Borja Esteban AN INTEGRATED INDUSTRIAL POLICY FOR THE GLOBALISATION ERA - Madrid, 21 October 2011 - European ...

European Economic and Social Committee
  Consultative Commission on Industrial Change
                                         (CCMI)

                                                       Borja Esteban
                                                    Institutional Relations Spain

AN INTEGRATED INDUSTRIAL POLICY FOR
       THE GLOBALISATION ERA

                                                  Madrid, 21 October 2011

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INTRODUCTION: The PSA PEUGEOT CITROËN Group in numbers:

                Sevelnord

       Poissy           Aulnay                                          Kaluga
                                                             Kolin
   Rennes              Mulhouse
                      Sochaux                                  Trnava
                    Vesoul *
Vigo                                                                             Wuhan
          Madrid
 Mangualde                  Val di Sangro
                            (Sevelsud)

                                                Porto Real
                                            Buenos Aires

                            2nd large car manufacturer in Europe
                            Present in 160 countries
                            198 000 Employees
                            Turn over in 2010 of 56’1 billion €; 1’134 billion in net profit
                            3’6 millions vehicles sold worldwide of which 40% outside Europe

INTRODUCTION: PSA in Spain

  All PSA’s Group companies are placed in Spain:
     PSA Group companies’ employees in Spain by the end of 2010 (without
     Faurecia): 15.444 Employees it means 8% from total Group’s Employees
     (198.000).
     Peugeot Citroën Automóviles España, Peugeot España, Automóviles Citroën
     España, Banque PSA Finance, GEFCO, ATESA, Faurecia.

Figures 2010 – Industrial brand

  PSA Group companies’ employees in Spain by the end of 2010 (without
 Faurecia): 15.444 Employees it means 8% from total Group’s Employees
 (198.000).
  Peugeot Citroën Automóviles España (industrial company)
  Two plants, Vigo and Madrid. Production 522.040 vehicles (Vigo 396.727;
 Madrid 125.313) + 52.608 kits (Vigo)
  It means 21’86% of total vehicles’ production in Spain (2.387.900) and
 14’5% of PSA’s sales (3’6 Millions)
  Exclusive production vehicles for PSA’s plants in Spain; Vigo: Citroën C4
 Picasso and C4 Grand Picasso, Madrid: Peugeot 207 CC.
  Shared with other Group’s plants production vehicles; Vigo: Citroën
 Berlingo and Peugeot Partner, Madrid: Peugeot 207 Saloon and Break.

Figures 2010 – Commercial brands

    Peugeot España
Registrations, 99.814 it means 9’08% of the market
(82.678 PV; 8’4% of the market + 17.163 LDV; 14’7% of the market)

    Automóviles Citroën España
Registrations: 103.154; leader brand with a market’s share of 9’39%.
Leader on LDV market since 1996.
(81.177 PV; 8’27% of the market + 21.977 LDV; 18’81% of the market)

The Group ambitions

A step ahead (CO2) :
        Nearly 800 000 vehicles sold in 2010 with less or 120gr/km
        PSA is improving continuously its combustion engines (new 3cylinder engine
        & Stop & Start) and working on new technologies (electric, hybrid and
        rechargeable hybrid vehicles).
    Global player: objective of 50% of sales outside Europe by 2015, targeted
   markets (China, Russia, Amlat…)...
    Responsible development (climate change, safety…)
    Issues at the core of the Group strategy:
    Partnerships, Toyota, Mitsubishi, FORD, BMW (Joint venture).
    premium product development (premium product development),
   Competitiveness of production in Europe, specifically in the small cars segments.

MARKET SITUATION

   EU
         Market decrease by -3% during 1rst 8 months 2011
         Low margins
         Hesitant consumers / low consumer confidence
         High pressure on prices (discounting)
         Perspectives do not seem to be better as the prospect of growth marginal, if
         not negative, in the near and mid-term future.

Spain:
         Same forecast with severed effects
         Market decrease by -20’5% during 1rst 8 months 2011

PSA PRIORITIES

    There’s a need to reinforce the competitiveness of the automotive industry in a
   global perspective and to have reliable and favorable framework conditions and
   continuous improvement of these at all levels. At present the EU industrial policy
   contributes insufficiently to strengthening the competitiveness of automotive
   manufacturing. PSA Peugeot Citroën has high expectations concerning the new
   European industrial policy, and is therefore directly involved in sector’s initiative
   CARS21[1] (as member of the High Level Group together with the other
   institutional & economic, social and environmental stakeholders).

[1] CARS21: A Competitive Automotive Regulatory System for the 21rst Century. Mission: The group shall develop a
    realistic vision for a competitive EU automobile industry and sustainable growth in 2020 and beyond. »

PSA PRIORITIES

PSA Priorities for an EU competitive automotive framework
     Obtain recognition by EU institutions (Including Member States) of the importance of automotive
     industry[2], and an engagement towards the competitiveness of the sector/keep European
     manufacturing base

     Apply better/smart regulation principles to legislative roadmap: competitiveness impact, burden
     limitation, cost-effectiveness, cumulative effects of all pieces of legislation, consistency among policies,
     lead-times....

Examples/test case:
           Energy taxation: Proposals based on carbon & energy content - Impacts on diesel price and therefore on
           competitiveness (75% diesel world market is European) & environment (rise in CO2 emissions/danger for
           CO2 objectives – diesel 20% less diesel). Need of consistency with climate change policy.
           Other legislative proposals: Noise (cost-effectiveness, lead-time), Ecall (backwards compatibility, cost-
           effectiveness-…)

     [2] Automotive industry: 3% EU GDP, 7% EU total manufacturing output, employs 12 million (2 direct; 10
     indirect, and amounts 7% European manufacturing employment), 232 billions € in RDI investment (20%
     total EU manufacturing RD), important sources of fiscal revenues (8%), 5% EU manufacturing exports.

PSA PRIORITIES
PSA Priorities for an EU competitive automotive framework
     Integrate the European policies with a direct impact on the competitiveness of the industry, namely Innovation (financial
     support + EV standardisation) and Trade (recognize as pillar industrial policy due to impact global competitiveness +
     ensure market access without penalising EU manufacturers – reciprocity, balanced, consideration of economic & social
     impacts, including cumulative effects of agreements + Europe should define red lines for FTAs agreements –ex : UE-India :
     0x0 dismantling)

Examples/test case:
            The preparation of the Horizon 2020 proposal (=FP8) and linked framework :
             •    PSA faces great challenges – technological mutation by 2020; leadership in CO2 emissions; great investment
                  in RDI -2bn year.
             •    Expectations :
                   – FP: Increase financial support (from 500m to 5bn) to reflect economic and social importance of industry
                       and investment in RDI[3]; coverage of activities closer to the market (demonstration projects should be
                       already included); simplification of procedures (shorten instruction to 6 months, reduce burden
                       reporting),
                   – Funds (including Structural Funds) dedicated to training in new car technologies,
                   – EIB support at nowadays level (continuity actual support policy to automotive sector)
                   – State aids framework adaptation to RDI needs (recognition as societal challenge (jobs, mobility),
                       intensity of aids, support of innovation projects closer to market)
            The EU-India FTA negotiations (currently Indian offers are not acceptable : not ready to
            significantly reduce tariffs on cars –peaks for small vehicles-, exclude components,
            against recognition UNECE…Rather no agreement than a bad agreement)

                      [3] 25 billions invested annually in RDI by EU automotive industry (largest private investor in absolute terms).

Borja Esteban
  Institutional Relations Spain
                THANK YOU

Madrid, 21 October 2011

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