How did the PSA Peugeot Citroën management get away with it?
Their upsetting news did not start any political rows, nor did it seem to come as a surprise. Both the unions and the employees reacted reasonably and the stock markets remained steady.
And yet there was the disquieting figure of a 10,000 job cut, with a loss of 7 to 8,000 jobs in France alone.
The 'non-reaction' was due no doubt to the management who was quick to point out that there would no
" job losses " and the necessity to
"reach 6% profitability" in a sector which is in a slump and facing fierce competition. (Le Figaro, 27/09). Moreover, the plan was already in effect as job reduction had started in January 2006.
Although reports of the job reductions made headline news, the media also mentioned other points of the business plan as well as the group's strategic objectives: profitability, but also a focus on new markets in the East, with China and Malaysia in the forefront, and the renewal of car models to help sales bounce back.
"PSA looks East. With profitability down and a slump in sales, there is a hiring freeze and investment reductions in Western Europe, but the group is focussing on new models and fast-growing new markets." (Libération, 27/09).
Coming on the eve of the Paris Motor Show, the PSA business plan also benefitted from other news linked to the car industry. The media wrote at length about the market share of their competitors and the sorry state of the automobile market in Europe, particularly in France, indirectly explaining the choices made by the PSA Peugeot Citroën management.
"The month of September has been 'truly awful' for the French automobile market, observed the President of the Committee of French automakers (CCFA), Manuel Gomez. Sales of new cars in France have greatly decreased (-13.3% compared to September 2005)" (Le Monde, 02/10).
Moreover, the media reported at length on Jean-Martin Folz's announcement of his upcoming retirement in 2007. It gave them the opportunity to talk about the present CEO whose personality has made a lasting impression over the past ten years. "A leader - an outsider of the Establishment" was Libération's headline (09/09).
In this uncertain context, what does the future hold for the French and European car companies? Beyond the media's observation of the market slump, aren't the challenges facing the automotive industry conducive to jump starting it again: can they achieve sustainable development and international protection of the environment while coping with gas price hikes and dwindling ressources? The biofuel E85 being developed in France and the implications of improved technology on the
car industry as well as the consumer were, basically, not reported on at all by the media.
Mr. Folz pointed out that this technology would have repercussions on production costs. He also stated that his group had recommended "quite a while ago that ethanol be added to petrol". And he went on:
"With E85, we are looking at new motors, new cars and new distribution channels. It's another route but an interesting one nonetheless". (AFP/La Croix, 27/09).
Click here for full-size graph
Sylvie Testard-Ramirez, Managing Director of Echo Research France
Anaylsis and commentary by Echo Research: www.echoResearch.com on the basis of 65 articles in the national daily press online between 1 September and 2 October 2006.
