Renault to cut 14,600 jobs worldwide in race to slash costs

Paris

RENAULT plans to eliminate about 14,600 jobs worldwide and lower production capacity by almost a fifth, under a cost-reduction drive aimed at outlasting the downturn rocking the global auto industry.

The plan includes cutting almost 4,600 positions in France, or about 10 per cent of the carmaker's total in its home country, through voluntary retirement and retraining, the company said on Friday.

Another more than 10,000 jobs will be scrapped in the rest of the world, trimming a global workforce of about 180,000 people.

The measures round off a decisive week for Renault and its Japanese partners Nissan Motor and Mitsubishi Motors, drawing a line under a two-decade era of aggressive expansion under the alliance's former leader, Carlos Ghosn, who was arrested in late 2018. A slump in consumer demand and factory shutdowns to slow the Covid-19 pandemic have forced their hand, with shrinking head counts and production cuts now a priority.

Renault acting chief executive officer (CEO) Clotilde Delbos said on a call with analysts and reporters: "We have spent and invested too much and will now come back to our base." She added that the focus will turn to profitability and away from the race for volumes.

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To achieve savings of more than two billion euros (S$3.15 billion) over three years, Renault's plan will cost about 1.2 billion euros to implement. The carmaker flagged possible adjustments to capacity in Russia, but held off on decisions about the future of six sites in France amid political furore and union opposition.

Instead, talks will begin on various scenarios, including phasing out car assembly at the Flins plant, which builds the Zoe model, and Dieppe, where the Alpine A110 sports car is assembled.

Renault has been at the centre of a political maelstrom in recent weeks over its plans to downsize in France while seeking a state-backed loan of five billion euros to bolster reserves.

French Finance Minister Bruno Le Maire warned on Thursday that he would not sign the cheque until he had examined the company's strategy "site by site", with closures being "a last resort".

At the same time, he said, Renault's manufacturing capacity is roughly three times what is needed this year.

The government is Renault's most powerful shareholder and has representation on its board. In exchange for the auto-industry stimulus package, the state has called for manufacturers to commit to keeping production and research in France. Renault and rival PSA Group have pledged to increase local production of electrified vehicles and components.

"If we do nothing, Renault is in danger," Mr Le Maire has said. While pledging to stand by the company, he has urged the automaker not to close the Flins factory and to give careful consideration to the situation at Maubeuge and Douai.

Renault said Friday it would consult unions on plans to transfer Choisy-le-Roi activities to Flins, where recycling would be developed. The company pledged to study a reconversion of Dieppe, the future of Caudan (in Fonderie de Bretagne) and examine Maubeuge and Douai. BLOOMBERG