Peugot’s woes show dire state of EU industry
EUROPE’S battered manufacturers could be about to embark on a major series of restructurings and layoffs, analysts warned as Peugeot Citroen announced plans to close one factory and scale down operations at another.
The French government has pledged to keep the plants open and stop the plan which would see 8,000 jobs cut.
But the company warned it will post a net loss in the first half of 2012, and a €700m (£554m) operating loss in the core car-making division.
Analysts warned the move could open up the floodgates on a wave of restructurings, with others including Renault, Fiat and Opel all considering or engaged in changes.
The government has appointed an expert to examine Peugeot’s finances, which will report back in a fortnight, with social affairs minister Marisol Touraine saying “we cannot accept something like this.”
It came as official data showed that industrial production in the Eurozone fell 2.8 per cent in the year to May, with French output down 3.8 per cent, Italy’s down 6.9 per cent and Spain’s down 6.1 per cent.
Meanwhile an Italian government debt auction provided some slight respite from the crisis.
In a sale of one-year notes, the state raised €7.5bn at an interest rate of 2.697 per cent – down sharply from 3.97 per cent just a month ago, showing tensions have receded slightly.
However, markets are still unconvinced the Italian government is safe – its 10-year borrowing costs still stand at a worryingly high 5.91 per cent.