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Group Renault to suspend planned capacity increase projects in Romania and Morocco
Group Renault announced on Friday it was suspending planned capacity increase projects in Romania and Morocco as part of a plan to reduce fixed costs globally. According to a press statement released by the French group, the objective of reducing fixed costs by more than 2 billion euros over 3 years aims to restore the group's competitiveness and ensure its long-term development.
"The difficulties encountered by the group, the major crisis facing the automotive industry and the urgency of the ecological transition are all imperatives that are driving the company to accelerate its transformation. The draft plan will strengthen the company's resilience by focusing on cash flow generation, while keeping the customer at the centre of its priorities. It is based on a more efficient approach to operational activities and rigorous management of resources," the statement says.
The plan includes, among other measures, suspension of planned capacity increase projects in Morocco and Romania, study of the adaptation of the group's production capacities in Russia, study of the rationalisation of gearbox manufacturing worldwide.
Global production capacity is slated to be revised from 4 million vehicles in 2019 to 3.3 million by 2024, as production headcount will be adjusted.
"If Groupe Renault plans to make the necessary workforce adjustments to enable a return to profitable and sustainable growth, it is committed to ensuring that they are carried out through exemplary dialogue with social partners and local authorities.This workforce adjustment project would be based on retraining measures, internal mobility and voluntary departures. It would be spread over three years and would concern nearly 4,600 posts in France, to which would be added the reduction of more than 10,000 other positions in the rest of the world," the statement points out.
The project also includes improving efficiency and reducing engineering costs, by taking advantage of the strengthened assets of the alliance streamlining vehicle design and development( reducing component diversity, increasing standardisation), and optimising resources (concentration of the development of strategic technologies with high added value in engineering sites of Ile-de-France; optimization of the use of R&D centres abroad and subcontracting; optimization of the means of validation through the increased use of digital).
"In a context of uncertainty and complexity, this project is vital to guarantee a solid and sustainable performance, with customer satisfaction as a priority. By capitalizing on our many assets such as the electric vehicle, by capitalizing on the resources and technologies of Groupe Renault and the Alliance, and by reducing the complexity of development and production of our vehicles, we want to generate economies of scale to restore our overall profitability and ensure our development in France and internationally. This project will enable us to look to the future with confidence," Clotilde Delbos, interim Chief Executive Officer of Renault, is quoted as saying in the statement.
Renault, Nissan and Mitsubishi previously announced on May 27 a new business co-operation model to leverage leader-follower scheme to enhance efficiency and competitiveness in products and technologies.
In a joint statement, the three producers announced that individual members will be reference for the regions where they have key strengths, acting as a gateway and as a support mechanism for partners' competitiveness. Nissan will be the reference for China, North America and Japan; Renault in Europe, Russia, South America and North Africa; and Mitsubishi Motors in ASEAN and Oceania.
According to Reuters, Renault, like its Japanese alliance partner Nissan, is rowing back on an aggressive expansion plan pursued by Ghosn, its former boss-turned-fugitive, who is wanted on charges of financial misconduct in Tokyo. Ghosn denies the charges.
Ghosn, who ran Renault and was the chief architect of the alliance, was arrested in Japan in late 2018 on financial misconduct charges, but fled to Lebanon in December last year. He has denied wrongdoing and hit out at his past employers.
Renault and Nissan have been hit hard by the pandemic just as they were trying to rework their partnership. Nissan this week also outlined a plan to become smaller and more efficient.
The pair were among the weakest global automakers going into the crisis, lacking a clear plan for using their alliance to emerge from the slump and share the burden of investing in electric vehicles and other technology.
Germany’s BMW also confirmed on Friday that it was in talks with its works council over job cuts, but declined to provide concrete figures. News agency dpa reported the carmaker plans to slash around 6,000 jobs, 4.8% of the carmaker’s total.
PM Orban: Discussions with Renault Romania management led to no conclusion regarding lay offs
Prime Minister Ludovic Orban has stated that discussions with the management of the Renault Group in Romania led to no conclusion regarding the existence of a decision at management level "to reduce part of the activities or make layoffs." Orban added that in Romania the car manufacturer has "an extremely profitable activity, a beneficial activity". "This is a decision of the company's management, as far as we, as the Government, are concerned, we have a very close collaboration with the Romanian management of the Dacia-Renault Group. Basically, the Renault Group in Romania has over 2,000 engineers working in design, it has the test part, the verification part, which is unique and which take places at Titu, we also have the production part in Mioveni. We had several discussions until now with the management of this company, but we couldn't draw any conclusion yet if they planned to reduce their activity in Romania or make layoffs," Orban told a press conference in Targu Mures.
He added that "everything depends on the market, on the existing orders" and stated that "in Romania, the Renault Group has an extremely profitable activity, a beneficial activity". "It is an activity that, from our point of view, must continue. It is a known fact that the decisions were taken or whatever is decided at the level of the Group is decided at the level of the entire Renault Group as a result of a period in which there were certain problems, but my conviction is that the problems that existed, at the level of the Renault Group, are not caused by the activity in Romania, because the activity in Romania is an extremely profitable activity, a well-organised activity and an activity that benefits the Renault Group as a whole," said Orban.
He answered after being asked about the Renault Group's intentions to lay off 15,000 employees worldwide and whether he had discussed the issue with the Romanian carmaker's managers.