Peugeot Seeks Sevelnord Job Cuts and Pay Freeze

May 31, 2012 02:24 PM EDT | Judith Davis

There are some major changing coming for workers at the Peugeot plant in France.  According to Reuters, French automaker PSA Peugeot Citroen (PEUP.PA) has asked workers at its Sevelnord plant to agree to a pay freeze, hundreds of job cuts and other concessions or face possible closure, officials at two unions said.

The company is opening talks on plans to reduce the threatened plant's 2,700-strong workforce, freeze salaries for at least three years, reduce leave and impose more flexible hours, CGT and CGC union representatives told Reuters.

Peugeot declined to comment on plans for Sevelnord. Its ultimatum, if confirmed, echoes tactics successfully employed to wring concessions from workers at Fiat's (FIA.MI) Pomigliano factory near Naples and General Motors' (GM.N) Opel plant in Ellesmere Port, England.

"This amounts to industrial blackmail," said Ludovic Bouvier of the CGT, Peugeot's biggest union. "They want us to set an example that workers in the rest of the group's factories will eventually have to follow."

Peugeot managers outlined their demands on May 25, ahead of formal negotiations to begin on Friday, said Bouvier and Pascal Lucas, his counterpart with the smaller CGC.

Without the concessions, the next generation of Peugeot Expert and Citroen Jumpy delivery vans would be produced in Vigo, Spain, both officials said they were told by plant chief Patrick Labilloy.

Besides the salary freeze, the plan would lead to "several hundred" job cuts, both union officials said. Some of the laid-off workers could eventually be re-hired to produce the new vehicles.

It would also give managers more leeway to impose overtime or the use of vacation days at short notice, in step with production demands, they said.

The Sevelnord plant in northern France, currently shared with Fiat, faces an uncertain future as the Italian automaker prepares to withdraw production of its Scudo van from the joint venture.

Peugeot is in talks with Fiat to unwind the venture before its expiry in 2017 and has said it is seeking a new partner for the factory.

Even with both of those steps completed, "we would still need to ensure that Sevelnord is competitive by comparison to alternative sites," company spokesman Pierre-Olivier Salmon said on Wednesday.

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