Exclusive: Renault seeks French labor deal to cut costs

PARIS Thu Sep 27, 2012 10:14am EDT

1 of 2. Renault Chief Operating Officer Carlos Tavares addresses reporters on media day at the Paris Mondial de l'Automobile September 27, 2012. The Paris auto show opens its doors to the public from September 29 to October 14.

Credit: Reuters/Christian Hartmann

PARIS (Reuters) - French automaker Renault (RENA.PA) will ask unions for a new nationwide deal on pay and conditions to avert mass layoffs of the kind announced by troubled rival PSA Peugeot Citroen (PEUP.PA), Chief Operating Officer Carlos Tavares told Reuters.

Faced with a sustained European auto-market slump, Renault is pressing workers to enter talks on aligning French wage and production costs with plants in Spain and the UK, Tavares said in an interview at the Paris auto show on Thursday.

"We're not asking for the moon," Tavares said. "We're talking about benchmarks."

Renault's No.2 executive said unions were mindful of the situation at Paris-based Peugeot, which plans to cut more than 10,000 jobs, close one assembly plant and shrink another.

"They understand that it's urgent," Tavares said. "The contrast with our French competitor is helping them to understand that it's better to discuss how we fix the situation."

Renault has called a meeting with worker representatives on October 8 at which managers are expected to table a roadmap for "difficult" negotiations on labor concessions, a Renault union official said.

"In the current context, we realize that we will have to negotiate," said the union leader, who asked not to be identified.

"We will have to offer concessions on flexibility in particular - but there will have to be guarantees on domestic jobs and production in return."

Peugeot, currently losing 350 euros ($450) on every car sold in Europe, plans to shutter its Aulnay plant near Paris in what many industry executives expect to be the first of several closure announcements in a region blighted by excess capacity.

Europe's second-biggest automaker also won labor concessions including a pay freeze, reduced leave and more flexible hours at its Sevelnord plant in northern France after threatening to close the site.

Renault's nationwide approach will seek to match production costs to those of its plant in Palencia, Spain and Japanese affiliate Nissan's (7201.T) factory in Sunderland, northeast England, Tavares said.

The French automaker "would prefer to have an overall deal that covers the whole country" but remains open to plant-by-plant talks if preferred by unions, he said.

(Editing by James Regan)

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