We thought too big, Renault admits as it cuts 15 000 jobs

By Gilles Guillaume And Sarah White Time of article published May 29, 2020

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Paris - Renault acknowledged that its

global ambitions had been unrealistic, as it announced plans to cut

about 15 000 jobs on Friday. The company will also shrink production and restructure French

plants as it pressed the reset button and sought to banish the

spectre of Carlos Ghosn.

Faced with a slump in demand that has been exacerbated by

the coronavirus pandemic, Renault has detailed plans to

find 2 billion euros (R38.8bn) in savings over the next

three years.

"We thought too big in terms of sales," said interim Chief

Executive Clotilde Delbos, adding the company was "coming back

to its bases" after investing and spending too much in recent

years.

The French carmaker was under pressure even before Covid-19

hit, posting its first loss in a decade in 2019, and has said

nothing would be "taboo" as it reviews its business.

It plans to trim its global capacity to 3.3 million vehicles

in 2024 from 4 million now, focusing on its most profitable

models and areas such as electric cars while freezing

manufacturing expansion in countries like Romania.

Renault, like its Japanese alliance partner Nissan, is

rowing back on an aggressive expansion plan pursued by Ghosn,

its former boss-turned-fugitive, who is wanted on charges of

financial misconduct in Tokyo. Ghosn denies the charges.

"The mindset has completely changed. The previous line was

volumes and sales and being the first on the podium," Delbos

said. "We're not looking to be on top of the world, what we want

is a sustainable and profitable company."

The company, due to bring ex-Volkswagen executive Luca de

Meo on board as CEO in July, said it would cut costs by reducing

the number of subcontractors in areas such as engineering and

the number of components it uses, as well as shrinking gearbox

manufacturing worldwide.

Delbos ruled out the need for a rights issue, saying Renault

was close to sealing a 5 billion-euro credit line guaranteed by

the French government.

A third of cuts to take place in France

Renault, which is 15% owned by the French state, faces the

most sensitive restructuring measures in its home country, which

will shoulder almost a third of the global job cuts and faces

potential plant closures.

The carmaker said it was in talks with unions. Six sites out

of Renault's 14 plants in France - including a component factory

in Brittany and the Dieppe factory where the group's Alpine cars

are made - will be under review, though most changes would take

effect after 2022, Delbos said.

Some of the six plants like the one in Flins, close to

Paris, where it makes its electric Zoe models, could cease to

assemble cars and centre on recycling activities instead, the

company said.

The government has said it will not sign off on the

state-backed loan until management and unions conclude talks

over jobs and factories in France. It is seeking further clarity

on how some big factories will be reorganised and further

guarantees on jobs before it gives the green light, according to

a source familiar with the matter.

In all just under 10 percent of its global workforce will be

affected by layoffs, and restructuring measures will cost 1.2

billion euros (R23.2bn). There will be about 4600 job cuts in France,

though Renault said it would prioritise employment transfers,

voluntary departures and retirement schemes.

French unions expressed frustration.

"This plan is unbalanced, at the expense of French

activities," the moderate CFDT union said on Friday, adding that

other countries had been less affected.

Getting over Ghosn?

Renault is still struggling to move on from the scandal

involving Ghosn, which strained its relations with alliance

partner Nissan and paralysed joint projects.

Ghosn, who ran Renault and was the chief architect of the

alliance, was arrested in Japan in late 2018 on financial

misconduct charges, but fled to Lebanon in December. He has

denied wrongdoing and hit out at his past employers.

Renault and Nissan have been hit hard by the pandemic just

as they were trying to rework their partnership. Nissan

this week also outlined a plan to become smaller and more

efficient.

They were among the weakest global automakers going into the

crisis, lacking a clear plan for using their alliance to emerge

from the slump and share the burden of investing in electric

vehicles and other technology.

Reuters

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