French president says Peugeot layoffs are unacceptable

[Papewaio]

The car industries are happy to get tax breaks and government grants. These sometimes come with strings attached.

But ultimately if they want to decide the government should be he majority shareholder.

[PanzerJaeger]

The car industries are happy to get tax teams and go government grants. These sometimes come with strings attached.

But ultimately if they want to decide the government should be he majority shareholder.

Well, it is more like governments force automakers to adhere to wildly optimistic standards and offer subsidies to help make up the R&D deficit it will take to achieve those standards. Sure the automakers could refuse, but that would put them a step behind their competitors and there would not really be much point to it as the standards must be met regardless.

But yeah, my first google search was to see if the French government had a stake in Citreon-Peugeot. That would change everything. As far as I can tell, it does not. Why then, is the French government involved in the staffing decisions of a particular company?

On the one hand, it is perfectly reasonable to step in and make sure that the industries which your people rely on do not take cheap cost-cutting measures that benefit nobody but the CEOs and the bottom line.

Why is that reasonable? The company is owned by and for the benefit of the shareholders.

Hollande is going to have a difficult time reindustrializing France if the government is going to have to sign off on factory relocations and staffing decisions. Why would any company set up shop in such an environment?

[HoreTore]

It makes business sense to realize production assets. Taking money out of the productive sector and placing it in things like real estate is good business.

But it's crap for society and the long term. The most important job for Hollande, and every other european leader, is to swap that around, so that it makes sense to take money out of real estate and put it into production.

[Philippus Flavius Homovallumus]

It makes business sense to realize production assets. Taking money out of the productive sector and placing it in things like real estate is good business.

But it's crap for society and the long term. The most important job for Hollande, and every other european leader, is to swap that around, so that it makes sense to take money out of real estate and put it into production.

That depends on your definition of "real estate" it doesn't make sense to sell productive land or tenant housing to buy a factory, it does make sense to buy tenant housing and plow the profit from that into buying a factory.

[HoreTore]

That depends on your definition of "real estate" it doesn't make sense to sell productive land or tenant housing to buy a factory, it does make sense to buy tenant housing and plow the profit from that into buying a factory.

I'm talking about real estate which does not produce anything, of course.

If you have a spare million today, the answer to what to do with it is "buy houses". We need to make it so the answer is "invest in a business".

And buying tenant houses and taking the profits from that into production is what we want. We are not there, however. If you buy tenant houses, the only logical choice for where to put the profits is buying another tenant house.

[Philippus Flavius Homovallumus]

I'm talking about real estate which does not produce anything, of course.

If you have a spare million today, the answer to what to do with it is "buy houses". We need to make it so the answer is "invest in a business".

And buying tenant houses and taking the profits from that into production is what we want. We are not there, however. If you buy tenant houses, the only logical choice for where to put the profits is buying another tenant house.

The obvious conclusion is that corporation and personal taxes are too high and property taxes don't scale properly.

This, in fact, a recognised problem in the UK - Council tax goes up, and up - then it stops.

[HoreTore]

The obvious conclusion is that corporation and personal taxes are too high and property taxes don't scale properly.

This, in fact, a recognised problem in the UK - Council tax goes up, and up - then it stops.

I don't presume to know the inner workings of either the british or french tax system well enough to comment on which specific taxes should be increased or decreased.

On a general note, however, production should be made more profitable, while house ownership should be made less profitable. There's a wealth of possibilities on how to achieve that, like certain tax increases and decreases, government subsidies(for startups), increased house building, etc etc.

One example that would work in Norway, is to tax property(at least second homes+) at the full market value(instead of 20-25%), and use that money to decrease the employment tax.

[Crazed Rabbit]

I'm talking about real estate which does not produce anything, of course.

If you have a spare million today, the answer to what to do with it is "buy houses". We need to make it so the answer is "invest in a business".

And buying tenant houses and taking the profits from that into production is what we want. We are not there, however. If you buy tenant houses, the only logical choice for where to put the profits is buying another tenant house.

Gee, maybe then you need a President who insists on second guessing every big business decision and then 'not accepting it' if he doesn't like it (how much legal power does the French President have in this regard, anyway?). Maybe you need to get rid of stupid laws that make it hard to fire workers, and oodles of regulations that drastically increase the cost of doing business. Like in Washington state, to start a liquor distillery, you have to rent the commercial property where you'll make the booze and then apply for the permit. Getting the permit takes 1 to 2 years, during which you have no income and have to keep renting the commercial property and paying rent. So the cost can easily be one million dollars.

The government has to accept they can't pick winners and losers in the economy and simply make it easier for everyone to succeed by getting out of the way.

while house ownership should be made less profitable

For crying out loud, why would you want to make something less profitable and lower the GDP?

This sort of meddling is what causes the most issues in the first place. Economically ignorant ministers decide they want to force their whim onto the economy and they end up hampering it.

