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France - Business climate falls, PSA sacks -300 agency staff

25 October 2011

The Business Climate Index, based on the views of top management across the main sectors of business activity, fell by -1 point to 95 points in October 2011 after having fallen by -9 points in September 2011, according to the latest analysis by the National Institute of Statistics and Economic Research (INSEE).

Since September 2011, the Index has therefore remained below its long-term average of 100 and has fallen in all sectors of business activity except the retail trade where it rose slightly from 93 points in September 2011 to 94 in October 2011.

Following the downturn in the business climate, car manufacturers, who were largely responsible for the growth in agency temporary employment in 2010, have now begun to slow down their operations.

Renault yesterday announced its first measures of re-introducing reduced working hours. Its factory in the Northern French town of Douai will close its doors between 26 October and 1 November 2011.

Factories in Flins (Yvelines) and Sandouville (Seine-Maritime), as well as the factory in Novo Mesto in Slovenia will close between 29 October and 1 November 2011.

Carlos Ghosn, Chairman and CEO of Renault, commented to Le Monde newspaper "customers are still buying but if they get nervous we will end up in unknown territory."

Ghosn expects the European car market to contract slightly by "between -1% and -2% but the decrease could reach as much as -5% or more if France and Germany fail to agree on a rescue plan for the Euro.

Competitor PSA (Peugeot, Citroën), whose Q3 2011 results were below expectations, has decided to put an end to the contracts of -300 agency temporary employees at its Aulnay (Seine-Saint-Denis) factory. The CGT union fears that the Aulnay factory might be closed down altogether.

Staffing levels at the Sevelnord (Nord) and the Madrid (Spain) factories are currently under review.

Philippe Varin, President of the Board of Directors of PSA, commented at the recent Frankfurt car exhibition "we have to prepare ourselves for more difficult times."

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