Renault to bring home Slovenia production line

Saturday, March 21, 2009 at 1:13 AM Posted by Beijing News


Carmaker Renault said Friday it is shifting a production line from Slovenia to Paris to meet a jump in demand and denied the move was linked to a pledge to keep jobs in France in exchange for state aid.

The French auto giant said it was ramping up production of its small Clio II and Twingo cars, which are both produced in Slovenia, after trade-in bonuses in several European countries boosted demand for the models.

Since the Slovenian plant of Novo Mesto is already running at full capacity, production of Clio cars would be shifted temporarily to Flins near Paris, it said.

The move would create work for 400 people in Flins from June to October, while the spare capacity freed up at Novo Mesto would enable it to ramp up production of the Twingo.

Renault's announcement set off alarm bells at the European Commission whose competition spokesman said it would seek guarantees from Paris that the move is not protectionist and complies with EU free trade rules.

The Commission pounced on comments by France's Junior Minister for Industry Luc Chatel, who linked Renault's decision to the state's bailout for the auto sector, saying it was proof the six-billion-euro plan was working.

National champions Renault and PSA Peugeot Citroen both pledged not to close French factories or dismiss French workers in exchange for the aid package.

President Nicolas Sarkozy, welcoming Renault's decision, insisted it would not cost any Slovenian jobs.

"This is not about cutting jobs in Slovenia," the president told a press conference at an EU summit in Brussels. "It doesn't take a single job from our Slovenian friends and it creates jobs for Flins."

Commission head Jose Manuel Barroso later toned down suggestions of a row, saying: "I think there was a misunderstanding."

"We have been informed that the company in question is planning to increase its output in France but without abandoning its production in another country," Barroso said.

Slovenian Prime Minister Borut Pahor also played down the situation.

"As far as I'm informed it is very normal, it's okay," he told reporters, saying he had discussed the transfer with Sarkozy.

The carmaker's subsidiary in Slovenia, Revoz, also insisted it was an operational decision aimed at making up for a shortfall in capacity at Novo Mesto, 80 kilometres 50 miles east of Ljubljana.

"This decision is not a relocation of production but an addition to the production at Flins," Revoz said in a statement.

"Faced with the sharp increase in demand for the Twingo and Clio II models which are currently produced in Slovenia, we were unable to meet market demand," it said.

Revoz separately plans to ramp up production at Novo Mesto from 750 to 880 vehicles per day -- including a small number of Clio cars -- and to employ more 150 people, it said.

Brussels later said it was satisfied the French plan complied with European Union trade rules.







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