Renault SA, Europe’s third-biggest carmaker, will build the next version of Japanese partner Nissan Motor Co.’s Micra compact car in its home country of France in an effort to use excess capacity, reports Businessweek.
Renault will build about 82,000 Micras a year at its plant in Flins, about 40 kilometers (25 miles) from Paris, with production starting in 2016, the carmaker said today in a statement. The decision is partly the result of a labor- efficiency agreement that Renault, based in the Paris suburb of Boulogne-Billancourt, reached in March with unions, it said.
“This announcement is good news for Flins, but also for all Renault plants in France,” Chief Executive Officer Carlos Ghosn, who also runs Yokohama-based Nissan, said in the statement. “The efforts committed by our employees under the Renault agreement are beginning to bear fruit. Renault is in line to fulfill its commitments.”
The French carmaker is reorganizing production as sales plummet in Europe amid a recession. The deal with unions includes cutting the workforce in France by 17 percent and freezing pay this year in exchange for a pledge not to close any plants in the country for three years.
Renault wants to raise capacity utilization at its French sites to 85 percent by 2016 from 60 percent to 65 percent percent currently, Raluca Barb, a spokeswoman at the carmaker, said today in an e-mail.
Nissan, which is 43 percent-owned by Renault, said in a separate statement that the Micra built at Flins will be sold across Europe. The Japanese carmaker’s other plants are already at full capacity, with no space for the new model, it said.
A factory owned by the Renault-Nissan in Chennai, India, will continue to produce the current version for the Micra and will also manufacture the next generation of the model beginning in 2016, Nissan said.
Three of the four main unions at Renault, representing about 64 percent of its workforce, have approved the contract. It enables Renault to eliminate 7,500 jobs by 2016 through attrition. Labour leaders also agreed to increase the average number of weekly workhours to 35 from 32.
PSA Peugeot Citroen, the biggest carmaker in France and second-biggest in Europe, is awaiting a Paris court decision today that may clear the way for the implementation of a plan to eliminate about 11,200 jobs by 2015 to shore up finances.
Read more of this report from Businessweek.