Renault CEO Says New Plant in Morocco Good for France

Renault stressed on Thursday that the opening of a giant factory in Morocco to build low-cost cars is not a sign that it is abandoning production at home in France.

"It isn't something that is being done to the detriment of France," chief executive Carlos Ghosn said on French RTL radio ahead of an official opening ceremony later on Thursday for the plant outside Tangiers.

The so-called "delocalization" of manufacturing, particularly in the auto industry, is a hot subject in France in the run up to a presidential election.

After figures earlier in the week showed a record trade deficit and resparked debate about the competitiveness of French industry, Ghosn said "on the contrary [the factory] will increase work in France ... in our engineering labs, motor factories, and among our suppliers."

The Tangiers factory is key for Renault's to expand in the low-cost segment under its Dacia brand, which already accounts for nearly a third of sales.

With an initial capacity of 170,000 vehicles but expected eventually to reach 400,000 vehicles per year, the Tangiers factory will help Renault keep up with demand and introduce new models, such as the Lodgy minivan.

Lower labor costs in Romania helped Renault position Dacia in the low-cost segment, and company executives say Morocco will help keep it competitive as average monthly wages there are much lower at around 250 euros ($330) per month.

A leader of France's far-right National Front called Renault opening the Tangiers factory "a real scandal" while a member of President Nicolas Sarkozy's governing UMP party said the company had a "social obligation" to continue manufacturing at home.

Ghosn said that Renault, which received a 3.0-billion euro ($4.0-billion) loan from the French state during the 2008 financial crisis, was keeping its promise to increase production in France and that it was investing in high technology activities in the country such as electric vehicles.