The restructuring of the automobile industry: the experience of Renault

The European automobile industry has ben undergoing a major restructuring in the 1980s in response to greater worldwide competition, particularly from Japan. Renault was badly hit in the early 1980s by cash flow problems and faced a crisis situation. Its response was to undertake a company–wide restructuring with the emphasis on restoring management quality and strengthening quality management. The objective was defined as the achievement of 'total quality'. In addition, the workforce was reduced by 30% over a three year period, profit–sharing was introduced, and overheads reduced by 8% per annum. The company divested itself of subsidiaries not involved in its core business of automobile manufacture. The results have been a return to profitability and a dramatic increase in levels of productivity.