So PSA Peugeot Citroen launched its latest round of union negotiations this week with – what on the face of it – seems an extraordinarily generous offer to its labour bodies.
In a nutshell, the French automaker has pledged not to close any factories and is aiming to commit to a 1m annual vehicle volume, provided unions sign up to a deal which would see pay increases put into deep freeze next year, coupled with what PSA coyly describes as ‘moderate’ rises in 2015 and 2016.
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The manufacturer appears to be predicating its figures on Europe returning to a 15m unit volume by 2016 – which considering the current moribund numbers stubbornly hovering around the 11m mark – seems to be taking a remarkably generous punt on a Continent-wide recovery.
Analysis during the summer from LMC forecast the Western Europe car market at 11.41m units – down 3.1% compared to last year – and despite the UK standing almost alone in bucking the gloomy trend I wonder which bits of the Continent PSA is banking on to trigger its 1m annual production.
Those rather upbeat flames of hope by PSA were slightly doused by one analyst I spoke to from Germany’s oldest private bank – Metzler – who poured some cold water on the French automaker’s wish list.
“[The] 15m units – probably seems a bit too optimistic – the recovery will probably be a very slow one with perhaps a 2%-3% increase – 15m seems optimistic,” said Metzler automotive analyst, Juergen Pieper.
PSA appears to be offering a pretty good deal to the unions – who in Western Europe hasn’t had pay restraints or freezes during one of the most prolonged recessions in a generation? – but given the current over-capacity how will it be able to commit to no closures?
It has already announced the shuttering of Aulnay – along with up to 8,000 redundancies – and who’s to say there won’t have to be more in the pipeline – the elephant in the room that must make President Francois Hollande have one eye on his electoral chances next time round.
French unemployment is already a huge issue and although even though Paris’ economy is showing signs of stirring into life, the last thing the politicians need is yet another huge wave of redundancies.
But across the Atlantic, the US took some pretty brutal medicine along the way to what appears to be a genuine recovery in its auto sector, so why would Europe, or more particularly, France be immune from further plant closures?
Juergen Pieper again from Metzler: “It [offer] seems a little less harsh than closure [s],” he said. “It seems they are really compromised on that side.
“Of course what we see very often [with] a closure – Opel discussed some 15 years about it and finally they do it. To some degree, we expected an outcome like that.”
Perhaps the unions are scenting blood with a nascent Eurozone recovery widely touted – if hardly visible in Southern Mediterranean countries.
“It looks like the business is starting to improve just a little. Maybe with this new 308 coming, the market is starting to stabilise a little,” said Pieper “So perhaps this is a reason to be a bit more friendly towards the unions.”
But really – is PSA asking the world of its labour bodies? Well, perhaps yes according to what many see as its most militant branch, the Confederation Generale du Travail (CGT).
I spoke to one French union leader this week and I said let me guess the one labour body that has reacted with hostility to the deal – was it by any chance the CGT? ‘Bingo’ – I paraphrase – he replied.
I’ve been speaking a lot lately to the National Union of Metalworkers of South Africa (NUMSA), which has been engaged in a massive series of walkouts and its official language is remarkably similar to the strongly left-leaning CGT.
Their French brothers at the CGT had this reaction to PSA’s plan this week: “We call on workers to not themselves be smoked out by this fool’s bargain,” they thundered, at the same time barely drawing breath before dismissing the 1m vehicle production offer as a “virtual commitment.”
There’s a lot of ‘ifs’ and ‘buts’ in PSA’s aspirations, but in a depressed French domestic market, not to mention a still downtrodden Europe, the automaker’s unions could do well to grab this offer while it’s on the table.
Apart from the usual refuseniks, PSA’s plan could well strike a chord with its organised labour, but they will be sure to be probing with a sharp scalpel, the detail of guaranteed volume and factory pledges against future forecast projections.
But at least there’s an inkling of a concrete plan – with some notable union exceptions surely the rest of the labour bodies should take it.
