The Rise and Fall of Peugeot Is an Image of France Itself. out of Gas
Total Page:16
File Type:pdf, Size:1020Kb
PEUGEOT The rise and fall of Peugeot is an image of France itself. Out of gas BY SOPHIE SASSARD, MARK JOHN AND GILLES GUILLAUME A vintage Type 203 car of French carmaker Peugeot at the Autofriedhof Franz Messerli auto graveyard near Bern, Switzerland, 2008. REUTERS/ ARND WIEGMANN SPECIAL REPORT 1 PEUGEOT DECLINE OF A LION RALLYING FORCE: Peugeot, which has owned Citroen since the 1970s, has a reputation for reliability and ruggedness. Left, Peugeot 208s at the plant in Poissy, near Paris, 2013. Right, French world rallying championship leader Sebastian Loeb in a Citroen Xsara at the Acropolis Rally of Greece, 2004. REUTERS/GONZALO FUENTES/YANNIS BEHRAKIS PARIS, DECEMBER 4, 2013 many ways mirror those of France, a former has fallen to just over 11 percent from a global power also fighting to define its role peak of 15 percent in 2002. he rush to Paris’s Charles-de-Gaulle in a world of harsher economic and politi- Earlier this year there were signs airport for flights to China began on cal forces. The parallels between Peugeot’s America’s General Motors, which already TFriday, Oct. 11. A first set of bank- decline and France’s economic malaise are has a seven percent stake in PSA, might ers booked onto the 10-hour overnight startling. Today, both the automaker and be interested in a wider tie-up to help put Air China Flight; over the next 48 hours, the country are struggling to bring down the French firm back on its feet. Those talks they were followed by top management heavy debt and adapt to global markets. In cooled. Now China is key. from PSA Peugeot Citroën and the French PSA’s case, the company is at stake; France’s “It is the only card they have left to Finance Ministry. economy is a mounting worry for investors play,” said Patrick Fridenson, car historian Peugeot was ailing – and it had just in the euro zone. at France’s EHESS institute. started talks about selling a stake to state- Once known worldwide for the reli- PLUS CA CHANGE... owned Chinese automaker Dongfeng. ability and ruggedness of its cars, Peugeot “There’s a big exodus to China right – which has also owned the Citroën brand The group is no stranger to crisis – or to now,” a bemused trade unionist at the Paris- since the 1970s – has in recent years escaping it. based company told Reuters that weekend. watched rivals spot global opportunities In the 1980s, debts accrued after an ill- For the bankers, it would be just another and snatch them from under its nose. starred takeover of Chrysler’s European deal, but for the car-maker, it could be a Both France and PSA must find a way operations were about to send the company lifeline. Dongfeng and the French state are – if there is one – of competing in world to the wall when it produced the Peugeot contemplating a joint investment to prop markets while funding the labour and wel- 205 – a first-generation “hot hatch.” The car up the 200-year-old firm, which is strug- fare provisions that make up the country’s sold millions and helped save the company. gling to contain losses that burnt 3 billion cherished social model. France’s share of “Every time there is a crisis, people say euros ($4 billion) of cash last year. euro zone exports has fallen by a third since it’s worse than last time,” said Jean-Louis PSA gave the world its first series-man- 2000 to just over 12 percent, while PSA’s Loubet, author of “The House of Peugeot”, ufactured car in 1891 – 22 years before Ford share of the Western European car market charting the history of the firm, which after took mass manufacture to a new level with its 1810 launch made everything from saws the Model “T”. It has survived two world Every time there is a to corsets. wars and become an emblem of France. crisis, people say it’s worse than The challenges facing PSA now are big- After years watching its position eroded by last time. ger than ever. Like many in France, the rivals and now hit by the financial crisis, it company must overcome entrenched resis- has reached a critical point. Jean-Louis Loubet tance to change. Its rich history and current difficulties in car historian The Peugeot family retain a minority SPECIAL REPORT 2 PEUGEOT DECLINE OF A LION shareholding which carries a veto on major The Peugeots are … loyal European car market fell off a cliff. decisions, and have fiercely defended the patriots with the best intentions. “The strategy has not changed – indeed company’s independence. Their Protestant But they are horrified by change. it is more relevant than ever,” the spokes- ideals have made them social pioneers: man