Peugeot, one of France’s iconic companies, is in trouble, presenting President François Hollande with an early, telling crisis that is displaying the contradictions at the heart of his campaign promises to spur economic growth while shrinking the budget deficit with tax increases.
Mr. Hollande, France’s first Socialist president since 1995 and a man who wants to lead the left’s battle against austerity politics in the euro zone, promised not only to restore growth but also to revitalize French industry, create jobs and save the French social model — all while vowing to find $40 billion in savings and tax increases to bring the government deficit down to 3 percent of gross domestic product in 2013.
He even created a whole Ministry for Industrial Recovery, led by Arnaud Montebourg, to stop factories from closing. But now Europe is in recession , and Peugeot , hemorrhaging money, has announced plans to cut spending by $1.85 billion by 2015, lay off 8,000 workers and shut a major factory at Aulnay-sous-Bois, near Paris. And Mr. Hollande is learning how hard it is to be a French Socialist in a European Union that demands budget cuts and debt limits, endorses free trade and has rules against favoring national manufacturers.Page 1 of 6 | Next Page