Bloomberg News

French Government Urges Renault to Intervene in Supplier Strike

October 04, 2011

Oct. 4 (Bloomberg) -- The French government, Renault SA’s biggest shareholder, urged the carmaker to intervene in a strike at engine-parts supplier Montupet which may curb production.

“We have asked that Renault invite its supplier to show more responsibility,” Industry Minister Eric Besson said today in the National Assembly, the French parliament’s lower house. “We won’t be letting Renault turn a blind eye.”

Workers at Montupet, which provides more than 70 percent of cylinder heads for Renault’s engines and also supplies PSA Peugeot Citroen, are staging a five-week strike at the Ingrandes plant in western France in protest at plans to cut wages.

Renault expects no impact on output “in the short term,” a spokesman said by phone. Both it and Peugeot suffered severe disruption from April’s Japanese earthquake and tsunami, and several Peugeot plants lost additional days of production because of a logistics problem at Agrati, a key supplier.

Renault has stockpiles of cylinder heads and can push sales of unaffected engine models to make the inventory last longer, the spokesman said, declining to elaborate on stock levels.

With President Nicolas Sarkozy trailing Socialist rivals in opinion polls six months before elections, his center-right government is keen to avoid plant closures and layoffs. The state has a 15 percent stake in Renault and two board seats.

The carmaker sold off most French foundries more than a decade ago before repurchasing two of them to improve quality and secure supplies against industrial action. The CGT union, which backs the strike, wants it to buy the Ingrandes plant.

“For the moment it’s unclear whether Renault already has plans to shift production overseas or whether they will be forced to intervene,” CGT spokesman Fabien Gache said by telephone. “We know Renault will be experiencing parts shortages, and some will begin to run out this week.”

The Ingrandes strike intensified after Oct. 30 talks in which Montupet reiterated plans to cut basic pay by 15 percent.

--With assistance from Helene Fouquet in Paris. Editor: Chris Jasper.

To contact the reporter on this story: Laurence Frost in Paris at lfrost4@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


Tim Cook's Reboot
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus