September 25, 2012 1:31 pm

Peugeot warns of state interference

Directors at PSA Peugeot Citroën will be looking on with wry amusement as Tom Enders, EADS chief executive, seeks to make his company “normal” by cutting the stake held by the French government, writes James Boxell in Paris .

Mr Enders hopes that stripping the French government of its veto rights over senior appointments and strategic decisions, while diluting its shareholding from 15 per cent to 9 per cent, will stop Paris meddling in the aerospace company’s affairs.

The experience of Peugeot in recent months, which has decided to close a car plant just outside Paris and cut about 6,000 French jobs, suggests he may be in for a surprise even if he gets his way on cutting the stake.

Unlike many of the country’s large industrial groups, including rival carmaker Renault, the French state does not own a share of Peugeot.

But this has not stopped ministers hauling in its chief executive to complain about the Aulnay plant closure, with Socialist French president François Hollande criticising the company for allegedly acting dishonestly by delaying job cuts until after recent elections and for having a poor strategy and favouring dividends over investment.

By contrast, Renault, in which France owns a 15 per cent stake, has been largely left alone in recent years to pursue an international partnership with Nissan of Japan and quietly shift parts of its production to eastern Europe and north Africa.

In the end, Mr Hollande appears to have conceded that he will have to swallow Peugeot’s restructuring, just two months after describing it as “unacceptable”.

But the political attacks on Peugeot over recent weeks have done little to help the struggling company’s share price, which has halved in six months.

Unions met again with Mr Hollande on Thursday to discuss the fate of the Aulnay plant, the country’s first such closure in 20 years. But they said they had not received any commitment to halt the job cuts.

“We are satisfied to have obtained the promise of a tripartite meeting [between unions, Mr Hollande and Peugeot management] with the strong support of the president, but he has not commited to freeze the restructuring,” said Tanja Sussest of the SIA, Aulnay’s biggest union.

This is a long way from the promises earlier in the summer, when the leftwing CGT union threatened “war” over the Aulnay closure.

Some industrial executives believe the more measured response shows that the power of France’s trade unions is sometimes overstated, with private sector membership down to just 8 per cent of employees.

“You only have to look at the small numbers of people protesting outside Aulnay’s gates to get a sense that the workers in large part accept that the company is going to do this,” said a senior executive at a large French manufacturer.

Even Arnaud Montebourg, the leftwing industry minister who led the charge against the Peugeot family shareholders over the Aulnay closure, has since recognised that the company has little choice but to restructure because of chronic overcapacity and its heavy exposure to the struggling French, Spanish and Italian car markets.

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