PARIS - PSA/Peugeot-Citroen is reorganizing its manufacturing network in western Europe to ensure no plant stands idle while another struggles to meet demand.
The new plans move on from the 'one plant/one platform' system announced by Chairman Jean-Martin Folz in 1998. In the future, different cars using a single platform will be built at two plants in the same general area.
The changes will see the Aulnay and Poissy plants, both in the Paris area, become dedicated to production of small cars (superminis and minis). Mulhouse and Sochaux, in eastern France, will be the home of mid-sized cars (lower-medium). Rennes, Brittany (western France), will make upper-medium and full-sized models.
Vigo, in northern Spain, will be given higher or wider cars such as the Berlingo/Partner commercial vans or the Citroen Picasso compact minivan.
Madrid (Spain), Mangualde (Portugal) and Ryton (England) are considered 'complementary facilities' and will be dedicated to small and mid-size cars as well as niche vehicles.
Simultaneously, PSA will boost production investment from euros 2 billion in 1999 to an annual euros 2.7 billion over the next few years. It will help raise car output from the current 2.5 million vehicles to 3 million in 2001. PSA expects to sell 2.7 million vehicles worldwide this year.
'We've defined a geographical organization rather than a simple platform organization, in order to better manage production and employment within a single area,' said Jean-Louis Silvant, PSA's executive vice president for manufacturing, in an interview in PSA's Neuilly headquarters near Paris.
No idle plants
PSA's manufacturing reorganization will ensure that no plant stands idle. The new organization will be implemented as new models are introduced. The first significant change will occur with the Peugeot 307, which will debut in October at the Paris auto show and go on sale early next year. The 307 will be built at Sochaux and Mulhouse. The successor to the Citroen Xsara will follow in 2003.
'We have chosen this geographical organization partly because we realized over the past few months how difficult it was to manage different levels of activity at Sochaux and Mulhouse,' Silvant said.
Mulhouse long benefited from the success of the Peugeot 205 in the 1980s and now is facing high demand for the 206. By contrast, Sochaux suffered from the lack of success of the 605 and the transition from the 405 to 406. The plant stood idle for up to 46 days in 1997, while Mulhouse, 33 miles away, needed staff to work overtime.
'It's far more difficult to mix different models of the same brand in one plant than Peugeot and Citroen models based on the same platform,' Silvant said.
The two plant/one platform structure also will help PSA with its plans to extend the Peugeot and Citroen product ranges and the number of models in each range.
'The diversity of body types is not a problem for paint and assembly shops,' Silvant said. 'But it is a problem for stamping and body shops because you need to completely change the manufacturing tools from one body to another. We consider that beyond three different bodies - hatchback, sedan and wagon, for instance - it is too complex to manufacture a complete range in one plant. Therefore, we'll split production into two different facilities.'
More work shifts
Simultaneously, PSA has raised employment levels and extended shifts to expand capacity. Around 5,000 workers were hired in France in 1999 - 3,000 of them because of the introduction of the 35-hour week. A third shift was introduced last year at Aulnay, Mulhouse, Vigo and Ryton and will be extended to Sochaux and Rennes this year. A fourth, weekend shift also was launched at Mulhouse and Vigo.
'We want to reach a daily European capacity of 11,903 units in late 2000 compared with 8,938 vehicles in 1998,' Silvant said.
To achieve this, PSA will raise capital expenditures from euros 2 billion to an average annual level of euros 2.7 billion over the coming years.
'We'll focus on our core business. It means we will outsource noncore operations,' Silvant said. 'That includes seats, wiring, some stamping parts and some foundry parts. At the same time, we'll modernize our 20 stamping production lines but also engine and gearbox plants.