PSA Peugeot-Citroen Group to Slash 8,000 Jobs in France as its European Sales Tumble

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French automobile group PSA Peugeot-Citroen has announced a major restructuring plan that will see the company shutting down one factory and axing some 8,000 jobs in its home market as a response to dwindling sales in Europe.

For the first time in two decades, the company will close a factory in France, the Aulney production site near Paris, which will result in the loss of 3,000 jobs. The company will also shed 1,400 jobs from the Rennes factory and some 3,600 positions in other French sites.

The 8,000 layoffs announced Thursday are in addition to 6,000 job cuts announced last year. Overall, the group employs some 100,000 workers in France and a total of 209,000 worldwide.

PSA Peugeot-Citroen said that the reorganization was necessary as the company is heavily reliant to Europe where its sales tumbled 15 percent in the first five months of the year compared to a 7.3 percent drop industry-wide adding that it faces a €700 million (US$858 million) loss in the first half of the year alone.

The automaker said that capacity utilization in the Group's European plants fell to an average of 76% in first-half 2012, down from 86% in 2011.

"I am fully aware of the seriousness of today's announcements, as well as of the shock and emotions they will arouse in the Company and its stakeholding environment," said PSA Chairman Philippe Varin.

"The depth and persistence of the crisis impacting our business in Europe have now made this reorganisation project indispensable in order to align our production capacity with foreseeable market trends. We are committed to implementing the proposed measures while pursuing exemplary social dialogue and profoundly respecting our values," he added.