We thought too big, Renault says as it axes 15,000 jobs
in cost-cutting reboot
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[May 29, 2020] By
Gilles Guillaume and Sarah White
PARIS (Reuters) - Renault acknowledged that
its global ambitions had been unrealistic, announcing plans to cut about
15,000 jobs, shrink production and restructure French plants as it
pressed the reset button and sought to banish the spectre of Carlos
Ghosn.
Faced with a slump in demand that has been exacerbated by the
coronavirus pandemic, Renault detailed plans on Friday to find 2 billion
euros ($2.22 billion) in savings over the next three years.
"We thought too big in terms of sales," said interim Chief Executive
Clotilde Delbos, adding the company was "coming back to its bases" after
investing and spending too much in recent years.
The French carmaker was under pressure even before COVID-19 hit, posting
its first loss in a decade in 2019, and has said nothing would be
"taboo" as it reviews its business.
It plans to trim its global capacity to 3.3 million vehicles in 2024
from 4 million now, focusing on its most profitable models and areas
such as electric cars while freezing manufacturing expansion in
countries like Romania.
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Renault, like its Japanese alliance partner Nissan, is rowing back on an
aggressive expansion plan pursued by Ghosn, its former
boss-turned-fugitive, who is wanted on charges of financial misconduct
in Tokyo. Ghosn denies the charges.
"The mindset has completely changed. The previous line was volumes and
sales and being the first on the podium," Delbos said. "We're not
looking to be on top of the world, what we want is a sustainable and
profitable company."
The company, due to bring ex-Volkswagen executive Luca de Meo on board
as CEO in July, said it would cut costs by reducing the number of
subcontractors in areas such as engineering and the number of components
it uses, as well as shrinking gearbox manufacturing worldwide.
Delbos ruled out the need for a rights issue, saying Renault was close
to sealing a 5 billion-euro credit line guaranteed by the French
government.
Renault shares were down 5% by 0820GMT, the worst performing stock on
France's blue-chip index.
THIRD OF CUTS IN FRANCE
Renault, which is 15% owned by the French state, faces the most
sensitive restructuring measures in its home country, which will
shoulder almost a third of the global job cuts and faces potential plant
closures.
The carmaker said it was in talks with unions. Six sites out of
Renault's 14 plants in France - including a component factory in
Brittany and the Dieppe factory where the group's Alpine cars are made -
will be under review, though most changes would take effect after 2022,
Delbos said.
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![](../images/052920pics/busine39.jpg)
Renault workers and union representatives, wearing protective face
masks, gather at the main entrance of the Renault factory in
Choisy-le-Roi near Paris, France, May 29, 2020. Renault said on
Friday it was launching talks with unions to restructure several
French car plants, potentially leading to closures, as it confirmed
plans to cut around 15,000 jobs worldwide. REUTERS/Charles Platiau
![](http://archives.lincolndailynews.com/2020/May/29/images/ads/current/rohlfs_lda_072017.png)
Some of the six plants like the one in Flins, close to Paris, where it makes its
electric Zoe models, could cease to assemble cars and centre on recycling
activities instead, the company said.
The government has said it will not sign off on the state-backed loan until
management and unions conclude talks over jobs and factories in France. It is
seeking further clarity on how some big factories will be reorganised and
further guarantees on jobs before it gives the green light, according to a
source familiar with the matter.
In all just under 10% of its global workforce will be affected by layoffs, and
restructuring measures will cost 1.2 billion euros. There will be about 4,600
job cuts in France, though Renault said it would prioritise employment
transfers, voluntary departures and retirement schemes.
French unions expressed frustration.
"This plan is unbalanced, at the expense of French activities," the moderate
CFDT union said on Friday, adding that other countries had been less affected.
GETTING OVER GHOSN?
Renault is still struggling to move on from the scandal involving Ghosn, which
strained its relations with alliance partner Nissan and paralysed joint
projects.
Ghosn, who ran Renault and was the chief architect of the alliance, was arrested
in Japan in late 2018 on financial misconduct charges, but fled to Lebanon in
December. He has denied wrongdoing and hit out at his past employers.
Renault and Nissan have been hit hard by the pandemic just as they were trying
to rework their partnership. Nissan this week also outlined a plan to become
smaller and more efficient.
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They were among the weakest global automakers going into the crisis, lacking a
clear plan for using their alliance to emerge from the slump and share the
burden of investing in electric vehicles and other technology.
(Reporting by Gilles Guillaume and Sarah White; Editing by Jane Wardell, Jason
Neely and Pravin Char)
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