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Peugeot cuts 8,000 jobs to end losses, shuts plant

French automaker PSA Peugeot Citroen announced 8,000 job cuts and the closure of its Aulnay assembly plant as it struggles with mounting losses at its core automotive division.

Peugeot said on Thursday the Aulnay plant near Paris, which employs more than 3,000 workers, will halt production in 2014 as part of a drive to reorganize output across the company’s under-used French factories.

Its Rennes plant in western France will also cut 1,400 of its 5,600 jobs as it downsizes in response to shrinking demand for larger cars, Peugeot said. Some 3,600 non-assembly jobs will also be scrapped across the company.

“I am fully aware of the seriousness of today’s announcements,” Chief Executive Philippe Varin said in a statement.

“The depth and persistence of the crisis impacting our business in Europe have now made this reorganisation project indispensable in order to align our production capacity with foreseeable market trends.”

Peugeot said it will post a net loss in the first half and a 700 million-euro ($857.5 million) operating loss for the core car-making division. Operating cash flow is expected to remain negative until late 2014, the company said.

Peugeot said it plans to convert the Aulnay site for other activities and seek other positions within the group for around half its workforce.