Hollande accepts Renault?s shedding of 7,500 jobs but takes on Mittal for cutting a fraction of this
Given the unending economic mess in the eurozone, it is not surprising that Renault, like many of its European counterparts, is struggling to balance its books. The European car market could hit a 20-year low this year, with car registrations in 2012 being 8% less than 2011. Worse, Renault has been hit the hardest with yoy new car registrations declining by over 19% in 2012. So, in order to size up more investment capacity in such tough times, Renault plans to cut 7,500 jobs by 2016 at its French plants?a move that could save up to 400 million euros?through natural wastage and voluntary retirement schemes.
Renault?s axing of jobs in France, like ArcelorMittal?s before it, is dictated by the plunge in European demand in the face of debt crises and austerity measures. It is something most sensible companies do, so it is welcome that despite French President Fran?ois Hollande?s anti-layoff stance, the government has not criticised the company or threatened to penalise it in any way. In which case, what is one to make of the government threatening a ?temporary nationalisation? of LN Mittal?s Florange plants when Mittal wanted to layoff a mere 630 workers? Arnaud Montebourg, French minister for industry, who bluntly told Mittal that he is ?not welcome? in France, hides behind the pretext that Renault?s plans do not include direct layoffs?but voluntary retirement is a surreptitious method of getting rid of redundant labour.
To outsiders, this reeks of protectionism, and preferential treatment for French companies. And clearly sends the wrong signals to foreign investors. At a time when French unemployment is over 10%, and its economy in doldrums?GDP growth in 2011-12 was a mere 1.4%, and is expected to be 1.5% for 2012-13?France can ill-afford this hypocrisy.
