French President Emmanuel Macron is hoping to use national and EU financial firepower to rescue crucial companies and bolster their roles as champions — that makes Renault a problem.
The French carmaker is bleeding red ink and on Friday announced a three-year restructuring plan, with 4,600 jobs set to go in France alone as part of a global effort to cut costs by €2 billion.
The pandemic, which saw Renault’s car sales in France fall by 83.8 percent in April, has only accelerated the carmaker’s decline to a struggling brand buckling under the weight of a costly transition to clean mobility while locked in a troubled alliance with Japanese automaker Nissan.
“The kind of [health] crisis we have just come through has forced us to act,” said Renault’s Chairman Jean-Dominique Senard at a press conference announcing the restructuring plan. He said the coronavirus had simply made the need to reform “more urgent.”
Jobs cuts, closing factories and angry workers are a problem for Macron.
The French government has announced an €8 billion rescue package for the car industry, as well as a promised state guarantee for a €5 billion loan for Renault — as long as the carmaker strikes a deal with its unions over factory closures and joins fellow French carmaker PSA in the Commission-led project to build a European battery industry for electric cars.
On Friday, Senard said the company didn’t need the cash yet. He was also lukewarm on the need to invest in battery cell technology. “In batteries we are very well supplied for the years to come,” he said.
However, interim CEO Clotilde Delbos did say that electric motor production would be repatriated to France from China.
Saving companies like Renault — in which the French state has a 15 percent stake — is part of Macron’s post-pandemic vision of building up national and European champions able to do battle on global markets. The government gave Air France a €7 billion bailout, part of which involved assurances that the airline would continue to buy aircraft from Airbus — another industrial champion.
In comparison to PSA, which turned a profit and is gearing up to merge with Fiat Chrysler, Renault is in a much more difficult spot. It posted a €141 million loss last year, its alliance with Nissan is in tatters, and it needs to slash production.
The restructuring plan will see Renault cut 15,000 jobs worldwide, and start talks with its unions over what to do about excess production at some of its 14 French plants. “Today the company can longer take the weight of the expenses given the collapse of the market,” said Senard.
Renault is leaving the big decisions until after July 1 when Luca de Meo, the former boss of Volkswagen unit Seat, takes over as CEO.
“Why make a rather sad announcement like that of job losses without announcing a development plan,” asked Senator Olivier Jacquin, a French Socialist senator working on transport. “It’s a bit surprising from that point of view.”
Getting the job cuts out of the way now might clear the decks for new corporate leadership to set out long-term goals, but it does nothing help Macron steer his government through a major economic crisis. The prospect of mass redundancies also exposes him to political pressure. “When the government is putting €8 billion on the table, this cannot be done without putting conditions for the development of an industrial strategy,” said Sébastien Jamuel, a Communist MP for Dieppe in the north of France where Renault has a plant. “Industrial sovereignty must be regained, but not only in the world of words, but also actions and demands that the shareholder state must make.”