amid fears of public backlash over jobs

PARIS: Renault said on Friday it was launching talks with unions to restructure several French car plants, potentially leading to closures, as it confirmed plans to cut around 15,000 jobs worldwide.

Faced with a slump in demand exacerbated by the coronavirus crisis, Renault is aiming to find €2 billion ($2.22 billion) in savings over the next three years as it hones in on key car models.

“We thought too big in terms of sales,” interim chief executive Clotilde Delbos told a conference call, adding the firm was “coming back to its bases” after investing too much in recent years.

The company plans to trim its global production capacity to 3.3 million vehicles in 2024 from 4 million now, focusing on areas such as small vans or electric cars as it freezing manufacturing expansion in countries such as Romania.

The company — due to bring ex-Volkswagen executive Luca de Meo on board as CEO in July — said it would also slash costs by cutting the number of subcontractors in areas such as engineering, reducing the number of components it uses and shrinking gearbox manufacturing worldwide.

It hopes to find additional savings by producing more cars jointly with its Japanese partner Nissan, which has also outlined a plan to become smaller and more efficient.

Renault said the restructuring measures, which include job cuts and employment transfers that would affect just under 10 percent of its global workforce, would cost €1.2 billion.

FASTFACT

15%

Renault is 15 percent owned by the French state.

The group, which is 15 percent owned by the French state, said some plants such as the one in Flins, close to Paris, where it makes its electric Zoe models, could cease to assemble cars and center on recycling activities, instead.

Six sites in all, including a component factory in Brittany and the Dieppe factory where the group’s Alpine cars are made, will be under review.

Unions in France have said they feared the measures could lead four sites to shut, though outright closures are likely to lead to a public backlash.

The government has said it will not sign off on a planned €5 billion state loan for Renault until management and unions conclude talks over jobs and factories in France.

Renault was already under pressure when the coronavirus pandemic hit, posting its first loss in a decade in 2019. Like its peers, it is now trying to juggle a slump in revenue with industry-wide changes such as investment needed to produce more environmentally friendly vehicles.


Saudi Arabia’s 6-point plan to jumpstart global economy

Updated 07 July 2020

Saudi Arabia’s 6-point plan to jumpstart global economy

  • Policy recommendations to G20 aim to counter effects of pandemic

DUBAI: Saudi Arabia, in its capacity as president of the G20 group of nations, has unveiled a six-point business plan to jump start the global economy out of the recession brought on by the COVID-19 pandemic.

Yousef Al-Benyan, the chairman of the B20 business group within the G20, told a webinar from Riyadh that the response to the pandemic -— including the injection of $5 trillion into the global economy — had been “reassuring.”

But he warned that the leading economies of the world had to continue to work together to mitigate the effects of global lockdowns and to address the possibility of a “second wave” of the disease.

“Cooperation and collaboration between governments, global governance institutions and businesses is vital for an effective and timely resolution of this multi-dimensional contagion transcending borders,” Al-Benyan said.

“The B20 is strongly of the view there is no alternative to global cooperation, collaboration and consensus to tide over a multi-dimensional and systemic crisis,” he added.

The six-point plan, contained in a special report to the G20 leadership with input from 750 global business leaders, sets out a series of policy recommendations to counter the effects of the disease which threaten to spark the deepest economic recession in nearly a century.

The document advocates policies to build health resilience, safeguard human capital, and prevent financial instability.

It also promotes measures to free up global supply chains, revive productive economic sectors, and digitize the world economy “responsibly and inclusively.”

In a media question-and-answer session to launch the report, Al-Benyan said that among the top priorities for business leaders were the search for a vaccine against the virus that has killed more than half-a-million people around the world, and the need to reopen global trade routes slammed shut by economic lockdowns.

He said that the G20 response had been speedy and proactive, especially in comparison with the global financial crisis of 2009, but he said that more needed to be done, especially to face the possibility that the disease might surge again. “Now is not the time to celebrate,” he warned.

“Multilateral institutions and mechanisms must be positively leveraged by governments to serve their societies and must be enhanced wherever necessary during and after the pandemic,” he said, highlighting the role of the World Health Organization, the UN and the International Monetary Fund, which have come under attack from some world leaders during the pandemic.

Al-Benyan said that policy responses to the pandemic had been “designed according to each country’s requirements.”

Separately, the governor of the Saudi Arabian Monetary Authority said that it was “too early” to say if the Kingdom’s economy would experience a sharp “V-shape” recovery from pandemic recession.