Peugeot Citroen plans 8,000 job cutsContinue reading the main story
French carmaker Peugeot Citroen has set out plans to cut 8,000 jobs and close an assembly plant outside Paris as losses mount.
Peugeot said the Aulnay plant near Paris, which employs 3,000 workers, would stop production in 2014.
Last week, Peugeot said its first-half sales had fallen 13% amid a "profound crisis" in its eurozone markets.
Another plant, at Rennes in western France, is set to shed 1,400 posts from the 5,600 it employs there.
Another 3,600 jobs would be lost across all facilities in France.
Peugeot's chairman, Phillipe Varin, said the situation was grave.
PSA Peugeot Citroen's jobs cut announcement is a sign of the problems faced by mass-market carmakers in Europe.
Over the past couple of years, companies that make high profit margins from selling luxury cars, such as Audi, BMW and Mercedes, have done very well.
Relative newcomers Kia and Hyundai have also enjoyed great success, with competitively priced models made in ultra-modern, hi-tech factories in the Czech Republic and Slovakia.
Traditional mass-market carmakers, such as Peugeot, as well as Renault, Opel/Vauxhall, Ford, Fiat and Toyota, are stuck with old-fashioned factories and well-paid workers demanding more.
Unable to compete with the newcomers on price and without the brands needed to attract profitable luxury buyers, they find themselves stuck in the middle where the European motor industry's excess capacity is most acute.
"I am fully aware of the seriousness of today's announcement, as well as of the shock and emotions they will arouse in the company," he said in a statement.
He said "the depth and persistence of the crisis" made the reorganisation necessary and that workers who lost their jobs would receive support and help in finding new employment.
Around half of those currently employed at Aulnay would be offered new jobs at Peugeot's other Paris plant at Poissy.
One CGT union leader, Jean-Pierre Mercier, said: "Varin has declared war on us, and we'll give him war."
Workers at the threatened plant stopped work after the announcement.
In an interview with Europe 1 radio, French Social Affairs Minister Marisol Touraine said the cuts were "unacceptable".
The French Prime Minister, Jean-Marc Ayrault, said the government was studying the closure plan, which he called a "great shock".Competition
Peugeot's sites are working well below capacity, with the average operating at 76% of their potential.
It said that the output of its smaller cars - which account for 42% of sales - was worse than average as many of its competitors operated in lower-cost markets.
The carmaker said it expected to report a loss for the first half of this year and to return to break-even by the end of 2014.
Earlier this year, Peugeot announced a 1bn-euro (£800m; $1.2bn) savings programme on top of headcount cuts of 6,000 announced last November.
Peugeot also this year entered into an alliance with GM of the US, under which GM takes a 7% stake in Peugeot, making GM the second-biggest shareholder in the French firm after the Peugeot family.
The company said the effects of that deal would not be felt until after 2014.