What companies would be so stupid to invest in France when there's going to be a 90% tax on salaries above 1.25Million and so many business constricting regulations?

Its reasonable because left to their own devices, almost any large corporation will reach a point where the best course of action (in order to generate more money) runs contrary to what is good for the people and the nation.

(Barring regulation on workers rights and the environment and the like) - Who determines what's good for the people and the nation? Some small cadre of government officials deciding among themselves what is good for the nation? This is (supposedly) a free nation, where other people don't get to tell you how to invest because they say your plan isn't 'good for the nation'.

CR

[HoreTore]

For crying out loud, why would you want to make something less profitable and lower the GDP?

This statement has so little thought put into it that I lost the will to comment on your post.

Which isn't all that bad, since the rest of your post seems to argue against points I have never made...

[PanzerJaeger]

I think you are confusing regulatory oversight with central planning. It is perfectly reasonable for governments to prevent business practices in general that run contrary to the public good. Interfering in the legitimate strategic decisions of companies on an operational level is a completely different animal, and an unsustainable one at that.

How long do you suppose Peugeot can continue to compete on a global scale with high levels of overcapacity and over staffing?

[Tellos Athenaios]

At present Mr. Hollande represents a major stakeholder in PSA. Also, PSA has a history of being kept afloat by loans from the French government. So uhm, if the French government does not take kindly to the MBA idea of "when in trouble axe your staff, keep your bonus" then that is entirely reasonable. After all, under that plan not only will the French taxpayer be footing the bill to keep PSA alive in loans, but additionally will be made to foot the bill for the lay offs.

[PanzerJaeger]

At present Mr. Hollande represents a major stakeholder in PSA. Also, PSA has a history of being kept afloat by loans from the French government. So uhm, if the French government does not take kindly to the MBA idea of "when in trouble axe your staff, keep your bonus" then that is entirely reasonable. After all, under that plan not only will the French taxpayer be footing the bill to keep PSA alive in loans, but additionally will be made to foot the bill for the lay offs.

Well, I have an MBA so maybe I'm missing the brilliance of running factories at below break-even capacity levels and continuing to pay workers who are no longer needed. I was taught that such things are bad for business. The plan, as I understand it, is not about keeping bonuses. That's just hyperbole. Those bonuses make up a minute fraction of the company's quarterly losses, not to mention the annual figure, and I strongly doubt that anyone at PSA will be getting one this year anyway considering the company's recent performance. In reality, the plan is meant to keep the company viable in the new European market. I do not know how management will be able to do that without realigning production to meet changes in demand and technology.

[Tellos Athenaios]

Well, I have an MBA so maybe I'm missing the brilliance of running factories at below break-even capacity levels and continuing to pay workers who are no longer needed. I was taught that such things are bad for business. The plan, as I understand it, is not about keeping bonuses. That's just hyperbole. Those bonuses make up a minute fraction of the company's quarterly losses, not to mention the annual figure, and I strongly doubt that anyone at PSA will be getting one this year anyway considering the company's recent performance. In reality, the plan is meant to keep the company viable in the new European market. I do not know how management will be able to do that without realigning production to meet changes in demand and technology.

Obviously. I was merely taking a cheap shot at the typical not-so-brilliant MBA solution of "my business is not performing, I know I'll just out source/fire/cut pay until the cost drops" trousering bonuses off the short term gain but rendering a company little but a top heavy management shell devoid of value. In manufacturing that is just as much the death of a business: the issue is nearly always that few people want to buy your stuff let alone pay a premium for it.

The question is not "how can I cut costs" but "how can I turn around my business". Cutting cost on staff might be a stop gap, but it is not a solution -- the only real solution is to make a product that is in demand. In the car industry this always meant upping your technological game, it's always the companies at the forefront of technology which are able to create pocket the desirable mid range products off economies of scale beginning to work their magic on new tech. After all it is technology which drives the car's performance, what you can offer in terms of looks (i.e. how close you can get to design perfection without sacrificing too much elsewhere), and the other features; that in turn makes the product more compelling which drives sales which therefore creates value. By comparison, shaving off the equivalent of a few $M in running costs of a factory does not add up to nearly as much on the bottom line.

Take for example Nokia. Basically, it managed to wreck itself with a single decision to not make product that people want. Nokia was and is famous for razor sharp efficiency in the channel -- they were able to churn out handsets at remarkable volume and low costs, which is what kept them afloat for quite a long time before they jumped the shark/to Windows Phone. They cut costs on staff by cutting R&D, software development and maintenance staff positions, spinning out and selling off of assets, took a cool $1bn from MS right away as part of the deal but even so ran a couple of $bn losses in a few quarters later and it is now truly a burning platform, and sinking further still. All in all it appears now a proper MBA disaster, that one -- give it a few more quarters and it is practically ripe for the hostile takeover.