New management at PSA Automobiles
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  1. #1
    1000+ Posts gerry freed's Avatar
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    Default New management at PSA Automobiles

    The rumour has gained momentum that PSA is going to hire Carlos Tavares to take over the running of the automobile division of PSA, considered in crisis.
    He will take over the management while Philippe Varis, presently in charge, will concentrate on raising the 4 billion euros needed to keep it going.
    The intention will be that Varin at 61 will retire at the end of 2014, and Carlos Tavares will then take over as Director General ie CEO of the division.

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    Tavares was No2 in Renault until a few months ago he made a speech in which he said that he wanted to be No 1 in a large car company, at which point Ghosn asked him to leave.

    If this comes off we will have two "French" car makers. One run by a Lebanese/Brazilian/Frenchman in a corporate network of French, Japanese, German, Rumanian and Korean interests.
    The other, to be run by a Portugese, with US and Chinese relationships will be dependent for its future on its expansion in countries like China and the Argentine.
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    Well at least they are still french companies, not US or Japanese based with products that are or soon will be never again built in their own country, being smothered by a waive of right wing populist 'economic theorists who just want to pay as little tax as possible, while digging holes in the ground for what ever they can sell.

  3. #3
    1000+ Posts gerry freed's Avatar
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    The Button plan and its sucessive waves of subsidies were a market distortion intended to give Australian manuacturers sufficient momentum so that they could become global players and be self sustaining. A worthy aim - but the target has shifted with the industry's global concentration. The only ways such market distortions can be sustained is by local market protection or a continuing increase in subsidies to cover the now embedded inefficiencies in small localised production. Australia has used protectionism as well to short term advantage but it works both ways and it seems generally agreed that Australian has to open its doors, if others are not to penalise Australian sourced imports.
    Rather than buy jobs to the detriment of the whole economy it makes better long term sense to release the people that are in effect employed by the other Australians, to make work and to divert that valuable human resource into more sustainable and economically justifiable wealth creation for the community.

    Ford are the first to quit and also the first to have a global product strategy to sell a family of similar cars everywhere. Their positioning illustrates effectively that with economies of scale and positioning in low production cost locations they can offer all their customers better value cars. When sold in Australia their customers have more purchasing power to put back in the economy.

    France which has a much bigger and hence more attractive domestic market is in just the same position. The economics of car manufacture no longer match the French operating costs, brought about by bleeding the revenue of the industry to pay for social redistribution of wealth. Now the markets that want to buy the cars are in countries whose cost structure and expectations of income are well below France. Their market opportunity whose volumes lower the car prices for all, are only attainable if manufacture is in their cost structures. Growth combined with consolidation is moving to their markets - China India, Russia, South America, North Africa and not the developed economies.

    The two French companies are head quartered in France and quoted on the French stock exchange but their owners and sources of finance are more widely spread. Both now have a French government involvement while PSA has a controlling family which many consider an obsolete structure. However, the majority of the debt funding and investment through ownership of shares come from pensions and insurance funds with multi national portfolios.
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  4. #4
    1000+ Posts gerry freed's Avatar
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    PSA confirmed the appointment today and the shares went up 5%.
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    1000+ Posts gerry freed's Avatar
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    Varin is leaving with a payout of 21 million euros.
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    1000+ Posts gerry freed's Avatar
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    He called a press conference today at which he renounced the pay out. He said that it was agreed with the board in 2010 in different circumstances and was today inappropriate.
    Hollande agreed.
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    Quote Originally Posted by gerry freed View Post
    If this comes off we will have two "French" car makers. One run by a Lebanese/Brazilian/Frenchman in a corporate network of French, Japanese, German, Rumanian and Korean interests.
    The other, to be run by a Portugese, with US and Chinese relationships will be dependent for its future on its expansion in countries like China and the Argentine.
    but they will all have a very french workforce, which will no doubt play a decisive role in the companies' future.

    Quote Originally Posted by gerry freed View Post
    Hollande agreed.
    i wonder what Montebourg thinks on the subject...

  8. #8
    1000+ Posts gerry freed's Avatar
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    More than half of the car production of PSA and Renault is outside France, and if you take the Renault Nissan alliance into account, 2/3 of the production of the two French based companies is done outside France. The real challenge is that among their various locations, France is the most expensive.

    Montebourg is on another road. He is trying to copy the Dick Smith Buy Australian campaign with "Made in France". He is now trying to persuade the government buying agencies to buy more French products for the public service.

    PSA call themselves "A French car maker with a global dimension"
    see
    http://www.psa-peugeot-citroen.com/e...-scope-article

    I see them as one of the few companies left, competing in a consolidating and globalised industry, who happen to be one of the two remaining players with a French history.
    Last edited by gerry freed; 28th November 2013 at 08:11 AM.
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    Quote Originally Posted by gerry freed View Post
    The Button plan and its sucessive waves of subsidies were a market distortion intended to give Australian manuacturers sufficient momentum so that they could become global players and be self sustaining. A worthy aim - but the target has shifted with the industry's global concentration. The only ways such market distortions can be sustained is by local market protection or a continuing increase in subsidies to cover the now embedded inefficiencies in small localised production. Australia has used protectionism as well to short term advantage but it works both ways and it seems generally agreed that Australian has to open its doors, if others are not to penalise Australian sourced imports.

