It looks like François Hollande’s honeymoon will be short indeed. We’re only two months into the first Socialist presidency France has seen in nearly two decades, and already French automakers are facing significant layoffs and plant closures. The FT reports that French manufacturer Peugeot is planning to cut one of its plants near Paris, as well as cutting more than 6,000 jobs.This may sound somewhat routine for America, but it is alarming for France; the FT describes the layoffs as “an industry taboo.” Nor will this be the end of automotive layoffs. The piece goes on to estimate that tens of thousands more jobs could be cut if nothing changes. To make good on his campaign promises, Hollande would have to get the government involved, and there are some hints that it may indeed step in to aid struggling car manufacturers:
Aulnay’s closure was widely expected but the move will pose problems for the French government, which is facing a wave of industrial redundancies which threatens tens of thousands of jobs.Arnaud Montebourg, industry minister, is to present a plan for state support for the auto sector to the government on July 25.
This puts Hollande in a pickle. The Socialist government cannot afford to see factories closing down and workers losing their jobs. This means every company in France can now extort money from the government by threatening to close. Don’t be surprised if other French companies begin vocally threatening layoffs in the hopes of recieving similar treatment from the state.The French socialists believe in subsidizing industry to keep jobs and friends. Industry, knowing this, will have its hand out.