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The French carmaker Peugeot announced that it will be slashing 8,000 jobs and closing a factory north of Paris.
French carmaker PSA Peugeot-Citroen announced a drastic cost-cutting plan on Thursday, slashing 8,000 jobs in France and closing a major factory near Paris, according to the Associated Press.
Chief Executive Philippe Varin told reporters, "I know how serious these measures are for the people concerned, and for our entire company," according to Reuters. "But a company can't preserve jobs when it is burning 200 million euros ($245 million) a month in cash."
The announcement was met with union anger, with unions claiming the news was a "declaration of war" and an "earthquake," according to Agence France Presse.
Last week, Peugeot said it faced a "profound crisis" in its eurozone markets as its first-half sales fell 13 percent, according to the BBC.
The plan announced on Thursday would stop production at the Aulnay plant near Paris, which employs 3,000 workers, by 2014. The plant at Rennes will shed 1,400 jobs out of 5,600 and an additional 3,600 jobs will be cut across facilities in France, said the BBC.
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Workers at the plant in Aulnay walked off the job and protested in front of the factory, according to the AP.
French Prime Minister Jean-Marc Ayrault said the government was studying the cost-cutting plan, which he said was a "great shock," according to Reuters.
Peugeot, Europe's second largest carmaker, warned that it faces a first-half loss of 700 million euros ($858.2 million) this year as it suffers from low sales due to the recession.
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According to Bloomberg, Peugeot is planning to work with General Motors, with which it formed an alliance earlier this year, to cooperate on purchasing and vehicle development in order to lower costs.
Varin said that workers who lost their jobs would be given support and help in finding new work. Around half of the workers at Aulnay would be offered positions at the other Paris plant, Poissy, said the BBC.
Jean-Pierre Mercier, a union leader, said, "Varin has declared war on us, and we'll give him war."
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