French carmaker Renault recently acknowledged that its global ambitions had been unrealistic and it is going ahead with a restructuring exercise. According to a Reuters report, the automobile manufacturer is planning to cut about 15,000 jobs, shrink production and restructure French plants.
Owing to the declining sales due to the coronavirus pandemic, the company announced detailed plans to save $2.2 billion 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.
Even before the pandemic began, the company was in pressure as it posted its first loss in a decade in 2019. The company has said nothing would be “taboo” as it reviews its business.
The company 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.
In a similar move, 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.”
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 more 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% of Renault’s global workforce will be affected by layoffs, and restructuring measures will cost 1.2 billion euros. There will be about 4,600 job cuts in France, though Renault said it would prioritise employment transfers, voluntary departures and retirement schemes.
Meanwhile, in other news, Germany’s BMW also confirmed that it was in talks with its works council over job cuts, but declined to provide concrete figures. News agency DPA reported the carmaker plans to slash around 6,000 jobs, 4.8% of the carmaker’s total.
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