© Reuters. The logo of French car manufacturer Renault is seen at a dealership of the company in Bordeaux

By Gilles Guillaume

PARIS (Reuters) – Renault (PA:) and PSA Group (PA:) face a potential stand-off with French workers worried that an industry drive to meet EU emissions targets will fuel demands for concessions in upcoming labor negotiations.

Renault and Peugeot maker PSA are seeking to renew three-year, nationwide pacts covering wages and other working conditions in the coming months, which in the past have allowed them to trim costs.

Informal labor talks between Renault and workers began in early September, unions said, and are set to kick off at PSA next week.

While negotiations have been fraught before, and involve balancing demands like pay freezes and pledges to produce or invest in France, unions are already bristling over fears for jobs in motor factories amid a shift toward electric cars.

No clear outlines on potential job or wage demands have been put forward yet. PSA’s summons for discussions referred to the “energy transition” as a high priority.

Renault said it did not want to comment on discussions that were just starting. PSA said it was hoping for constructive talks that took into account “the stakes for the group”, without giving further details.

A majority of French auto unions backed previous accords in 2013 and 2016, in deals that came after the euro zone debt crisis and austerity measures had hit consumer demand.

“And now? PSA is making a lot of money, and the new (CO2) regulations are coming in at just the right time so they can tell us that they need to keep improving the group’s performance,” said Franck Don of the PSA faction at the CFTC union.

Carbon dioxide emissions must be cut to 95 grams per kilometer for 95% of cars by the end of 2020 under the new EU rules, from the current 120.5g average.

The green overhaul is raising concerns over profits in a sector already facing faltering sales, with cleaner auto models still far pricier to build than traditional ones and the extent of consumer demand for these vehicles unclear.

European car registrations fell 8.6% in August, data this week showed, although an exceptional surge last year distorted comparisons.

At a PSA factory in Metz, northeastern France, employees are concerned plans to produce electrified gearboxes there may not make up for cutbacks to traditional ones.

“It’s the tip of the iceberg … the labor map in France is being redrawn,” said Maria Casoli of main PSA union, Force Ouvriere.

France’s hard-left CGT union was the only one to veto previous pacts, allowing the carmakers to pursue their planned competitiveness measures.

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