French government offers €6bn bailout to car industry
The French government, in its bid to bail out struggling car industry from deep crises, has offered a €6bn aid package, with a condition that companies would keep all domestic plants running. The aid package, to be announced in next few days, would bind car makers, including giants Peugeot-Citroen and Renault, to forswear executives’ bonuses and freeze share dividends.
Responding to the government’s offer, Peugeot-Citroen’s president, Christian Streiff, stressed need for urgent flow of liquidity, but cautioned that companies should not be dictated by the state on how to run their businesses.
A big slump of 15% in European car sales and freeze on new cheap credits by banks has put French automobile industry in deep crises, particularly the manufacturers of parts that are struggling to survive.
Speaking at industry summit in Paris, French Prime Minister, Francois Fillon, declared that government was prepared to bail out the automobile industry, which provides 10% of all wage-earning jobs in France and employs 2,500,000 people.
But he warned that the government’s aid will not come as a blank cheque. The state will not be helping those manufacturers which decide to close any plant in France. According to the industry minister, Luc Chatel, the government was ready to help the industry to tide over short-term cash problems by offering the €5bn to €6bn aid package. In turn the government would seek a freeze on executive bonuses, shareholders’ dividend and the closure of plants.
Prime Minister Fillon urged European Commission to speed up its decision making and commented that “When there is fire, you have to act rapidly”. The announcement has been welcomed by the industry with reservations on certain conditions put forth by the government.
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