As expected, the French government issued a firm "Not so fast" to Peugeot's desire plan to shutter a plant in Aulnay, France and get rid of jobs. The plant closure has been in discussion for a while, but the layoff headcount has been rising every time it gets reported, going from 6,000 to 8,000-10,000, and now reaching 14,000 workers that Peugeot wants to shed.

Both Peugeot-Citroën and Renault received billions from the French government during the financial crisis, the quid pro quo being that the companies wouldn't close factories and eliminate jobs. The companies' business positions aren't much better now, with Peugeot's overcapacity touching 25 percent. Sound business practice would dictate getting rid of assets dragging on the balance sheet, but the company remains bound by the deal it made the with the French government.

Nevertheless, the government knows that Peugeot has to do something – a carmaker that drags on state resources while sinking with every job intact is still no good to anyone. So even though French President Francois Hollande has said he wants to rework Peugeot's stated aims and French finance minister Pierre Moscovici said the plan "isn't acceptable" as is, Moscovici elaborated on that by saying "We are here to find solutions," and "I'm here to build."

The idea is to assure everyone that Peugeot's straightjacket will be loosened a bit, even if it's not free to do completely as it wishes. But it also sounds like the French government is getting ready to open the door to worker redundancies – not 14,000 of them, but it seems inevitable that a fair number of jobs will have to go.


