Re: Opinion: Is PSA right to add new capacity?
From: Midvally (midvally@shaw.ca)
Date: Tue 19 Nov 2002 - 20:00:43 EST
I think that PSA is right on. Build in a community where you a familiar
with the market. If you don't know the market, go with someone you know.
PSA took a partner in China, I believe they are on their second partner.
They took a partner in India and I think that deal went sour. PSA is right
to partner with Toyota, they will both learn plus they are building a new
generation supermini to tap an untapped market: the second vehicle for the
busy family in Europe and cheap to run, easy to park and maneuver some of
those backstreets you couldn't get a 505 down. It's much more important
than 0 to 60 MPH is! And never mind those big displacement engines either,
the important thing is fuel economy. Until our roads become as crowded as
they are in Europe and fuel prices go to world prices , we won't be seeing
anymore Peugeots here.
Dan
----- Original Message -----
From: "hugo_steincamp" <norgo@cybertrails.com>
To: <peugeot-L@yahoogroups.com>
Sent: Monday, November 18, 2002 8:16 PM
Subject: Opinion: Is PSA right to add new capacity?
> RICHARD JOHNSON: Is PSA right to add new capacity?
>
> Automotive News Europe / November 18, 2002
>
> EVERYONE TALKS about overcapacity and some companies are even doing
> something about it. But PSA/Peugeot-Citroen certainly isn't one of
> them.
>
> In fact, PSA is adding capacity, 600,000 units by mid-decade with
> some help from Toyota. By building car plants at a time when others
> are shutting them down the French company is aggravating a bad
> situation. Or is it?
>
> PSA doesn't even agree that there is a problem. Chairman Jean-Martin
> Folz has a typically contrarian view. He doesn't acknowledge the
> concept of "overcapacity" that others talk about so much. To Folz,
> capacity is a purely theoretical concept. That's partly his
> intellectual approach to business. Folz just sees things differently.
>
> But then he has never had to lead an auto company through a crisis.
> He's run PSA for five years, five good years, and before that he was
> in the sugar business. Folz has never seen serious trouble from the
> inside of the auto business. He's never felt the sting of
> overcapacity.
>
> So does PSA have a responsibility to the rest of the industry? Does a
> single auto company pay the price for its own excess capacity or does
> the entire industry have to pay? Maybe PSA can't meet its current
> demand, but won't the pressure on prices caused by two new car plants
> hurt all parties concerned? Maybe PSA should have held back this
> time.
>
> Of course, no auto executive really believes that and Folz certainly
> does not. This is private enterprise, not a centrally planned
> economy.
>
> What's more, central Europe - where both new plants will be located -
> presents an extraordinary opportunity that PSA is in a perfect
> position to exploit. Central Europe is shaping up much as America's
> southern states did in the early 1990s. It's become the New European
> Manufacturing center.
>
> Suppliers are rapidly shifting capacity into the region. It's easier
> for parts makers to do than high-profile carmakers who are subject to
> severe social criticism. But the vehicle manufacturers are coming,
> too.
>
> For now, central Europe means the Czech Republic, Poland and Hungary.
> The future has arrived in those countries. Costs are low, the quality
> of work force is high, the supply base is developing fast and local
> markets are ready to grow as the EU expands to include them.
>
> Five years ago, then-Honda President Nobuhiko Kawamoto said: "In our
> experience, in former Communist countries, it is not the habit of
> people to work hard, nor are they trained to do exactly what they are
> asked to do. Even with sufficient salary they don't want to follow
> instructions."
>
> But carmakers and suppliers are now hiring workers for whom communism
> is a vague, distant memory or else a legend handed down by their
> elders.
>
> PSA's new plant is not just a vote for central Europe, it's a vote
> for Europe. PSA could have invested in China or North America or
> South America. Instead it decided to stay in the region. Ten years
> ago, under different circumstances, PSA made a similar choice, though
> it really had no choice back then. It couldn't afford to go global
> when many others did.
>
> Because PSA was forced to concentrate on Europe it thrived in Europe.
> And it was not overextended in several highly vulnerable emerging
> markets that eventually did collapse - all but burying the likes of
> Fiat Auto in the process.
>
> PSA is right - right to build a new plant and right to build it close
> to home. Europe has a bright future and, to a large degree, the
> future is central Europe.
>
>
>
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