Peugeot announces huge losses and factory closure
PSA Peugeot-Citroen (to give the company its official title) has said it is currently losing £90 million per month and will close its big Aulnay factory near Paris and reduce output at its Rennes factory as well, with a total loss of 8,000 jobs.
The company is also burning its way through £150 million in cash per month, which is even more serious than the losses. As accountants like to say, "Profit is a concept, but cash is a fact"
CEO Philippe Varin said in a statement, ""I am fully aware of the seriousness of today's announcements as well as of the shock and emotions that they will arouse in the company...The depth and persistence of the crisis impacting our business in Europe have now made this reorganization project indispensable in order to align our production capacity with foreseeable market trends."
In a way, it is in Peugeot's interest to talk up the crisis. Its major issue is going to be persuading the unions to go along with its plans, and underlining just how bad things are may be an attempt to stop the unions going ballistic. However, it does not seem to have worked. The AFP press agency reported that the unions described the announcement as a "declaration of war" and an "earthquake".
Meanwhile, in a French radio interview, the French Social Affairs Minister Marisol Touraine said the cuts were "unacceptable". As Peugeot will try to explain, the choice is not between 8,000 job cuts and no job cuts: it is between 8,000 job cuts and bankruptcy.Then there won't be any jobs at all.