PSA Peugeot-Citroen: Factory closures & 8,000 job losses planned

PSA Peugeot Citroen has revealed it is to close one factory, cut job numbers elsewhere and shed a total of 8,000 jobs as demand for its cars dwindles.

When we reported last year that Peugeot Citroen were planning to idle their plant in Trnava, Western Slovakia we said that this was just the tip of the iceberg for Peugeot Citroen, and that they would have to take far more drastic action if they were to survive. They must have been listening.

With the mainstream middle of car sales heading the same way as the mainstream top end did a few years ago – when European mainstream makers dropped their top-end cars as buyers deserted for premium marques – companies like PSA, GM’s Opel and Vauxhall and Ford are struggling with over capacity and poor sales in Europe.

The first of these to take real drastic action (GM will be doing something similar in 2014 – although Vauxhall’s Ellesmere Port is safe) is Peugeot Citroen with news that it is to shed 8,000 jobs and close its plant in Aulnay, near Paris, in 2014.

The Alunay plant will be the first French car plant to close in 20 years (although it won’t be the last), and its production will be incorporated in to PSA’s Poissy plant which currently builds the Peugeot 208, Citroen C3 and DS3. Jobs will also go at Rennes (1400) and another 3600 corporate jobs will also be lost.

The news that PSA is expected to post a net loss for the first half of 2012 in the region of €700 million makes this inevitable. PSA CEO Philippe Varin said:

A company can’t preserve jobs when it’s burning 200 million euros a month in cash. Prevaricating would have put the group in great danger.

The depth and persistence of the crisis impacting our business in Europe have now made this reorganisation project indispensable in order to align our production capacity with foreseeable market trends.

There seems no way back to the fortunes of the past as car buyers desert the middle ground for the polar opposites of premium and budget makes.

The next news on closures could come from Fiat, but there are growing calls for Ford to cull its European operations – or even pull out of Europe altogether – as sales slide.

Watch this space.