Sources: Sanofi tells unions a 25% gain at French production sites is needed

Sanofi CEO Olivier Brandicourt

Very public run-ins between ex-Sanofi CEO Chris Viehbacher and France's powerful unions were one factor that reportedly cost him his job. Now his replacement, Olivier Brandicourt, will see if he can do any better as he tries to negotiate a deal to significantly boost efficiencies at the company's French production sites.

In a meeting with union workers shortly after being named CEO, Brandicourt told union members that the costs of French manufacturing operations were a drag on earnings and that he intended to fix that. The company is now negotiating with one group, and according to information union members provided Reuters, Sanofi ($SNY) is looking for a 20% to 25% boost in productivity over three years.

A document the union gave the news service indicates the French drugmaker intends to keep a strong manufacturing presence in its home country but wants its French operations to be more in line with the costs at facilities in Eastern Europe. Reuters reports that union members believe the plan will lead to job cuts. The company has nearly 110,000 employees worldwide, including 27,000 in France.

A company spokeswoman told Reuters in an email that the company wants "to preserve our competitiveness in France in a sustainable way." She said: "Only one negotiation process is currently underway at the level of pharmaceutical production in France, which excludes vaccines, animal health, biological products." She also pointed out the company has added more production staff this year in France than in previous years.

Some details are expected to be offered when Brandicourt lays out his 5-year strategic plan for Sanofi during an investor day event in November. After he announced in July a plan to reorganize the company into 5 operating groups, a Sanofi spokesperson told French news media that the revamp did not envision significant jobs cuts.

Former Sanofi CEO Chris Viehbacher

Viehbacher in 2012 made France the focus of R&D cost cutting, complaining publicly that Sanofi's R&D operations there were sucking up money without developing an important product in two decades. But he encountered huge resistance from unions and powerful government officials when he said he intended to whack Sanofi's workforce in France by 5% to 7%, about 2,500 jobs. The strikes, public protests and pushback from politicians were reportedly embarrassing to Sanofi's French board members. Viehbacher had to back down, reducing the cuts to about 900 and even then they took two years to be finalized. When Chairman Serge Weinberg explained Viehbacher's firing last year, he said the CEO had acted too independently.

- read the Reuters story

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