PSA Peugeot Citroen announced that it decided to expand engine production through an upcoming investment plan, with the winner of the strategy being a French production location instead of a competing Spanish facility.
Highlighting the decision to expand engine production in its home country instead of neighboring Spain, PSA’s decision also earned a presidential visit from President Francois Hollande, who needs all the bright spots he can get in France’s dark labor market. The second-largest European automaker announced it would invest to update and upgrade its Tremery site to build the turbocharged variant of the three-cylinder engine already produced there, in a bid to save local jobs. The additional 200,000-unit annual engine production was won over a competing bid from Peugeot’s plant in Vigo, Spain. The decision came after “work done by the Trémery site to meet competitiveness targets”, which included concessions by the French unions, said manufacturing chief Yann Vincent. The expansion does not create any new jobs, with the factory’s current 3,700 people workforce expected to naturally decline through attrition.
The investment can also be viewed as a consequence of Peugeot’s 3 billion euro ($3.26 billion) capital hike, in which the founding family ceded control over the company after China’s Dongfeng and the French government acquired matching 14 percent stakes in the loss-making automaker. The visit also comes amid troubled times for Hollande, being two days prior to the second leg of local elections in which his Socialist party lost big time to centre- and far-right rivals as the French are disgruntled with the economic situation in the country, as unemployment has been stuck at a high 10 percent margin.