Peugeot citroen to slash jobs in europe

The West Australian French auto giant PSA Peugeot Citroen says it plans to slash thousands of jobs in Europe as part of an 800 million euros ($A1.07 billion) cost-cutting plan amid a

stagnating European car market. Nearly 6,800 jobs among group employees and subcontractors are at risk. The group announced to unions at a meeting on Wednesday that 800 temporary positions

would be cut in France by the end of the year, a union source said. For 2012, the company said, another 1,000 manufacturing jobs would be cut through voluntary departures, up to 2,500

non-production positions would be eliminated and another 2,500 jobs were expected to be lost by ending outsourcing contracts. The cost-cutting program comes after the company announced that

sales in its cars division fell 1.6 per cent to 9.3 billion euros in the third quarter. However, overall sales rose 3.5 per cent to 13.45 billion euros. "The competitive environment has

become more challenging due to pricing pressure, which has intensified in Europe since September," the company said in a statement. "In this tougher environment, recurrent

operating income for the automotive division is now expected to be close to break-even for the full year," it said. It also noted "negative impacts over the full year of 250

million euros from the aftermath of the (March earthquake) disaster in Japan and 700 million euros from higher raw materials prices". In a separate statement after the union meeting,

PSA said the job cuts "are designed to streamline the group's organisational structures or to adjust project budgets, particularly in sales, marketing, information technology and

research and development". The company, France's largest carmaker and Europe's second-largest after Germany's Volkswagen, employs more than 205,000 people around the

world, including 100,000 in France. It employs 167,000 people in total in Europe. The new plan comes on top of a program announced in 2009 that aims to save a total of 3.7 billion euros. CGT

union representative Bruno Lemerle slammed the plan as "scandalous". "Logically when the results are good, the company should employ people, try to develop," Lemerle

said, pointing to the increased overall turnover figure. "Our workload is excessive as it is, we don't need a reduction in the workforce," he said. With two huge

manufacturers, PSA and Renault, France's car industry is key to the country's economy and accounts for around 10 per cent of the national workforce. PSA chief Philippe Varin met

French Industry Minister Eric Besson after the announcement and insisted that the group's manufacturing presence in France was not in question, the ministry said. PSA "specified

that the decisions announced today do not call into question the PSA group's industrial presence in France", the ministry said in a statement. The company said it expected growth

in the European market to stabilise this year, but for sales to grow seven per cent in China, six per cent in Latin America and 30 per cent in Russia. The company also said on Wednesday it

plans to make new investments to double its production capacity in Brazil. GET THE LATEST NEWS FROM THEWEST.COM.AU IN YOUR INBOX. Sign up for our emails