French unions are cautiously welcoming today’s (25 September) news PSA Peugeot Citroen has offered to commit to a 1m annual vehicle volume coupled with a pledge not to close any factories during the next three years in exchange for wage restraint.
If accepted by PSA labour bodies, the deal would see production rise from the current 930,000 vehicles per year to around 1m models in 2016 assuming 15m units will be sold in Europe by that date.
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In return, PSA is asking across-the-board pay increases to be frozen next year, while for 2015 and 2016, rises would be “moderate and defined” depending on progress on the 2015 Rebound plan and financial results.
“It is wage moderation and flexibility,” a PSA spokeswoman told just-auto from Paris. “To have plants running when demand is there and to be able to slow down when the market is down.”
Any acceptance will be subject to forensic scrutiny by unions, but PSA maintains such a volume would allow the Group to maintain production levels in all its assembly and mechanical component plants as well as foundries, with no closures.
“Each party demands something from the other – everyone has to do their bit,” CFTC union leader Franck Don told just-auto from Paris. “It is not finished yet – now we have to sign the social plan.
“Today, workers are ready to make efforts on condition there will be a return to profitability and to good fortune – there will be flexibility asked of course,” said Don, adding there was no guarantee no factories would be shut “without asking for a modification of salaries.”
Further details of PSA’s proposals include a production launch of at least one new model in each assembly plant during the 2014-2016 period, expanding the commitment to maintain these plants in operation beyond the 2016 medium-term plan.
Some EUR1.5bn (US$2.03bn) in capital expenditure has been committed to the French plants from 2014-2016, despite a reduction in overall Group capital expenditure and R&D spend during the same period.
“We still have high financial security – our financial situation is not a risk at all – we have what we need to make these investments,” added the PSA spokeswoman.
“If you take what we have invested in our plants and the products in France during three years until now, it is EUR1.1bn and we are speaking about going to EUR1.5bn. It is our money.”
PSA is declining to comment on what will happen if unions reject the deal – and there is already speculation one labour body will not ink the agreement – but did concede “the question was asked” should no signature be achieved.
“We do not place ourselves in a position where we would not sign,” said the PSA spokeswoman. “We are optimistic about unions signing this agreement.”
The French automaker added it would also commit to retaining an R&D base in France with 75% of such work remaining in its home country in 2016.
The pledge would see France stay home to upstream research and engineering, powertrain design and development, platform module design and development and, in a majority of cases, new body style development.
This will see PSA R&D operations maintained at the upstream research and engineering centres in Vélizy and La Garenne overseeing research, innovation, modular strategy and upstream design and engineering on behalf of the entire Group; the development centres generally located near the plants in La Garenne, Sochaux and Vélizy; and the test centres located near the development facilities in Carrières-sous-Poissy, Belchamp and La Ferté Vidame.
See also: FRANCE: No more factory closures says PSA
