France: Peugeot cuts 8,000 jobs, closes factories

As the market expected, French automobile manufacturer Peugeot-Citroen announced on Thursday morning they were cutting 8,000 posts in France.

Peugeot registered an operational loss of 700 million euros in the first quarter. At the time, it warned they would see a reduction of European sales by 8 percent for the year but have now revised the figure to 10 percent.

The main factory hit by the losses will be the closure in Aulnay-sous-Bois in 2014 where 3,000 workers will be impacted. The factory in Rennes will also experience deep cuts in workers. Peugeot hopes the reduction in workers will take place through voluntary retirements.

This is the first auto closure in France in 20 years since the closure of Renault at Billancourt.

Peugeot CEO, Philippe Varin, said in a statement he understands the full gravity of the announcement of job losses and emotions upon the workers impacted by the reconstruction.

Peugeot was the first car maker in Europe to suffer from a decrease in sales in Europe, starting last summer, particularly in the Mediterranean countries such as Spain, Italy and Greece. European sales of Peugeot saw a loss of 15.2 percent where 61 percent of its sales are made. The group has begun outreach to developing nations such as China and Russia but financial difficulties have halted investment.

On Sunday, French economic minister, Pierre Moscovici, said the government would not let the auto industry fail. "We have confidence that Peugeot and us will find equitable solutions while respecting employment," he said.

With the business reconstruction in place, Peugeot expects to see operation cash flow equalize at the end of 2014.