Like U.S. Firms, French Automaker Stalls

Renault factory in Le Mans i i

hide captionA Renault steel frame factory in Le Mans, France. The French automaker plans to close almost all of its plants in France for one or two weeks as the car market slows.

Jean Francois Monier/AFP/Getty Images
Renault factory in Le Mans

A Renault steel frame factory in Le Mans, France. The French automaker plans to close almost all of its plants in France for one or two weeks as the car market slows.

Jean Francois Monier/AFP/Getty Images

Just like their American counterparts, European carmakers have been hit hard by the financial crisis. A slowing economy has forced auto manufacturers in Germany and France to slash output as production stockpiles far outpace demand.

In the French town of Le Mans, a temporary halt in production at the Renault factory has many people worried about the town's future and its identity. The name Le Mans is synonymous with car racing. Every June, the racing world turns its attention to the 24-hour test of endurance that takes place on the roads of Le Mans.

A few miles from the famous race course, all is silent at the Renault plant, which has shut down production for two weeks. Union leader Michel Feuvrier says it's not just Renault employees who are affected, but thousands of others who work for companies in the area that supply Le Mans' biggest employer.

"Le Mans is very attached to the car industry, and these plant closures are really going to affect us if they continue into the new year," Feuvrier says. "We don't feel it so much now because it's only the first weeks, but if it keeps up, you're going to see the car industry disappear from this area."

New-car sales in France have dropped 8 percent in the past year, and Renault shares have plummeted 77 percent. The French car industry employs 10 percent of the nation's workforce.

Christelle Fromage, who has been with Renault 27 years and designs chassis, believes Renault is using the crisis as an excuse to transfer jobs to plants in places like Romania, where labor is cheaper.

"Renault is doing well," Fromage says. "Let's not exaggerate things. Of course salaries are higher here in France than places like Romania, but we're doing fine and our cars are well-priced."

Jacques Tessier, 43, is at home instead of working his shift on Renault's production line. He says watching TV has helped take his mind off things.

"I've put my life on hold, waiting for the future to get better," he says. "There's really not much else to do. You have to try to be positive, but it's not easy."

Tessier's worst fear is that Le Mans will go the way of Renault's plant in the town of Sandouville in Normandy. One thousand jobs are being cut there as part of Renault's plans to lay off 6,000 workers worldwide.

Last month, workers burned tires and fought with police during a visit to the Sandouville plant by French President Nicolas Sarkozy. He wants the EU to provide $50 billion to help European carmakers develop greener automobiles.

But helping to restructure Renault is not necessarily the best way to help Le Mans, says Serge Danilo, editor of the town's principal newspaper, Le Maine Libre.

"Le Mans is still an industrial city, so in any downturn, we're the first to lose jobs," Danilo says. "We have to develop our service industries like other towns. Nantes and Rennes have done that, and they're doing better than we are."

Many people in Le Mans doubt Renault will ever play as big a role in the city's economic life as it did in the past. Town officials are trying to attract new employers with infrastructure projects like the city's new light rail system. And, to encourage innovation, Le Mans will stage a separate, 24-hour endurance race next year — this one for environmentally friendly cars.

Correction Nov. 14, 2008

The audio as well as an earlier Web version of this story incorrectly referred to the Le Mans "speedway." In fact, Le Mans is not run on a track but on a circuit of closed public roads.

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