French carmaker Renault is to shift some car production back to France after the guarantee of state aid.
French carmaker Renault is to shift some car production back to France after the guarantee of state aid.
The company will bring one car production line to the Paris suburbs from Slovenia and create 400 jobs, a French government minister said.
Renault will take the production of its Clio Campus model to the Paris suburbs from Slovenia, creating 400 jobs, a French government minister said.
But the European Commission has demanded clarification about the plan, saying it may be protectionist.
But the European Commission has demanded clarification about the plan, saying it may be protectionist.
France last month agreed to give Renault and Peugeot Citroen loans in return for keeping French plants open.
France last month agreed to give Renault and Peugeot Citroen loans in return for keeping French plants open.
The plan to offer both Renault and Peugeot Citroen 3bn euros ($4bn; £2.8bn) sparked a row over protectionism after President Nicolas Sarkozy suggested that the money should not be used to rescue French-owned factories in Eastern Europe.
Luc Chatel, a junior minister for industry, announced Renault's decision in a local radio interview.
Luc Chatel, a junior minister for industry, announced Renault's decision in a local radio interview.
European concerns
European concerns
EU competition commissioner Neelie Kroes told the BBC she was highly surprised and was seeking urgent clarifications.
EU Competition Commissioner Neelie Kroes told the BBC she was highly surprised and was seeking urgent clarifications.
Ms Kroes said she received a pledge from Mr Chatel just a few weeks ago that the 6.5bn euros state bail-out for car firms would not be linked to moving jobs to France.
This is not about cutting jobs in Slovenia French President Nicolas Sarkozy
If the aid proves to be conditional, Ms Kroes said, it is illegal under EU rules and should be paid back.
Ms Kroes said she received a pledge from Mr Chatel just a few weeks ago that the state bail-out for French car firms would not be linked to moving jobs to France.
If the aid proves to be conditional on this, Ms Kroes said it would be illegal under EU rules and should be paid back.
BBC correspondent, Oana Lungescu, said the clash comes at a pivotal point.
BBC correspondent, Oana Lungescu, said the clash comes at a pivotal point.
"This row couldn't have come at a worse moment for the EU, just as leaders meeting in Brussels are calling on the US and others to tackle the global crisis by avoiding all forms of protectionism," she said.
"This row couldn't have come at a worse moment for the EU, just as leaders meeting in Brussels are calling on the US and others to tackle the global crisis by avoiding all forms of protectionism," she said.
The French plan to offer both Renault and Peugeot Citroen 3bn euros ($4bn; £2.8bn) sparked a row over protectionism after President Nicolas Sarkozy suggested that the money should not be used to rescue French-owned factories in Eastern Europe.
But Renault has defended its plans, saying its Slovenia factory was at full capacity and that the move to the Flins faciility in Paris would allow Renault to cope with additional orders.
A Renault spokeswoman told the BBC that no jobs would be lost in Slovenia when production is moved to the Flins factory, near Paris.
In 2008, the French government said it would give consumers 1,000 euros if they traded in cars older than 10 years for a low-emission car.
'Increased production'
Renault spokeswoman Natalie Bourette said the move will not see job losses at Renault's Slovenian plant, which makes the Twingo and Clio models, but would rather be used as an opportunity to ramp up Slovenian production of the Twingo.
"Novo Mesto [the Slovenian plant] has no more available capacity, which is why we took the decision," she said.
Renault's claims were backed up by French President Nicolas Sarkozy.
"This is not about cutting jobs in Slovenia," he said.
"It doesn't take a single job from our Slovenian friends and it increases jobs for Flins," he added.
Meanwhile, Renault anticipates it will produce 8,000 Clio Campuses in Flins between June and October. Flins mostly produces the newer Clio III model.
Carmakers in Europe and beyond have been hit hard by the economic downturn.
Carmakers in Europe and beyond have been hit hard by the economic downturn.
Renault last month reported a steep fall in profits and abandoned its targets for 2009, blaming an economic crisis "of massive proportions". Sales in Europe were down more than 7%, it said.
Renault last month reported a steep fall in profits and abandoned its targets for 2009, blaming an economic crisis "of massive proportions". Sales in Europe were down more than 7%, it said.
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Are you a Renault worker in Slovenia? What is your reaction to this move? Should other countries follow the French example? Send us your comments using the form below.
Are you a Renault worker in Slovenia? What is your reaction to this move? Should other countries follow the French example? Send us your comments using the form below.
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