Peugeot slashes 8000 French jobs
French carmaker PSA Peugeot Citroen has shocked France with an announcement it will cut 8000 jobs, sparking union anger and underlining the country's competitiveness problems.
Unions slammed the announcement as a "declaration of war" and an "earthquake", with the hardline stance certain to add to the problems facing the new Socialist government as it deals with France's flagging economy.
President Francois Hollande was elected in May on a promise to put the economy back on track, focusing on growth rather than austerity measures adopted elsewhere in Europe in the face of the eurozone debt crisis.
Mr Hollande has expressed his "deep concern" over the cuts to the government and has told officials "to do everything possible to limit the social consequences of this plan".
Prime Minister Jean-Marc Ayrault said the layoffs were "a real shock" and announced the government would present its rescue plan for the struggling auto industry on July 25.
Peugeot shares initially jumped on Thursday on news of the layoffs, but then tumbled to their lowest level in more than 20 years after Minister of Industrial Renewal Arnaud Montebourg said the government did not accept the plan.
"We do not accept the plan in its current state," Mr Montebourg told the Senate, without saying what pressure the government could bring to bear on the company.
Global Equities trader Xavier de Villepion said: "The fact that the government is opposed to this plan is a bad sign. The group will have to make very high payouts, apparently more than planned, and that's creating a lot of uncertainty, leading investors to sell PSA shares."
The stock ended the day down 1.74 per cent to 7.02 euros.
Mr Montebourg said he had named an expert, Emmanuel Sartorius, to look at the company's finances and decide whether the layoffs are "necessary and proportionate". Sartorius is to present his conclusions by the end of July.
PSA, France's biggest carmaker and second in Europe to Germany's Volkswagen, said it expected the European market to shrink eight per cent this year and had to adjust its business in the face of the worsening outlook.
