PSA Peugeot Citroen, a renowned French automaker plans to close a plant and to cut 8000 jobs to improve the firm’s financial situation in difficult economic and political times. Philippe Varin — CEO of PSA Peugeot Citroen made clear that the company will report a net loss for the first half of 2012 as European demand continues to fall, down eight per cent in 2012. The Aulnay plant, responsible for building the Citroen C3 will be the first French car factory to shutdown in 20 years. Employing more than 3000 workers, the production operation in this plant will be ceased in 2014. It is expected that the production will be combined with the firm’s Poissy plant, where the Peugeot 208, Citroen C3 and Citroen DS3 are built.

“A company can’t preserve jobs when it’s burning 200 million euros ($241 million) a month in cash. Prevaricating would have put the group in great danger,” Varin said. According to him the depth and perseverance of the crisis impacting the trade in Europe have now made this reorganization project indispensable in order to schedule production capacity with foreseeable market trends. The company now wants to get back the track and secure the future of the group in France.

Following the announcement of closing the plant, the workers at Aulnay plant downed tools and halted production. Jean-Pierre Mercier, the representative of CGT, France biggest industrial union, said that “Varin has declared war on us, and we’ll give him war.” Besides, Peugeot may also shed 1400 of its 5600 employees at another plant in Rennes. The automaker claims that job cuts are due to the low demand for large cars like the Peugeot 508 and Citroen C5. However, the group is offering workers assistance towards further employment solutions.

In March, General Motors bought a seven per cent stake of the French marque, but the French government never supported the company in the same way US leaders propped up GM and Chrysler following the global financial crisis. Meanwhile reports say that the global sales of Peugeot fell 13 per cent in the first six months of 2012 to 1.62 million.

via Caradvice