July 8, 2012 / 6:39 PM / 5 years ago

France eyes structural change to save auto sector

3 Min Read

PARIS (Reuters) - France will not let its auto industry collapse and plans to unveil structural measures to help the struggling sector stay afloat, French Finance Minister Pierre Moscovici said on Sunday, as the threat of closure looms over a major production center.

Moscovici said a plan to save the auto sector, which was first floated this week by Prime Minister Jean-Marc Ayrault, would be unveiled in the next month, including job-saving solutions for a Peugeot PSA (PEUP.PA) factory near Paris.

"We will have to take measures in the coming month," he told BFM news television. "There will be a plan for the auto industry, we will not abandon the automobile industry."

"We have trust in PSA and we will find solutions that are both balanced and respectful of jobs."

Hinting at a plan that could touch on high labor costs and rigid contracts which French auto constructors say make them less competitive, he added: "We will also need structural measures for this industry, which is in a strategic position."

Moscovici, whose home constituency is in France's industrial east, home to automobile producers, has taken a keen interest in the sector's fate as declining European car sales force France's remaining car makers to slash costs.

He presided over the ACSIA group of carmaking regions which published a report in late June calling for a "new deal" to save the car industry by reorienting French production toward smaller vehicles and taxing big polluters.

The plan would have to come in time for a Peugeot PSA works council meeting this month, at which company executives are expected to announce the closure of its plant at Aulnay-sous-Bois, near Paris, union officials said. The plant employs some 3,500 people, with an additional 10,000 subcontractors.

A symbol of industrial decline, France's car sector lies at the heart of a debate on restoring French competitiveness ahead of a summit on social affairs next week, as hardline union CGT warns about an upcoming wave of 75,000 job cuts.

Laurence Parisot, head of the MEDEF employers' union, told Europe 1 that France should follow the example of U.S. President Barack Obama, who told U.S. carmakers that a taxpayer-funded bailout would be contingent on a restructuring of their sector.

"Everyone needs to understand that if we want our companies to become efficient again and powerful world leaders in five or ten years, there will have to be efforts, that we will have to accept restructuring," she said.

Reporting by Nicholas Vinocur; Editing by James Dalgleish

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