Renault to bring home Slovenia production line

Carmaker Renault said Friday it is shifting a production line from Slovenia to Paris to meet a jump in demand and denied the move was linked to a pledge to keep jobs in France in exchange for state aid. The French auto giant said it was ramping up production of its small Clio II & Twingo cars, both produced in Slovenia, after trade-in bonuses in several European countries boosted demand for the models. Since the Slovenian plant of Novo Mesto's already running at full capacity, production of Clio cars would be shifted temporarily to Flins near Paris, it said. The move would create work for 400 people in Flins from June to October, while the spare capacity freed up at Novo Mesto would enable it to ramp production of the Twingo. The announcement set off alarm bells at the EC whose competition spokesman said it would seek guarantees from Paris that the move isn't protectionist and complies with EU free trade rules. The Commission pounced on comments by France's Junior Minister for Industry Luc Chatel, who linked Renault's decision to the state's bailout for the auto sector, saying it was proof the 6B-euro plan was working. National champions Renault and PSA Peugeot Citroen both pledged not to close French factories or dismiss French workers in exchange for the aid package. President Nicolas Sarkozy, welcoming Renault's decision, insisted it wouldn't cost any Slovenian jobs. "This isn't about cutting jobs in Slovenia. It doesn't take a single job from our Slovenian friends and it creates jobs for Flins," the president said at an EU summit in Brussels. Commission head Jose Manuel Barroso later toned down suggestions of a row, saying: "I think there was a misunderstanding. We have been informed the company in question is planning to increase its output in France but without abandoning its production in another country," Barroso said. Slovenian Prime Minister Borut Pahor also played down the situation. "As far as I'm informed it is very normal, it's okay," he told reporters, saying he discussed the transfer with Sarkozy. The carmaker's subsidiary in Slovenia, Revoz, also insisted it was an operational decision aimed at making up for a shortfall in capacity at Novo Mesto. "This decision is not a relocation of production but an addition to the production at Flins. Faced with the sharp increase in demand for the Twingo & Clio II models currently produced in Slovenia, we were unable to meet market demand," Revoz said. Revoz separately plans to ramp up production at Novo Mesto from 750 to 880 vehicles per day -- including a small number of Clio cars -- and to employ more 150 people, it said. "Clearly this is not a relocalisation, it is a rebalancing," the head of the Flins plant told reporters, saying the site was chosen because it produced Clio Campus cars up until last Oct. "It is very easy to start production up again; the installations are all there," said Olivier Remoleux. Renault in March announced a 78% drop in net profit for '08 as the global economic crisis sent its sales tumbling 30 percent in the 4th-Q and 7% for 2008 as a whole. France's bailout plan for the auto sector sparked initial fears of protectionism after Sarkozy suggested aid shouldn't be used to rescue French-owned plants in eastern Europe. Brussels later said it was satisfied the French plan complied with European Union trade rules.