    Rather than buy jobs to the detriment of the whole economy it makes better long term sense to release the people that are in effect employed by the other Australians, to make work and to divert that valuable human resource into more sustainable and economically justifiable wealth creation for the community.---

    France ---economics of car manufacture no longer match the French operating costs, --. in countries whose cost structure and expectations of income are well below France.--if manufacture is in their cost structures. ---- China India, Russia, South America, North Africa and not the developed economies.
    ---.
    Hi
    I appreciate the consequences of playing on a Global field. Also realise the way the multi national companies exploit the Governments to their advantage. It's happening in Australia now

    But what I see is the move to reduce us all to the lowest common denominator on wages and the obvious living standards that must follow. The change process needs a strong committed Government that has the peoples interests foremost in their ideas. That's the problem we have here where will we find one of those, not in the current lot, that's for sure, not in the previous lot either. It seems from here the French are doing better than our lot, or at least trying a bit.

    What is interesting in the observation of the Global change of structure, how the rich and powerfull, eg CEOs, big corporations, seem to benefit more than anyone else by screwing the less well off Perhaps nothing really changes over the years, except the players

    I have lived in two third world countries over the years and now see that development there is now almost impossible. They have nothing to give. A subsistence living has a lower cost structure than most but the setup cost defeats any development. They can only hope to supply no cost bodies to another country and get remitances as income. However due to the level of exploitation at al levels, even this does not work Has greed taken over the whole world and there is nothing better to hope for ??? Should I start planning my grass hut and gardens ???

    jaahn

  10. #10
    1000+ Posts gerry freed's Avatar
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    Seen from here, Australia is doing a great deal better in managing change than France.
    Some 3rd world countries are social failures and improving the quality of life there is difficult for the inhabitants and of limited interest for others. Most though are capable of change for which the most powerful driver is education. You may once have described India, China and most of the Americas south of the US as 3rd world basket cases. Not today, there are several billion people improving their quality of life in these countries.
    A tidy model of the world would be that we in mature economies carry on our consumption growth in resources, while the late starters catch up. For a number of reasons, not least of which are the finite resources of our planet, we have to slip back to allow them to catch up and then move ahead together. The French Republic is philosophically based on the "Rights of Man" which are often misinterpreted as the rights of Frencmen.
    I have no moral difficulties in accepting that a poor Chinaman has a right to improve his lot by working for a wage that I cannot accept and maintain my standard of living.
    The underlying problem here is that popularist politics has allowed wealth redistribution to damage wealth creation by distributing wealth not yet earned. In simple terms pensions, healthcare, social benefits have increased beyond our ability to pay for them and the gap has been filled by borrowing. Lenders do expect to be repaid and that has nothing to do with greed, it is about equity. The greed rests with the voting public. The abuse of power is right there. The debts have to be repaid before the overspending countries can move ahead again.

    The net result is that a Chinese can save enough to buy his first car, if the car is built in his community and so matches his personal cost/reward structure. If not, it may for ever be beyond his reach because he cannot lift his income to match the purchase price if built in a mature economy.

    Here we see the other side of the equation. The French market is downsizing its car purchases and has less and less interest in large luxury cars. That is why Renault is coping with the European downturn by meeting its home market need with simpler cars made in lower cost locations.
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    On the basis of his plans for Alpine & comments on the joys of an A110 compared the Megane RS (truck-like by comparison), I developed affection for Tavares & wish him well. I look forward to a Peugeot faux-Alpine in due course. Perhaps he could buy the rights to 'Djet' from EADS &, with a bit of historical infidelity, call it that.

    cheers! Peter

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    Gerry

    I agree with your summing up of the economic situation in both France and Australia, there are non sustainable practices in both countries that will inevitable lead to change in the way our car industries and related markets do business in both the domestic and global markets. Insular moves to increasing social support when there is a need to work with other markets and provide the natural wealth growth that just might become sustainable in the long run will be a challenge for both governments.

    In the short term social needs and aspirations strangle the ability of industries to survive, let alone create wealth, while increasingly there is money diverted to what I would term frivolous and wasteful spending by individuals but also to those that suffer immediate hardship and need subsistence support from governments, an economic disaster that can't be managed unless governments can take to give more or borrow to make ends meet. I can only see one path that might serve short term economic survival without cutting domestic social support, and that is by bringing in outside wealth as investment and in effect selling off control of state supported and regulated (and now debt ridden) manufacturers in the hope of building new markets and revenue streams.

    To do that economic miracle you need to have industry with some attraction to potential partners and investment profit in the future and probably a cultural change within your own country to contributing to make those industries viable and attractive or have some means of soaking up and redirecting internal capitalisation. Do people have to work longer, for smaller wages, less immediate reward for social stability based on real economic growth ? or is it just an inevitable slide back into insular tariff protection of non viable manufacturing practices - keeping everyone happy and staving off the need to make hard decisions today.

    Even in a Banana republic, banana's become too expensive unless you bring in virtual slave labor imported for that purpose, labourers who are willing to work for next to nothing, I guess - getting non contributors to contribute at least in part for their social upkeep and the well being of countries is a moral challenge for all of us, but wealth stripping is popular too..in the short term and no one wants to sacrifice their own comfort level these days.

    Perhaps it is all up to the companies to shuffle chairs, promote new schemes and dreams - as long as I am comfortable and needs well provided for...!

    Ken

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