Auto Outlook: Peugeot to soften layoffs during job cuts

By AL SWANSON, United Press International   |  July 29, 2012 at 5:30 AM
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French automaker Peugeot, under pressure from the new Socialist government of French President Francois Hollande, still plans to close a plant near Paris.

Peugeot Citroen PSA announced this month it would close a plant in Aulnay, north of Paris, and layoff 8,000 of its domestic French workforce of about 80,000 employees to bring production costs down. Hollande called the job cuts "unacceptable" and told the cash-strapped carmaker to go back and talk to its unions.

Last week, Peugeot management did and said it would press ahead with restructuring but work to soften the impact of any job losses and the closure of the assembly plant, The Wall Street Journal said.

Peugeot Wednesday reported a loss of 819 million euros ($990 million) in the first six months of 2012 as car sales in Europe sag amid economic uncertainty fueled by Greece and Spain.

The French government unveiled a 500 million euro ($605 million) recovery plan for a struggling domestic auto industry that includes a higher consumer incentive for consumers who buy clean green-technology plug-in electric or hybrid vehicles. The French auto industry employs about 600,000 people.

France's Industry Minister Arnaud Montebourg had warned Peugeot not to expect government assistance unless it was willing to make concessions.

"I pledged that there will be no forced layoffs and that we will do what is necessary to reindustrialize the Aulnay site." said Peugeot Chief Executive Officer Philippe Varin after meeting face-to-face with French Prime Minister Jean-Marc Ayrault.

Ayrault also demanded assurances the underutilized assembly plant would be redeveloped, the Journal said.

Peugeot is France's second-largest automaker after Renault, which is partly owned by the French government from previous government bailouts, and is Europe's No. 2 automaker by volume after Germany's Volkswagen.

Job reductions at the Aulnay plant apparently will be accomplished through attrition, reassignment and outplacement of workers to other employers rather than immediate painful layoffs. Wage freezes are likely.

Last week, Peugeot reached a partnership agreement with Toyota to use a plant in Sevelnord in northern France to assemble Toyota-branded delivery vans for sale in Europe as Toyota moves production out of Japan because of the strong yen.

The companies already have a joint partnership producing small passenger cars in the Czech Republic.

2025 U.S. mileage standards ready to be finalized

The U.S. Environmental Protection Agency and the National Highway Safety Administration expect the Obama administration to finalize proposed 2017-2015 fleet fuel-efficiency standards by mid-August.

The proposed Corporate Average Fuel Efficiency, or CAFE, rules would require automakers to produce vehicles that average 54.5 mpg by 2025.

NHTSA said the White House Office of Management and Budget would complete its review by Aug. 14, about two weeks later than the administration had planned.

Thirteen major auto companies, including Ford, GM and Chrysler, signed on to the tough new mileage proposals last year even though automakers said the requirements could cost the industry nearly $158 billion. Industry experts estimate the new mileage standards could add $3,000 to the cost of an average vehicle through 2025.

The Congressional Budget Office in May projected improved fuel efficiency would cut gas tax revenue by $57 billion through 2025, The Detroit News said, and recommended an 18.4 cent per gallon hike in the federal gasoline tax to pay for road repairs and construction.

Presumptive Republican presidential nominee Mitt Romney told the News in a recent interview: "The best approach is to try to build vehicles that people want, rather than having the government telling the companies what they must make."

Fuel economy ranked as the top concern of new car buyers in a Consumer Reports survey released in June, with two-thirds of respondents saying their next car would have to get better mileage than their current vehicle.

German automakers have claimed the proposed CAFE standards are tilted to favor U.S. automakers.

Consumers waiting for a battery breakthrough

Reaching the 300-mile range on a single charge is becoming the Holy Grail for electric car battery technology, and so far no battery has come near that mark.

The New York Times last week reported scientists at the University of St. Andrews in Scotland have demonstrated a stable lithium-air battery pack with four to 10 times more energy storage capacity than conventional lithium-ion batteries.

"We need to go beyond the 300-mile driving range for EVs [electric vehicles]," chemistry professor Peter Bruce told the Times in a telephone interview, "so we need a transformational shift. Lithium-air batteries have potential to provide it."

Science magazine said the lithium-air battery pack only lost 5 percent of its electrical capacity over 100 charge-discharge cycles in a laboratory.

But Bruce said the lithium-air cell still has a long way to go.

"We're just now trying to address the fundamental science challenges," he added.

Ford's first plug-in: the C-Max Energi

Ford engineers say the Detroit automaker's first plug-in hybrid, the 2013 C-Max Energi, will have combined range about 550 miles, the gasoline equivalent of 95 mpg.

Ford recently drove a C-Max from Sacramento to San Diego without stopping for fuel, The Detroit News reported.

The C-Max can go about 20 miles in electric-only mode before its 2-liter, 188-horsepower, 4-cylinder engine takes over -- that's about double the battery-only range of Toyota's plug-in Prius, which has a combined range of about 540 miles.

The C-Max will sell for $29,995 after a $3,750 federal tax credit when it goes on sale this fall.

The 2013 plug-in Chevrolet Volt gets an expanded range of 380 miles -- 38 miles on battery power only -- when it becomes available in showrooms in August.

High traffic deaths up

Traffic deaths took a 13.5 percent jump from January through March, the National Highway Traffic Safety Administration said.

NHTSA estimates there were 7,630 traffic fatalities on U.S. roadways from vehicle crashes in the first quarter, compared to 6,720 during the first three months of 2011 -- the largest quarterly increase in traffic deaths since 1979.

The Detroit News said unusually mild winter may have increased road deaths in 2012 because people took advantage of the warmer weather to drive more.

"The winter of 2012 was also unseasonably warmer than usual in the most areas of the country," NHTSA said. "Consequently, the fatality rate for the first quarter should not be used to make inferences for the fatality rate for the whole of 2012."

Traffic deaths had declined for the last five years and were down 1.7 percent in 2011 to 32,310.

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