Peugeot Weighs Cutting Another 1,500 French Jobs, Union Says

Jan 22, 2014 6:55 am ET

(Updates with union meeting in third paragraph.)

Jan. 22 (Bloomberg) -- PSA Peugeot Citroen, Europe’s second-largest carmaker, is considering cutting an additional 1,500 jobs in France in the face of continued production overcapacity in the region, a union leader said.

“Our sources internally are telling us that management estimates the overstaffing in France at about 1,500 positions,” Jean-Pierre Mercier, a CGT union official at Peugeot, said by phone. “They may plan to cut these jobs through voluntary redundancies.”

The cuts would come on top of the 11,200 French positions to be eliminated by Peugeot by 2015 under its current restructuring plan, Mercier said. Peugeot human resources chief Philippe Dorge is holding a meeting this afternoon with unions. Jean-Baptiste Thomas, a Peugeot spokesman, declined to comment.

The 118-year-old manufacturer is planning a capital increase of 3 billion euros ($4.1 billion) after burning through 4 billion euros in the last two years as auto demand in its European home region sank. The new funding is equal to 78 percent of Peugeot’s value and follows a share sale in March of 2012 to raise 1 billion euros in which General Motors Co. bought a 7 percent stake that it later sold.

The stock today gained as much as 57 cents, or 5.5 percent, and traded up 4.9 percent as of 12:51 p.m. in Paris. The shares have climbed 77 percent in the last 12 months, valuing the manufacturer at 3.88 billion euros.

The CGT union has clashed in the last year with management, opposing the closing of Peugeot’s Aulnay plant on the outskirts of Paris, and unsuccessfully filing suits to block Chief Executive Officer Philippe Varin’s restructuring plan to stem losses at the French manufacturer.

--Editor: Chad Thomas