Renault to Cut Over 14,000 Jobs -- WSJ
May 30 2020 - 3:02AM
Dow Jones News
By Nick Kostov
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (May 30, 2020).
PARIS -- Renault SA is planning to slash production capacity by
a fifth and cut more than 14,000 jobs around the world, as the
French auto giant grapples with a prolonged slump in the global car
market.
The company said Friday that measures would include
restructuring its plants in France, reducing the number of parts it
uses in its vehicles and cutting marketing expenses. It hopes to
save EUR2 billion ($2.2 billion) in fixed costs a year by 2022.
The planned moves, similar to cuts announced at partner Nissan
Motor Co. on Thursday, represent an effort to downsize the company
after a bid to expand sales around the world never came to pass.
Renault had hoped to sell more than 5 million cars a year by 2022,
but last year sold less than 3.8 million.
"We thought too big in terms of sales. We have structured
ourselves for a company size that we have never achieved," said
Clotilde Delbos, Renault's acting chief executive.
Global auto sales peaked in 2017 and have been declining since.
More recently, the coronavirus pandemic has exacerbated auto
makers' struggles.
Renault has also had to grapple with management upheaval
following the 2018 arrest of former CEO Carlos Ghosn on charges of
financial misconduct, which he denies. Mr. Ghosn's successor lasted
less than a year in the job before being pushed out. The company
has struggled to regain its footing, and last year reported its
first annual loss in a decade.
Reflecting current uncertainty, Renault executives have declined
to make any financial predictions for 2020.
Earlier this week, Renault and its partners Nissan and
Mitsubishi Motors Corp. announced they would divide up the global
car business, aiming to cut duplicate spending to save billions of
dollars a year. That plan allows Renault to design small cars and
compact SUVs for its partners, while leaning on its partners for
vehicles it is less good at, like larger SUVs.
On Friday, Renault said it plans to cut production costs by
roughly EUR650 million, engineering costs by EUR800 million and
find EUR700 million in savings on marketing expenses and support
functions.
However, those plans are still in draft form. Renault will now
start discussions with unions and local authorities. The company's
incoming chief executive, Luca de Meo, is expected to come up with
a new product strategy to present around the end of the year. The
former Volkswagen AG executive was appointed in January but won't
start in the job until July because of a noncompete provision.
The plan is already generating friction, with workers at
Renault's plant in Maubeuge in Northern France going on strike on
Friday, according to union officials. That plant produces small
vans for the European market.
In all, Renault said it would cut around 4,600 jobs in France,
with more than 10,000 jobs cut in the rest of the world. Four
production sites in France, including parts factories, will be
under review and the company is also planning to reverse course on
planned capacity increases in Morocco and Romania and shrink
gearbox manufacturing world-wide.
Overall, the plan -- set to cost around EUR1.2 billion to
implement -- is expected to reduce Renault's capacity to produce
vehicles by almost 20% to 3.3 million annually.
Renault shares fell 5% on Friday but are still up around 20% for
the week. Investors have cheered Renault's moves, as well as the
French government's plans to get consumers buying cars again by
subsidizing the purchase of electric and hybrid vehicles.
The French state has also pledged to support Renault by backing
a EUR5 billion credit facility to help it ride out the pandemic.
Ms. Delbos, the interim CEO, said that agreement is expected to be
finalized in the coming days. However, French President Emmanuel
Macron has said the state won't sign off on the credit facility
until the company and unions reach an agreement over some of its
plan to reshape its workforce in France.
Write to Nick Kostov at Nick.Kostov@wsj.com
(END) Dow Jones Newswires
May 30, 2020 02:47 ET (06:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.