For nearly a decade, Jacques Calvet railed against Japanese automakers as predatory traders which, if not checked, would bring about the ruin of the European auto industry and European culture itself.
As chairman of France's PSA/Peugeot-Citroen SA, Calvet was instrumental in convincing the European Union it should impose quotas on the number of Japanese vehicles that could be imported into Europe. Once the system was implemented in 1993, he continued to press for stricter quotas.
In one of his few interviews since retiring in 1997, Calvet tells Staff Reporter Diana T. Kurylko that he now backs the expiration of the Japanese import quotas at the end of 1999. The playing field has changed, he said - the Japanese are not as formidable as was once feared, and European makers have become stronger.
And all that noise he made in the early and mid-'90s? I was just doing my job, Calvet says. Edited excerpts of the interview follow.
Do you believe the import quotas should end when scheduled on Dec. 31?
Yes. When the agreement was signed between the European Commission and Japan, it seemed impossible to stop the Japanese carmakers from increasing their production and sales levels. The situation is very different today.
Has that much changed in the competitive environment?
Yes, the Japanese carmakers are less powerful than 10 years ago. The best part is that the Japanese carmakers have built many plants in Europe, first in the U.K. but now in France and Central and Eastern Europe. Now the Japanese carmakers want to be seen as European carmakers.
Why did Europe need the quota agreement? Because the European car industry was weaker?
There was another very important factor - the exchange rate of the yen. Since World War II and until three or four years ago, the Japanese authorities systematically undervalued the yen. That gave them a pricing advantage. Now the level between the yen and Western currencies is fair.
But didn't the European car industry need quota protection to to become competitive?
Yes, the agreement gave European carmakers time to increase their quality and productivity. At PSA, for example, there has been much improvement - thanks to putting Toyota's production methods in place. We have just-in-time production and produce cars to customer order. We have had 10 percent annual production gains.
Why was France one of the five countries with very tight quotas? Did you need such tight restrictions on Japanese imports?
You should understand that each of the then-12 members of the European Union had different interests. Countries without their own car industry wanted a complete and quick opening of the market so their car prices would be lowered. The countries where cars are produced - Italy, France, Spain, Portugal, the U.K. and, marginally, Belgium - wanted quotas.
Germany doesn't have a specific quota level. But I know that Germany and Japan signed, before the EC-Japan agreement, a secret bilateral agreement limiting Japanese imports into Germany to 15 percent of the market. The German carmakers were much less interested in the EC and Ministry of International Trade and Industry discussion because they had this under-the-table ban.
Why was the production of Japanese transplant factories not included in the quotas?
The agreement was not a precise one. This question has never been answered clearly.
You once called the United Kingdom 'Japan's fifth island' and 'a Japanese aircraft carrier anchored off the northwest coast of Europe.' Why?
When you are a member of the European Union, I feel that each country has to take into consideration not only its own interests but also those of the other members. I had complained several times to the British government that acceptance of Japanese plants would facilitate competition against European carmakers - which would be contrary to the common good. Each time, I was told, 'If this plant isn't located in the U.K., it will be built in France, Germany, Italy or another country.'
That wasn't the real reason. The British trade unions and Margaret Thatcher had destroyed the British car industry, so it was necessary for the government to try to rebuild it using the Japanese companies.
Are you pleased with Toyota's decision to build a plant in France?
I admire and respect the way Toyota has tried to become a French carmaker. They are advertising not only the new Yaris car but also their respect for the environment, the creation of jobs, the hiring of young people, etc. Step by step, Toyota is giving itself a French flavor.
With quotas coming off and competition intensifying, doesn't PSA Group have to look for a partner, as Renault did with Nissan?
In the past, it was considered good to be smaller and have niches. Now, big is considered advantageous because you have a larger production capacity, more employees and purchasing clout. Annual production of 2 million cars no longer makes economic sense; today, the minimum is 4 million cars annually. But at the same time, you face the risk of becoming bureaucratic, unable to react quickly, and being straddled with a big hierarchy. Look at GM - it was a giant 10 to 15 years ago and was not quick to react. It is necessary to balance the advantage and disadvantages of a small or big size.
If you were still in charge at Peugeot, would you have made the deal Renault made with Nissan?
I would never have considered such a deal. But maybe one day, if BMW sells Rover, it would be interesting to consider whether an arrangement, not necessarily a merger, between PSA and BMW would make sense. The cultural differences aren't big, there is a geographic complement and the two produce complementary product ranges.