Automotive News Europe reports that Faurecia, France’s largest auto supplier, will slash more jobs in western Europe as it simultaneously boosts production in low-cost countries.
The restructuring of the supplier’s manufacturing base “will continue year after year,” CEO Pierre Levi said at the presentation of Faurecia’s first half results here. “The shift took place two years ago, when we started renewing our products.”
Faurecia cut 1,341 jobs in the first half, mostly in Germany, France and Spain. The work force reduction cost the company €62.4 million in redundancy payments compared with €23.9 million in the first half of last year. In 2004, Faurecia employed 60,000 people worldwide.
Levi said more jobs will be lost. He predicts that the cost of labor cuts, along with the write off of assets such as closed plants, “is about to double to €100 million annually.”
Faurecia’s move highlights the cost pressure auto suppliers are under, as well as the growing internationalization of its clients. For instance, PSA/Peugeot-Citroen is creating new production capacity of more than 500,000 cars a year in eastern Europe alone.
“As rising raw material costs make business conditions even tougher, the trend [in shifting production outside western Europe] will probably gather speed,” said Yann Lacroix, an economist with French credit insurer EULER HERMES SFAC in a July bulletin.
An example is Faurecia’s seating business, which contributes nearly half its revenue – €2.5 billion of the company’s €5.6 billion first-half total.
Gerard Chochoy, head of Faurecia’s seating operations, said the company wants “in a few years” to produce 60 percent of its seats in low-cost countries compared with 30 percent in 2005.
Automotive News Europe