UPDATE 2-Renault wins union support to cut pay and jobs

Wed Mar 6, 2013 9:22am EST

* Force Ouvriere signs deal with large majority

* Renault shares rise 3 pct (Adds details from union, trader comment, background)

By James Regan and Gilles Guillaume

PARIS, March 6 (Reuters) - French carmaker Renault has won agreement from unions for a nationwide deal on pay and conditions that it says will boost its competitiveness, as a second union gave its backing to the plans on Wednesday.

Renault aims to cut 7,500 posts in France by 2016 mainly through natural turnover, equivalent to 14 percent of French staff, and wants to freeze salaries in 2013, win flexibility to switch staff between sites and lengthen average working hours by 6.5 percent.

The deal, which follows months of talks, will be a victory for Renault Chief Executive Carlos Ghosn, who had threatened to shift some production out of France if its workers there did not yield on efforts to reduce high labour costs.

Force Ouvriere, Renault's second-biggest union, said in a statement that it had decided by a large majority to sign the new agreement.

The decision follows a similar move by Renault's main union, the CFE-CGC, last month, giving the group enough support to validate the accord. The CFE-CGC represents 29.67 percent of staff, while Force Ouvriere represents 15.62 percent.

"The project will be presented to the central works council on March 12," Force Ouvriere representative Laurent Smolnik said, adding that it could be signed as early as the next day.

A Renault spokesman confirmed that the accord could be signed as early as next Wednesday.

To be valid, the deal has to be signed by at least two unions and must not have 50 percent or more of votes against.

The CGT union has already said it would not sign the agreement. The CFDT union was not immediately reachable for comment.

Shares in Renault extended their gains to be up 3.5 percent at 51.7 euros by 1315 GMT. The stock is up 25 percent since the start of the year.

"This is very positive news and reinforces our conviction that Renault will be able to improve its profitability in France," a Paris-based trader said.

The CFE-CGC had said its signature on any deal would come only in return for concrete assurances on numerical production targets for each factory involved.

Force Ouvriere said it had agreed to a deal in return for a commitment by Renault to build at least 710,000 vehicles in France, including 80,000 for partners. It also insisted that staff would only move around sites on a voluntary basis.

Renault said during negotiations in January that it could produce an extra 80,000 vehicles a year at its domestic factories for partners Nissan or Daimler.

Renault has been pushing workers to accept a deal to enable it to cut costs and align productivity with cheaper European sites such as its Palencia plant in Spain and alliance partner Nissan's Sunderland factory in England.

Automakers across Europe are cutting costs and capacity so they can still turn a profit while the euro zone debt crisis and resulting government austerity measures sap consumer demand.

Domestic rival PSA Peugeot Citroen is struggling to reverse mounting losses by scrapping more than 10,000 domestic jobs and closing an assembly plant near the French capital.

Executives from top players including Ford, Fiat , Daimler and Renault warned at the Geneva car show this week that demand in Europe would stay weak for years.

French car registrations fell for the 15th consecutive month in February, down 12 percent, as a weak economy continued to weigh on demand for new vehicles, according to the CCFA auto industry body.

French Industry Minister Arnaud Montebourg issued a statement to say he planned to hold a press conference on the automobile industry at 1100 GMT on Thursday. (Additional reporting by Blaise Robinson; Editing by Christian Plumb and Elaine Hardcastle)

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