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ORIGINAL FRENCH ARTICLE: « Le guide » Peugeot contre l’emploi

by Alain Cwiklinski

Peugeot’s “Guide against employment": a Confidential ’Guide’ on Outsourcing

Translated Friday 8 June 2007, by Gene Zbikowski

The automobile sector. obtained a confidential document on the PSA group’s - the owners of Purgeot - purchasing policy. The goal is to subcontract in low-cost countries. Thousands of jobs are threatened in Western Europe.

Sochaux (French département of Doubs), by our special correspondent.

The announced axing of 10,000 jobs among the executives and supervisors at PSA has upset some practices at the company.

Over the past few days in Sochaux, executives have been muttering, and for the first time in the history of Peugeot, “confidential” documents have been leaked. This enabled the CGT union at Peugeot’s Sochaux plant to reaveal, last week, the “PSA Global Sourcing Guide,” which is a weighty 150-page volume written in 2006, labeled “strictly for internal use,” and which obliges the group’s executives to review their buying policy for various automobile components. Western suppliers are much too expensive.

The company gets right down to brass tacks: “Purchases amount to 75% of the production cost of our cars. The gains that can be counted on in employing a global approach to buying will consequently have a proportional effect on the profitability of the group’s industrial operations.” And the automaker warns that “In 2005, for the series production lines, purchases in competitive countries by the PSA Peugeot Citroën amounted to nearly 10% of the overall mass of purchases. Today, it is a question of widening still more our negotiations regarding series, spare parts, accessories, capital goods and services to competent suppliers based in these countries and to arrive at a 25% to 45% range by 2010.3

Thee purchasing executives will therefore be required to give preference to more competitive suppliers in low wage countries over Western suppliers, which are much too expensive. PSA’s purchasing strategist unashamedly declares: “The group’s ‘Global Sourcing’ strategy is aimed at opening range of products to new suppliers in order to breathe new life into the competition to which present suppliers are subject.”

This competition is to involve a certain number of clearly identified countries from now on. The purchasing executives must consider precise criteria: “The list of Leading Competitive Countries (LCCs) is defined based on the economic criterion of per capita Gross Domestic Product (GDP). A country is considered to be an LCC if the per capita GDP is under $14,000. This list will vary as new statistics become available. From now on, when a country exceeds the $14,000 per capita threshold, it will be removed from the list.”

Thus PSA is already considering terminating its contracts with countries which are, all the same, emerging countries : “Slovenia with its $14,810 per capita will no longer be considered as an LCC in 2007.” The Slovenian people have, it seems, gotten rich too quickly. But it doesn’t matter, the list is long and arrangements can be made, depending on circumstances. “Israel, with its $17,380 per capita, is, however, considered to be an LCC considering the state aid to kibbutzim, which allows the country to offer competitive prices.”

The geographic area where suppliers are to be found has shifted considerably: “As concerns the search for new suppliers, the prime perimeter consequently comprises the following zones: Eastern and Central Europe, Turkey, North Africa, South Africa, Latin America, India, China, South Korea, Southeast Asia and Iran.” The document points out that “Turkey and the countries of Eastern Europe have, in view of the first analyses, the greatest short-term potential.”

These new priority zones are defined in descriptive company records as providing “industrial and macro-economic elements” whose main characteristic is “the low level of wages that are practiced.”

This obsession about reducing production costs leads Bruno Lemerle, a CGT shop steward, to openly express his indignation and his concerns: “What appears between the lines is not a desire to develop the company and employment, but an obsession about reducing costs to increase the profitability of capital and the return to shareholders. This policy is a threat in the long run for all labour pools in Western Europe, and it is going to accelerate social breakdown. We have to alert public opinion and the government and mobilize all workers against this industrial strategy. It has already had well-known consequences, such as the delocalization of part of the production of EAK, a subsidiary of Faurecia, and of Trecia, and of Delphi, which is going to shut down its plant in the Montbelard area in June.”

In the coming days, the “PSA Global Sourcing Guide” is going to make the rounds of all the automobile companies in Eastern France. Cyril Keller, the leader of the CGT union in the automobile sector, wants to organize general assemblies: “Subcontracted workers are hesitating to hold the bosses responsible for the delocalizations and the closure of their companies. There were of course rumours concerning this strategy but no one had any concrete information. This time, it’s in black and white. PSA wants to bust local subcontracting at every level. The reaction is going to be sharp each time a downsizing plan is announced!”

According to the INSEE (The French government bureau responsible for establishing statistics), Franche-Comté, one of the most industrialized regions in France, and which is also among the most dependent on the automobile industry, lost 5.6% of its auto sector jobs in one year. These are losses that are likely to worsen if the “Global Sourcing” policy is implemented.

Contacted by l’Humanité, the management of PSA could not be reached yesterday. When questioned on Thursday by the regional newspaper Le Pays, management admitted the existence of the document revealed by the CGT trade union but felt that it was only a transcript of practices that have already been implemented by the French automaker.

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