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Renault workers gather in front of the Fonderie de Bretagne, a subsidiary of Groupe Renault, in Caudan, France, May 28, 2020. Picture taken May 28, 2020. REUTERS/Stephane?Mahe Image Credit: REUTERS

PARIS: Carmaker Renault said on Friday that it would cut nearly 15,000 jobs, including 4,600 at its core French operations, as it seeks to steer out of a cash crunch exacerbated by the coronavirus crisis.

The company will target savings of more than two billion euros (Dh8.1 billion, $2.2 billion) over three years and turn its focus to electric vehicles as it seeks to restore competitiveness in a market reeling from slumping sales, after the Covid-19 pandemic forced millions of people into home confinement for weeks on end.

Renault had been navigating turbulent waters even before the health crisis, starting with the shock arrest of its former boss Carlos Ghosn on financial misconduct charges in 2018, which led to deep rifts in its alliance with Japanese partners Nissan and Mitsubishi.

“The difficulties encountered by the group, the major crisis facing the automotive industry and the urgency of the ecological transition are all imperatives that are driving the company to accelerate its transformation,” it said in a statement.

In February, Renault announced it had suffered its first net loss in a decade last year, followed quickly by the 2020 health crisis that saw new car registrations in the European Union plunge 76.3 per cent year-on-year in April.

In an “adjustment” plan announced to unions which AFP reported on Thursday, Renault said nearly 4,600 jobs would be cut out of 48,000 in France, and more than 10,000 in the rest of the world — some eight per cent of the company’s global workforce.

It would entail retraining, internal mobility and voluntary departures, spread out over three years, with no outright dismissals envisioned for now.

Expansion plans in Morocco and Romania have been halted, and are under review in Russia.

‘We don’t understand’

Four production sites in France could be closed or restructured, the automaker said, and its hulking factory at Flins northwest of Paris will stop making the Zoe electric hatchback from 2024.

Overall, production capacity will be cut to 3.3 million by 2024 from four million vehicles currently.

“We want to generate economies of scale to restore our overall profitability and ensure our development in France and internationally,” Delbos said.

The news came as a bombshell in Choisy, south of Paris, where about a hundred workers and local representatives gathered at a Renault plant on Friday morning.

It employs some 260 people and is alone among 14 French production sites earmarked for closure by 2022 under the plan, according to its chairman Jean-Dominique Senard.

“First we hear the news about Renault’s difficulties in the media, then they tell us we will close to go to Flins. It’s a shock ... We don’t understand how it’s possible,” said Antonio Perez, 52, who has worked at the Choisy site for over 20 years.

Added his colleague Farid, 43: “Now we know, we know that we have no future ... They just drop us in the middle of a pandemic, they throw us out on the street.”

Future ‘likely to be harsh’

The mayor of Choisy, Didier Guillaume, also expressed his concerns.

“Our region has already been marked by the deindustrialisation of the 1980s. What is hard to understand is that we are an exemplary site, engaged in a sustainable development approach,” he said.

“It is the last remaining production plant in the inner ring (bordering on the Ile-de-France region of Paris) and the second private employer of the municipality. The future is likely to be harsh.”

On Tuesday, while announcing an eight-billion-euro rescue plan for France’s car industry, which has seen sales and revenue slashed by some 80 per cent, President Emmanuel Macron said he wanted no production of any car model made in France to move elsewhere.

Macron’s plan is heavily focused on bolstering France’s electric car industry, and he said Renault had agreed to join a Franco-German project to produce electric batteries.

This had been a condition for Renault to receive a five-billion-euro government rescue loan, along with guarantees from the company over the future of staff at plants in Maubeuge and Douai in northern France.

The French government holds a 15 per cent stake in Renault.

On Wednesday, alliance partners Renault, Nissan and Mitsubishi unveiled a plan to deepen an alliance that just months ago appeared on the verge of breaking up.

The previous day, Nissan reported a $6.2 billion annual net loss and said it would shut its Barcelona plant and slash production.