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Renault warns unions of factory closures amid cuts, layoffs

 
 
 
 
 
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Employees of “Auto Chassis International” owned by French automaker Renault, attend a rally to protest against job cuts in Le Mans, western France on January 23, 2013.

Renault has officially warned unions that car factories will close unless they seal an agreement of salary cuts and thousands of layoffs in the floundering company.

“If there is no deal, it is impossible to leave things as they are,” Executive Vice President and Chairman of French Operations Gerard Leclercq said on Wednesday and added, “All options are open. But, for the moment, there is no plan B.”

Management of the part state-owned car manufacturing company gave unions a choice of wage freezes and job cuts or Renault would take drastic actions.

“The promise not to close factories could not be kept and closures would be inevitable,” Renault said in a statement aimed at giving the company an edge over international competitors.

According to union officials the managers in a Tuesday meeting said at least two factories faced closure in the absence of a deal. However, Renault denies the claim.

“There shouldn’t be any blackmail, there should be tough but honest talks,” Labor Minister Michel Sapin said.

The threats come after Renault on January 15, announced some 7,500 redundancies through natural attrition by 2016 to sharpen its competitive edge.

The company says the 17 percent workforce reduction will contribute to saving 400 million euros through spending cuts, which will give Renault “room for investment and development of its activities.”

French automakers have tried to solve their economic problems by slashing capacity and cutting costs.

The worsening debt crisis has forced European Union (EU) governments to adopt harsh austerity measures and tough economic reforms, which have triggered incidents of social unrest and massive protests in many European countries.

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