Renault's twin blueprints: autos and socialism

Even though he spent 11 years in the United States studying economics and teaching management, Bernard Hanon's job as chairman of Renault, the French auto giant, is unlike that of any American corporate chief.

Mr. Hanon is a government employee.

As such, he is expected by the new Socialist government of France to use his company as a piston in its drive to cut unemployment and create a more equitable society.

In fact, whenever French Socialists try to prove that nationalization works, they point first to Renault, which has been state-owned since the end of World War II. The company has certainly proved dynamic and internationally competitive. During the last decade, it has consistently made money. In 1980, while becoming the world's sixth-largest automaker, selling 2 million vehicles, it reported a tidy profit of something under $100 million (at today's exchange rates).

But as the Socialists embark on their sweeping nationalizations, their model is faltering. Hurt by high interest rates and stiff foreign competition, Renault recently announced it lost more than $100 million last year, its first loss in five years.

Mr. Hanon said in an interview, however, that he is hopeful Renault will once again make a profit this year, and expressed optimism that the company will be able to carry out the Socialist blueprint: creating new jobs and continuing to be the trend-setter in labor relations and social policy.

Mr. Hanon also reaffirmed Renault's intention of establishing a solid base in the American market through its 46 percent share of American Motors Corporation. He said the introduction of the Renault/AMC Alliance model in the fall could turn the ailing AMC ''from red to black,'' and he suggested the Big Three US automakers could learn from his nationalized firm.

After all, Renault's losses last year were relatively small compared with those of American automakers and arch-rival Peugeot, which was more than $290 million in the red last year and $340 million in 1980.

And despite the losses, Renault's sales picked up at the end of the year, moving Mr. Hanon to say, ''If volume keeps up, our automobile division will turn a profit this year. . .''

But Hanon did not minimize the difficulties ahead. High interest rates continue to hurt sales, and foreign automakers -- particularly West German -- have won 28 percent of the French market, while Renault's exports have fallen off.

While he wants Renault to be competitive, he said his goal is to keep Renault as a model for industrial relations. He reaffirmed the company's commitment to adding 3,500 more workers to its payroll of 110,000 in France, and to granting its employees five weeks' annual paid vacation. Renault was the first French company to provide four weeks off a year. It has now become one of the first major employers to add another week.

''But our room for maneuver to do much more is limited,'' he warned. He said he couldn't imagine laying off workers ''unless there was a complete economic crisis like during the 1930s,'' but added that to remain competitive, ''Renault just can't afford any more pure gifts (such as an extra week of vacation).''

Because it is state-owned, Renault has received more leeway over the years to give its employees benefits. Peugeot officials complain bitterly that government aid gives Renault a cushion that Peugeot, as a private company, can't share.

Renault officials respond that their company pays taxes just as Peugeot does, and that over the years relatively little of its investment has been government financed.

But Mr. Hanon admitted that government backing permits Renault to take a long view in its decisionmaking, and he stressed that ability in contrasting his strategy with that of American carmakers.

Renault's long view is evident in its investment plan. ''We invest 6 to 9 percent of sales every year, no matter what,'' Hanon said.

''The Americans swing between 2 and 12 percent,'' which is ''inefficient'' Hanon said.

In contrast to Detroit, Renault has produced only a few basic models. ''All it takes to turn AMC from red to black is one or two successful models,'' he said.

You've read  of  free articles. Subscribe to continue.
QR Code to Renault's twin blueprints: autos and socialism
Read this article in
QR Code to Subscription page
Start your subscription today