Valeo to cut 5000 jobs as outlook darkens

By Lawrence J Speer, Automotive News Europe

Auto-parts supplier Valeo will eliminate 5 000 jobs worldwide in response to declining car production and a pessimistic outlook for 2009.

The French company said the "sharp drop" in output will reduce its revenue 25 percent and result in a loss for the current quarter.

There will be "no improvement in production levels" next year, the company said in a statement.

Valeo said its annual operating margin will fall to about 2.6 percent for the year, down from 3.1 percent in the third quarter.

In October, ceo Thierry Morin said the company was on track for an operating margin similar to last year's 3.6 percent.

The global decline of automobile sales has decimated these projections and forced Valeo to cut costs by shedding workers.

Management informed the pan-European employee works council of plans to cut about 5 000 jobs, with a priority on voluntary departures.

Valeo plans to cut about 1 600 jobs in France, where it employs 15 400 people, and an additional 1 800 elsewhere in Europe.

The remaining head-count reduction will come from Valeo's global operations. The company employs about 54 000 workers in 27 countries.

"Faced with a worsening global economy, and against a backdrop of sharply declining automobile production, Valeo is adapting to the situation in order to maintain its competitiveness," Morin said in the statement.

The reductions will be discussed on 8 January in a meeting between Valeo management and representatives of its European work force.

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Original article from Automotive News Europe (A Crain publication)