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    • 1 Second Ago
  • 44 Comments
      Space
      • 2 Years Ago
      So they have to ask the government for permission before closing a factory???
        Val
        • 2 Years Ago
        @Space
        Yes, because they took money from the government, which didn't want them to slash any jobs. Now they are both screwed.
      Jon Acton
      • 2 Years Ago
      here's a radical thought; how about docking the exeuctive team's bonuses and cutting their pay? Hell, they are to blame for the over capacity and poor market direction in the first place not some guy on the line assemblig the vehicle afterall. Oh, but we wouldn't want to upset their lifestyle after all. I'm sorry but the executive teams the world over need to be held more accountable for their actions rather than the little guy. It make make for a more conservative market but in the end I feel it would be realistic.
        Scr
        • 2 Years Ago
        @Jon Acton
        You don't understand what actually happened. The management wanted to get their production in line with demand a long time ago, but the socialist government over there (they are ALL socialist, the question is to what degree) wouldn't let them and gave them a pile of cash to keep these near idle factories staffed to avoid a few layoffs. The problem is the market is still very soft and Peugeot cannot afford to keep this plant and it staff running any longer. So before, there would have been a couple thousand layoffs, a most, there will now be over ten thousand. Making the executives take a pay cut will do absolutely nothing to save any prodution line jobs, and many of them will likely be gone with the layoffs as well. When you have that amount of staff reductions, some of the management of that group goes as well. This is what happes when business-ignorant governments try to tell a company how to run itself and force them to make bad decisions, you end up with a situation much worse than the one you started with.
          TelegramSam
          • 2 Years Ago
          @Scr
          The reason for all of this in the first place, is that corporate culture rarely has the ability to make good long term decisions. This is because incentives for executives do not match up with making difficult long term decisions. It's really as simple as that. When your pursuit is strictly monetary it is not possible to make the best decision, only the decision that will make you the most money.
          TelegramSam
          • 2 Years Ago
          @Scr
          Is this single decision the difference between "going under" and "staying afloat"? Or is it an instance of a company seeing reduced profits, rather than no profits at all? If a company simply sees smaller profits, but they still exist, that business is doing a tremendous amount of harm chasing higher profits, while putting people out of work. The ironic portion is, they may never be able to achieve higher profits that way, because in the end, there have to be people with good enough salaries to buy their cars.
        • 2 Years Ago
        @Jon Acton
        [blocked]
          Mondrell
          • 2 Years Ago
          No. But he didn't propose minimum wage for executives. And at the risk of sounding nonsensically liberal, there have been numerous executives, automotive and elsewhere, who in spite of just compensation, have ruined or damned near ruined their respective firms with performances and decisions sensible individuals with less education could correctly discern as questionable or outright bad. GM is a sound example; while there are numerous other factors that contributed to its failure, its lack of long-run considerations was a basic blunder fostered by one of, if not the most generously compensated executive team in the industry.
      Joseph
      • 2 Years Ago
      Government is rarely the solution, and usually the problem. The best thing it can do is get out of the way (for the most part) and let the free market sort itself out. This will not be the case in the forseeable future in France after they elected a socialist. One can only hope the U.S. will start to pay closer attention to the rest of the world and realize how important it is to return to free market principles.
      jesscott
      • 2 Years Ago
      This is how socialists and communist both work, why should anyone think this to be out of the ordinary?
        William
        • 2 Years Ago
        @jesscott
        Coming to a country near you...very near. Oh wait...its already here.
          Justin
          • 2 Years Ago
          @William
          Automakers have received govt money I'm sure in the past, but I doubt it was to this extent back when our grandparents were children...
          TelegramSam
          • 2 Years Ago
          @William
          and has been since your grandparents were children. Only recently have Middle Class people again, been duped by big money to support policies that bolster the wealthy.
          TelegramSam
          • 2 Years Ago
          @William
          @Justin Even if that were true, the US government provides support for US corporations abroad, without actually handing over money. The US government has toppled nearly every Democratically elected government in South and Central America, anytime legislation has been passed in those countries that takes power away from American companies operating within their borders. http://en.wikipedia.org/wiki/Augusto_Pinochet#U.S._backing_of_the_coup
      ChrisH
      • 2 Years Ago
      Ayn Rand would be laughing
        A P
        • 2 Years Ago
        @ChrisH
        No kidding..........Atlas Shrugged gets closer to truth every day.
          Hodo
          • 2 Years Ago
          @A P
          Just had the same thought. And THIS (Europe's socialism model) is what we want to emulate? Uh, no thanks. Look, I'm not saying that un-watched, un-regulated capitalism works . . . clearly, we've seen that is not the case. However, I'd say that the current problems with "capitalism" have more to do with gov't involvement (backing, rescue, partnership) than with true, value-creating capitalism gone amuck.
      Justin
      • 2 Years Ago
      How unnatural. Sadly I feel like we're going in that same direction unless something changes.
      A P
      • 2 Years Ago
      What makes economies dynamic is the very act of a company going out of business and another taking its place. When governments start interfering is when things go wrong. The housing market is the perfect example: we would be on the way up if not for the Bamster keeping the marking from bottoming sooner. Now we are stuck with a market that cant figure out which way it wants to go with all of the artificial props to the market floor.
        TelegramSam
        • 2 Years Ago
        @A P
        Actually, what makes dynamic economies, is a robust middle class. That way you can expect demand for the products you are selling, since the upper class is small in number, and the lower class may not be able to afford your product. Laying off 10k+ employees, ensure that many people will not contribute to the economy in the near-term. So things are not as simple as you make them seem.
          Val
          • 2 Years Ago
          @TelegramSam
          But not laying them off will ensure that in the long term the whole company goes belly up, and then the government has to step in with even more borrowed money to keep them afloat. I mean, it doesn't really have to, but they will because politically they are supposed to. Same thing happened in the UK with british layland, it went on and on until the whole thing had to be shut down. And then it is much more than 10 000+ people, and not near-term, but quite long-term.
        turbomonkey2k
        • 2 Years Ago
        @A P
        How true. How can anything better rise up to replace it when it's propped up beyond it's practical lifespan?
      • 2 Years Ago
      [blocked]
        • 2 Years Ago
        [blocked]
          Val
          • 2 Years Ago
          They should take 100% of it and then hire all the unemployed people in france. That will solve everything. Also nationalize renault and all the rest of them that are not yet state controlled... again, because this has happened before, also in the UK. Worked out briliantly for british layland.
        icon149
        • 2 Years Ago
        well then then the private company should not have taken money from the government and ACCEPTED the terms offered which were not to close plants and lay off people. When you can't run your private company on your own and need to ask for help from the government, it no longer is completely private. That attitude is exactly what drove Wall street to crash the economy, make money and succeed privately, but don't worry about risk, cause then we will just get bailed out by the gov. oh but as soon as it's inconvenient we will be private again.
          • 2 Years Ago
          @icon149
          [blocked]
          vrmchris
          • 2 Years Ago
          @icon149
          hello to all. val, what led the us government to bail out the banks is what happened after 9/11/2001. six months after that, there all of a sudden came a boom in the economy. but that was based on speculation in the real estate market. of course wall street wanted in on the action so they created two debt packages. one called mortgage backed securities, and the other called credit default swaps. the other factor in this is where by law in the past one could only loan out 12 dollars for every 1 dollar held, there were those who were lending as much as 35 dollars for every 1 dollar. and these securities were sold world wide in the belief that the real estate market in the usa would keep going up. they were churned over and over again. the banks getting fees for these. and selling mortgages over and over again. until there were signs that people were not willing to purchase these things. nor were people willing to purchase houses that were/are overpriced. the banking system was going to fail because of sheer greed by the largest banks on planet earth. and was going to take down almost everyone else with them. unfortunately secretary paulson did not make the case for an orderly breakup of these banks because he came from that world. now, everyone is paying for that greed. including psa. no government wants people laid off. especially because so few gained so much at the expense of the many. this is where we are today. unfortunately any solution is going to require pain. the real question is how much and how long. and this is regardless who is in charge of various countries. regards, vrmchris
          Val
          • 2 Years Ago
          @icon149
          Is it really the case that PSA went to the government and asked for a deal? Or did the government go there and tell them to take the money because there are elections coming? And what business does the US government have to bail out failed banks? Did the banks want to be saved, or did the government say "Oh, you saw what happened when we didn't bail lehman, so now we have to bail you out, because you are too big to fail".
      silly4ily
      • 2 Years Ago
      if they cant sell the cars they make, the shift to making something that will sell. company stays open, people stay at work. it is not the workers fault that the company makes a product that sells slow or not at all. they need to diversify.
        Justin
        • 2 Years Ago
        @silly4ily
        Developing an entirely new product line would take pretty long I'm guessing.
      Basil Exposition
      • 2 Years Ago
      There seems to be a solution that would please everyone. Does the company have any factories outside of France? Close them and move the production to Aulnay. Yes, there will be retooling costs and production costs in France will likely be higher, but it's better than paying people to make cars that aren't being sold.
        silly4ily
        • 2 Years Ago
        @Basil Exposition
        think about what you just said. just because your not laying off people in france, your still laying off people. instead of pigeon holding themselves into only making one type of thing, diversify.
          Basil Exposition
          • 2 Years Ago
          @silly4ily
          The idea is to appease the French government while reducing capacity. I am quite certain the French government is not concerned about layoffs in other countries.
        Val
        • 2 Years Ago
        @Basil Exposition
        PSA has factories in other countries, like spain and czech republic, but moving the cheap models made there to france, where labor costs are really high, will ensure the eventual failure of the whole company. Also, PSA wii get bad name in those countries, where their models are not only made, but sold, so their sales will slump even further.
      Carbon Fibre
      • 2 Years Ago
      Good! The hell, it isn't ethical to drop people than lowering a PERCENTAGE of all stupid executives, spending or stupid concepts they push on Autoshows which are pointless. Good job.
      • 2 Years Ago
      [blocked]
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