Peugeot shuts plant

French automaker PSA Peugeot Citroen announced 8,000 job cuts and the closure of an assembly plant as it struggles with mounting losses, in a move that could hasten a wave of restructuring in western Europe.

The Aulnay plant near Paris, which employs more than 3,000 workers, will stop making cars in 2014 as part of a drive to reorganize Peugeot’s under-used domestic production capacity, the company said on Thursday.

It will be the first car plant to cease production in France for 20 years, posing a challenge to new Socialist President Francois Hollande’s objective of reviving industrial production.

The government said it was studying the closure plan but stopped short of condemning it, incurring the wrath of France’s biggest industrial union, the hard-line CGT.

Prime Minister Jean-Marc Ayrault promised in a statement to ensure that Peugeot helps laid-off Aulnay workers find new jobs and said ministers would present a wider auto industry support plan July 25.

A second factory in the western city of Rennes will shed 1,400 of its 5,600 jobs as the company downsizes in response to shrinking demand for larger cars such as the Peugeot 508 and Citroen C5. Some 3,600 non-assembly jobs will also be scrapped across the company.

"I am fully aware of the seriousness of today’s announcements," Chief Executive Philippe Varin said in a statement. "The depth and persistence of the crisis impacting our business in Europe have now made this reorganization project indispensable."


/Reuters/