Cutbacks at France's Peugeot and Renault meet growing resistance

Labour tensions at France's car makers took a turn for the worse on Tuesday as Renault factory workers protested over planned cuts and PSA Peugeot Citroen's restructuring plan suffered a legal setback.

While Renault staff demonstrated at the company's Flins plant west of Paris and Peugeot workers marched on the company's Paris headquarters, the car makers pursued union talks on plans to improve productivity and eliminate close to 8,000 jobs each.

"As things stand now, the conditions are unacceptable," CFDT union chief Laurent Berger said of Renault's proposals for a new nationwide labour deal.

Peugeot, the car maker worst hit by Europe's deep auto sales slump, is struggling to shed costs and lift sales in its effort to return to profit in 2015. Renault, while cushioned by earnings from its Dacia low-cost cars and a 43.4 percent stake in Japan's Nissan <7201.T>, is also grappling with industrial overcapacity as sales of French-built models plunge.

The CFDT, France's biggest private-sector union, also increased pressure on Renault boss Carlos Ghosn by echoing calls from within President Francois Hollande's socialist government for a cut to the chief executive's salary.

"Workers can't be asked to make sacrifices unless the CEO is asked to make sacrifices," Berger said on BFM Television.

The government, Renault's biggest shareholder with a 15 percent stake, attempted to trim Ghosn's pay at a board meeting in December, Finance Minister Pierre Moscovici said in a Monday radio interview, without giving details.

Ghosn earned 2.79 million euros ($3.76 million) from Renault in 2011 and 9.92 million from Nissan in its corresponding financial year, making him one of the highest-paid CEOs in France or Japan.

About 500 workers staged a protest in front of Renault's Flins plant, where production of the Clio has dwindled as more of the sub-compact vehicles are assembled in Turkey.

COURT ORDER

Renault is cutting 7,500 jobs over three years without compulsory redundancies and is demanding union concessions on pay, flexibility and working hours in return for guarantees to keep French plants open.

Unions, meanwhile, are demanding firm commitments on production volumes in France as part of any deal.

Peugeot's plan to close a plant and eliminate 8,000 positions across France faces possible delays after the Paris Appeals Court ordered a temporary halt to the restructuring to allow additional consultations with workers.

At the Peugeot Aulnay plant, earmarked for closure in 2014, production of C3 sub-compacts continued at a trickle amid continuing protests.

Workers from the plant, which reopened on Monday after a strike and 10-day closure this month, were called upon by the CGT union to march on Peugeot's Paris headquarters.

Negotiations on the cuts continued on Tuesday, but final implementation must now wait until Peugeot also completes formal talks ordered by the court at two sites belonging to parts division Faurecia .

The CGT union had challenged the plan by arguing that Peugeot had failed to consult workers at two Faurecia sites that would be affected directly.

"It's a restructuring that has an impact on Faurecia's activities," CGT lawyer Fiodor Rilov said. "As a result, workers' representatives have to be informed and consulted."

Peugeot shares were down 1 percent at 6.24 euros at 1408 GMT, wiping out a gain of about 1 percent before publication of the court ruling. Renault was up 1.7 percent at 44.75 euros.

Peugeot insisted that talks on the cutbacks were proceeding normally on Tuesday and will continue for two more scheduled sessions on February 5 and February 12.

"The negotiations are not suspended and will continue to make progress," a company spokesman said. He gave no new time frame for implementation, which the company had aimed to begin in February or March. ($1 = 0.7429 euros)

(Additional reporting by Nicholas Vinocur; Editing by David Goodman)