Peugeot's English lesson

National trauma would be certain if a French car maker announced the closure of one of its domestic factories and dismissed all its workers. Shutting any factory in France means public outrage, strikes and soul-searching. Such action by one of the flagship Gallic marques would be unthinkable. So it was no surprise that Peugeot-Citroen has chosen a British factory to pay the price for limp sales and its shift towards low-cost production in central Europe.  In the eyes of France -- and British trade unions -- the shut-down of Peugeot's Ryton plant is a cruel lesson in the pain of globalisation. There is a sadistic touch because the evil capitalist this time is French and the victim is the nation that never stops lecturing France on the merits of flexibility and the free market.

Peugeot may protest that the factory near Coventry had nothing to do with its new plants in the Czech Republic and Slovakia, but few people in France are buying the argument today. Libération said Peugeot had "taken English leave" (as the French expression goes) as part of its "creeping relocation" of car production to low cost central Europe. The big CGT union said that Peugeot, despite denials, was obviously aiming to export heavily back to the west from its new central European plants.

Peugeot argued that Ryton, which builds the outdated 206, was sacrificed in a cost-cutting exercise because its cars are 400 euros dearer than those of its other west European plants. Perhaps, but the assumption in Paris, as in Britain, is that Peugeot chose to make the most of the celebrated flexibility that permits the dismissal of British workers with little ceremony. Reporting Le coup de grace au made in UK, Le Figaro said that Ryton had been chosen in order to "delay or escape other more painful decisions such as closures in France or Spain."

Renault notoriously chose a similar foreign option when it suddenly shut its plant at Vilvorde in Belgium a decade ago. That closure -- more brutal than Ryton's year-long phase-out -- spurred an outcry in France and prompted European legislation.

There are fewer signs of French sympathy this time because of Britain's role as goad to France on the need for deregulating the labour code. A little Gallic gloating has even been audible in the reporting today about the "shipwreck" of Britain's once great car industry. The message is clear. While Britain has been content to abandon manufacturing and forego a domestic motor industry in the name of modernity, France has not done so badly by protecting its workers and also ensuring the survival of its native car production.  A little schadenfreude is in the air.  Peugeot's French unions have this afternoon voiced their solidarity with the British workers but stopped short of their call for industrial action in sympathy. The  CGT called the Ryton closure a scandal that had been motivated by stricly financial reasons.   At Sochaux, Peugeot's big French plant, which employes 14,000, workers were reported to be worried that they could fall victim one day to the financial logic that was applied to Ryton.  

No-one in France has an answer for the obvious question: how can Peugeot-Citroen and Renault, its historic competitor,  survive in an ever fiercer market without eventually shifting production away from French factories? 

Comments

[Gareth]

Globalisation: "it's fine as long as we don't have to suffer it ourselves."
I'm waiting for the Ryton MP to go on hunger strike, or would that just be too ridiculous a concept to imagine?
Gareth
http://www.paris-link.com/blogs

[Amano]

I didnt read the article thoroughly, but exactly where is the link between the English - French relations and the German noun "schadenfreude" ? Can somebody explain me?

[Frank Schnittger]

Let no one have too much "freude uber den shaden". Soon, nearly all cars will be manufactured in China and other low cost locations. The militant trade unionism which destroyed the British car industry will not spare the French - albeit a few decades later.

Higher "value added" activities, such as design and marketing will remain in Europe. But robots - and fewer low paid workers - will build the cars.

Why would consumers want to pay twice the price for a "made in France" car?

[Andrew Robertson]

I think you have to be careful to assume that 'low value' manufacturing will move to China whereas 'high value' design and marketing remain in Europe. Experience already shows that both the Chinese and the Indians are eagerly moving up the value chain and there is no reason to assume that the high value end can remain if the low value end has moved. This is already a challenge for UK with little or no manufacturing base left and will become so for the rest of Europe.

[Sarah]

Logically, businesses are in it for the money, so closing a plant for 'strictly financial reasons' is understandable. In France the state car manufactuerers might also be sources of social adhesion, but they have no such role in the UK. So, if it costs too much, take it to Eastern Europe!

[Peter Carrington]

Sarah is right, Peugeot-Citroen are in business to make money and choosing to close Ryton, shifting production east, etc are simple manifestations of that money making objective. Choosing Ryton over one of the other European plants also makes the same kind of sense. I would be suspicious of the claim that cars made at Ryton are ‘more expensive’, because it is easy for a large corporation to manipulate its inter-company cost allocations and make any one part appear more or less profitable but it is undeniable that the more liberal labour laws in the UK make it cheaper to shut down a plant there than anywhere else. All Peugeot-Citroen are doing is fully exploiting the opportunities that are in front of them and that’s precisely what they should be doing for their shareholders.

The temptation for the French media to gloat a bit is understandable but I hope the real lesson is not lost on French voters. The truth is that where Ryton goes today the other Western European plants will follow. Nothing can change that, nothing can stop it. Governments can either embrace the reality of globalization – as companies like Peugeot-Citroen have clearly done– or can fight a rearguard action to delay it. Bold declarations of the importance and legitimacy of economic nationalism and protection of core industries, hunger-striking politicians and loud unions may win a few months or years reprieve from facing reality but that’s all. None will do anything but postpone the day of reckoning and make the inevitable more difficult to accept and embrace.

[Schadenfreude]

AMANO Pls see http://en.wikipedia.org/wiki/Schadenfreude to understand why Schadenfreude

ALL - funny to watch the French news yesterday Fr2 about the Peugeot closure, followed by a topic about job flex in UK - balanced enough in the beginning and middle, explaining why lower indemnites de licenciement force people to find jobs quicker and make compromise, showing Blair (a socialiste) in Question time factually acknowledging that job losses happen, etc. Even mentioning that 2/3ds of Rover job losses have found a new job within a year. Still, "in cauda venenum" , they had to show in the end pics of waiters and street cleaners with voice over stating that "flexibility allows you to find jobs quicker, but maybe not the ones you are qualified for". Very French message here : waiting tables and street cleaning are not real jobs - as it happens , the job holders filmed were white, so there is another couple of very subtle messages here, maybe not even realized by the tv crew, that I will leave you to figure out - take care

[Michel R.]

"how can Peugeot-Citroen and Renault, its historic competitor, survive in an ever fiercer market without eventually shifting production away from French factories?"

If French people buy so much French cars, it is - besides the fact that they offer a good quality/price ratio - mainly because they are... French! Renault and Peugeot know that if they'd shut their French factories, French people would stop buying their cars and prefer cheaper ones, Korean or Japanese. And it is of course unthinkable that the two carmakers lose their leadership on their domestic market. So they have to cope with this burden and can do so by being extra-competitive elsewhere. And this time the victims are British...

It certainly is sad for West Midlands' workers, but the closure of MG Rover did not prevent Birmingham from being the dynamic and vibrant city it is today. I'm sure people in Coventry will find ways to follow B'ham example.

[Michael]

Actually, the UK now produces almost as many cars as in the industry's heydays in the 70s and almost twice as many as Italy does. Who'd have thought it? http://news.bbc.co.uk/1/hi/business/4919922.stm Of course, most of the manufacturers are not British-owned. One of big ones is Nissan, which is, of course, French-owned. Then again, they're probably all owned by evil global capitalists. Like the Californian public sector workers' pension fund.

[martin]

As a coming of the end peugeot worker,Thats 2300 workers ,I hope we spend money on English made things to keep the english men inn jobs.

[Hugues]

Is this about making cars ? I say it isn't : http://hugues.blogs.com/commvat/2006/04/a_tale_of_two_c.html