Renault Gets State Backing to Let Parts Supplier Die Amid Outcry

(Bloomberg) --

Renault SA dodged a political minefield after the government backed the manufacturer’s decision to withdraw support for a struggling auto-parts factory in France despite a backlash from unions and local officials.

“There is no credible offer for the takeover” of the Jinjiang SAM foundry in the rural Aveyron region, Finance Minister Bruno Le Maire said Wednesday on France Info radio. “We have been working for months with workers and local authorities to find a solution.”

The minister was reacting to Renault’s decision Tuesday to withhold further orders from Jinjiang SAM, dealing an effective death knell for the plant because the carmaker is its last remaining customer. Renault instead chose to back the takeover of another aluminum maker.

Renault Backs Takeover of One French Supplier, Rejects Another

“There is an economic and technological reality and that is that we are shifting from combustion engines to electric vehicles, and that’s four times less cast iron,” Le Maire said. The state has set up a fund to support some 15,000 foundry workers, he added.

French automakers have come under government pressure to back local suppliers and factories. Stellantis NV Chief Executive Officer Carlos Tavares in April reversed a decision to move engine production from a French site to Hungary. 

Renault took out a 5 billion-euro ($5.6 billion) state-backed loan last year to get through the worst of the pandemic and Chief Executive Officer Luca de Meo is pushing through a turnaround plan that includes job and cost cuts.

The fate of the foundry will be decided Friday in a French commercial court. Renault said Tuesday it has “serious doubts” about a plan to save the site.

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