World financial crisis

Carmakers cut production and jobs

Article published on the 2008-10-24 Latest update 2008-10-24 12:10 TU

The Peugeot-Citroën factory in Mulhouse, east France
(Photo: AFP)

Carmakers around the world, incluging France's Peugeot and Renault, have announced production and job cuts, amid gobal economic turmoil. Renault is to stop production at French factories for at least a week, while, in the US, GM is to slash white-collar jobs, claiming that a voluntary redundancy programme for production workers has failed to resolve its financial difficulties.

PSA Peugeot-Citroen announced "massive production reductions" on Friday, forecasting a 17 per cent fall in car sales in western Europe in the fourth quarter of 2008 and eight per cent for the year as a whole. Peugeot, which had predicted a five per cent rise in sales, now says they will fall 3.5 per cent.

The company's share price fell 12.55 per cent on the Paris stock exchange following the announcement.

Renault, which on Thursday announced a 20 per cent cut in production, ordered almost all French plants closed for at least a week and shorter shutdowns in Turkey, Russia and Slovenia.

"We are in a period when, without doubt, markets are collapsing and to avoid a brutal degradation in the company's situation, we have to manage stocks in an extremely tight way," a company spokersperson said.

Trade unions say that many French sites will be closed for up to two weeks, claiming that the company was overreacting and that sales are still rising.

The company's plant at Sandouville, northern France, was blockaded by workers Friday, in protest at 1,000 redundancies announced by  the company in July as part of a 4,000-job-reuction scheme.

In Barcelona Thursday, several thousand people demonstrated against Japanese automaker Nissan's plans to slash 1,680 jobs at a local plant, following a 34 per cent drop in US sales in September.

In the US, GM bosses declared in a letter to the Wall Street Journal that an unspecified number of white-collar jobs would have to go. They say that a programme of 9,000 voluntary redundancies announced in July has failed to solve the company's problems.

Since 2005, GM has cut 30,000 blue-collar and 4,000 white-collar jobs and suffered 66 billion dollars (52 billion euros) in losses.

Air France-KLM suffered an eight-per-cent drop in its share price after announcing that it will be "very difficult" for it to meet its earnings target while in Japan, Sony shares fell eleven per cent after forecasting a 59 per cent drop in profits on last year.

Official data in Britain showed the economy shrinking 0.5 per cent in the three months to September, the first contraction since 1992. 

Turkey's central bank started daily dollar auctions in a bid to increase liquidity and prop up its own currency.