said. The crisis has “provided the im- Over the decades they provided low-cost Source close to the company petus to help us learn to work differently housing to workers and free healthcare in and more efficiently.” a specially built hospital. A pension scheme THE EMBODIMENT OF THE STATE for workers’ widows began as early as 1811. “The Peugeots are like that,” said one That weekend dash to China was not the source close to the company. “They are first mission to rescue the company. In the genuinely good guys, loyal patriots with 1940s, its founding family had to salvage the best intentions. But they are horrified what they could from the ruins of post- by change. And this culture spread to every war Germany. level of the company.” In 1946, the Peugeot factory in the town Current and former employees speak of Sochaux in the Jura Mountains was in glowingly of an atmosphere of solidarity – ruins, largely destroyed by Nazi forces and a fierce pride and a desire to fight when the its machinery pillaged to help Hitler’s war company’s back is to the wall. But the same ON THE WAY OUT: Philippe Varin, Peugeot Chief effort. The Peugeots brought the equip- people complain that the best of intentions Executive, will be replaced by a former Renault ment back. A train bearing the French flag have often come up against turf wars and executive. REUTERS/BENOIT TESSIER and 600 tonnes of machine tools returned. internal red tape. The cars turned out by the re-built Even a largely symbolic move an- Sochaux plant included legends such as the nounced last year – when the group sold its The management of Peugeot’s rivals sleek 203, which saw off BMWs and Jaguars prestigious head office a stone’s throw from has also become more international. Other to win the 1950 Liege-Rome-Liege rally – a Paris’s Arc de Triomphe – foundered on in- companies, including Renault, started foretaste of the great African rallies Peugeot decision. “It took years to convince them to adopting English and local market lan- would dominate in the 1950s and 1960s. execute a decision that was pure common guages. Renault is led by Carlos Ghosn, At the same time, France itself was on sense,” said one company insider. a French-Lebanese born in Brazil. And it the move. Its post-war leaders embarked on In Peugeot, the CEO is lodged be- has two Japanese officials sitting on a man- an era of reconstruction that was to trans- tween four Peugeot cousins with senior agement board that conducts its business form it into a modern economy with infra- roles: Thierry Peugeot heads the supervi- in English, as do an increasing number of structure and public services that would be sory board, Robert runs the family holding, French companies. the envy of the world. The French discov- Xavier is products chief for the Peugeot Just one non-Frenchman – UK-born ered a taste for leisure and motoring. In the brand and Frédéric Banzet, a cousin by director of communications Jonathan post-war recovery known as the “Glorious marriage, heads the Citroën brand. Neither Goodman – sits on PSA’s 13-man execu- Thirty” years, French car ownership rock- CEO Philippe Varin nor the Peugeot fam- tive committee, which still carries out its eted from 1.7 million vehicles in 1950 to 14 ily would be interviewed for this story. business in French. million in 1973. The company has maintained nearly A company spokesman said that French moviemakers, writers and de- half its global autos workforce in France when Varin joined in 2009, he said “we signers wooed the world. On the road, the – a bigger share than Renault employs are too European, too middle-range, too 1955 Citroën DS offered a completely new – which prompted Industry Minister small,” and then embarked on a strat- driving experience – hydraulic suspension Arnaud Montebourg this year to hail what egy to change that. But as Europe’s debt and directional headlights that adjusted he called its patriotism. Yet critics argue crisis poisoned the wider economy, the their beam to match the turn of the steer- its fierce sense of independence has meant ing wheel. It was one of the most instantly PSA missed opportunities for strategic recognisable symbols of France’s post-war Follow Reuters Special partnerships, such as a tie-up with up- Reports on Twitter: Fifth Republic. General Charles de Gaulle market German group BMW or Japan’s @SpecialReports chose it as the presidential car, and Citroën Mitsubishi Motors. Text continues on page 5 SPECIAL REPORT 3 PEUGEOT DECLINE OF A LION Vital signs France's economic picture is among the weakest of the main rich nations. High social expenditure and low average working hours... Public social expenditure as a pct.