The French government has told Renault and Peugeot Citroen to stop trading with car parts firm Molex after it refused to pay for a redundancy scheme at a French plant despite making record profits.
The state has an interest of 15% in Renault, making it the biggest single shareholder, but PSA Peugeot Citroen is an entirely private company. Both companies are listed on the Paris stock exchange.
Industry Minister Christian Estrosi announced the measure to be taken by the auto companies after a cabinet meeting, describing the firm's refusal to make redundancy payments while turning a profit as "scandalous."
"This morning's announcement that Molex made $75 million profit of which 15% will be paid to shareholders shows the most contemptible behavior, towards Molex employees as well as the French government and French justice," Estrosi said. "This morning I asked Renault and PSA (Peugeot Citroen) to terminate all orders with Molex and for there to be no more commercial exchange between... our two constructors and Molex which treats our country's institutions with contempt," he said.
"It's time to end this sort of behavior."
Molex's electrical connectors plant in southern Villemur-sur-Tarn was closed in October 2009 after an 11-month struggle by workers to keep the factory running. The company decided to let the French state finance the planned redundancy scheme after 188 of 283 employees sought to take the company headquartered in Lisle, Ill., to an industrial tribunal.
The firm's decision particularly affected the "reclassification leave" due to be paid until January 2011 to 19 employee representatives who were sacked six months after the rest of the personnel.
"This is unacceptable, scandalous, we're going to use all legal means necessary, we will force Molex to explain itself before French justice," Estrosi said.
Copyright Agence France-Presse, 2010