French Government: PSA Needs to Close Plant

PSA Peugeot Citroen's need to restructure and cut jobs is "sadly not contestable," says a report commissioned by the French government, which concludes that shuttering the company's assembly plant in Aulnay, France, is "inevitable."

The findings are an about-face for the government. President Francois Hollande initially condemned PSA's plant-closing plan as "unacceptable." The action is part of the company's broader turnaround program, which would eliminate 8,000 jobs in France.

The study's conclusions are significant because opposition from unions and politicians has hampered previous efforts by PSA and other carmakers to shed excess capacity in France and other European countries.

It is unclear whether the PSA findings will make it easier for General Motors Co.'s Opel unit to sell its transmission factory in Strasbourg, France. An aide Hollande declared in May that the president would "arm wrestle" GM management over possible job losses at the facility, which has 1,000 workers.

The company has said it had hired financial advisers to find a buyer who would continue to operate the Strasbourg plant with its current workforce.