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