Renault axes 15,000 jobs in cost-cutting reboot

Says its global ambitions had been unrealistic as it shrinks production, restructures plants

PARIS: Renault acknowledged that its global ambitions had been unrealistic, announcing plans to cut about 15,000 jobs, shrink production and restructure French plants as it pressed the reset button and sought to banish the spectre of Carlos Ghosn.

Faced with a slump in demand that has been exacerbated by the coronavirus pandemic, the French carmaker detailed plans on Friday to find €2 billion ($2.22 billion) in savings over the next three years.

“We thought too big in terms of sales,” said interim Chief Executive Clotilde Delbos, adding the company was “coming back to its bases” after investing and spending too much in recent years.

Renault was under pressure even before Covid-19 hit, posting its first loss in a decade in 2019, and has said nothing would be “taboo” as it reviews its business. It plans to trim its global capacity to 3.3 million vehicles in 2024 from four million now, focusing on its most profitable models and areas such as electric cars while freezing manufacturing expansion in countries like Romania.

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.

“The mindset has completely changed. The previous line was volumes and sales and being the first on the podium,” Delbos said. “We’re not looking to be on top of the world, what we want is a sustainable and profitable company.”

Renault, which is 15% owned by the French state, faces the most sensitive restructuring measures in its home country, which will shoulder almost a third of the global job cuts and faces potential plant closures.

In all, just under 10% of Renault’s global workforce will be affected by layoffs, and restructuring measures will cost €1.2 billion. There will be about 4,600 job cuts in France, though Renault said it would prioritise employment transfers, voluntary departures and retirement schemes.

Published in The Express Tribune, May 30^th, 2020.

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