Tough Pechiney Job Cut Plan Angers Unions

Angry labour unions denounced a tough cost cutting plan at Pechiney that entails 4,000 to 5,000 jobs cuts worldwide, saying they were considering possible action.

We are going to fight. But it is premature to say what form our action will take, one union source said.

Labour representatives are due to meet management on September 27 to discuss the plan but are already thinking about taking action in October though no date has yet been set.

Pechiney's announcement follows plans by arms-maker Giat Industries to shed 2,741 jobs and appliance maker Moulinex to cut 2,600 jobs, most of them in France. Engiineering group Alcatel Alsthom may end up shedding some 30,000 jobs worldwide under its restructuring plan, analysts estimate. On Thursday Pechiney announced that an important part of the savings generated by the Challenge cost-cuting plan would come from a 16 per cent reduction in the total wage bill, with half of the savings to be found in France. The group employs 37,000 worldwide, of which 17,000 are in France.

The plan may lead to 4,000 to 5,000 job cuts by end-1998. In France the job reductions will come from up to 500 redundancies and 1,000 through early retirement. Use of flexible working would save 1,200 jobs. The programme will avoid relocating plants abroad where costs are cheaper and will involve the closure of one French foundry.

Labour unions immediately reacted to the announcement with a joint statement from five trade unions denouncing the job losses as unacceptable, while the CGT union called on employees to organise opposition.

Pechiney predicted on Thursday that provisions for its Challenge cost-cutting plan would push the group into the red in 1996. Chairman Jean-Pierre Rodier told reporters that the exact amount of provisions, which include up costs of shedding up to 1,500 jobs in France, was not yet known but would include two FFr2 billion ($388.9 million) in restructuring costs and result in a loss for the year.

The Challenge plan has identified FFr4 billion ($777.4 million) in cost savings to be made by the end of 1998 and is Pechiney's bid to match the profitability of its best competitors.

Alongside the savings, about FFr3.5 billion will be invested in the next three years to modernise plants. Analysts said they were less concerned over possible unions unrest at Pechiney than over the levels of provisions linked to the restructuring.