PSA/Peugeot-Citroen has decided to go with a French plant instead of a plant in Vigo, Spain, for its plan to expand engine production. The automaker aims to produce 200,000 more engines annually. For this project, the company chose to build the turbocharged version of a three-cylinder engine that was already being produced in the Tremery plant located in northeastern France.
This plant will have to be upgraded to accommodate the increase in production. This move is seen to protect local jobs. According to manufacturing head Yann Vincent, PSA based its decision on how the Tremery plant was able to reach competitiveness targets as well as on the unions’ concessions related to productivity.
Vincent asserted that this added production will not result in the net increase in jobs. In fact, attrition will still cut some of the plant’s workforce of 3,700 members. He added that the decision to boost domestic production had a strictly economic basis.
It won’t have any impact on actions to double the parts bought from lower-wage countries according to recovery plan initiated by CEO Carlos Tavares. He also said that Spain may have lower wages but it was more of a financial advantage to utilize the existing engine production capacity as well as the component supply logistics of the plant in Tremery.
Currently, only vehicles are manufactured in the Vigo plant. Vincent emphasized that the decision was due to its “superior economic performance." The models that use the three-cylinder engine include the following: the Peugeot 208, 308, 2008 and 3008, the Citroen C3, C4, C4 Cactus and C4 Picasso, as well as the DS 3 and DS 4.
In a statement, PSA said that the engine reduces fuel usage and CO2 emissions by 18% on average in comparison with the naturally aspirated EP Prince engine. There’s no denying that some vindication will be claimed with regards to this investment.
PSA received a 3 billion euro ($3.26 billion) bailout wherein the French government was able to acquire a 14% stake last year. When Economy Minister Emmanuel Macron hosted a workers’ delegation last March 19, he expressed his support for Tremery to get the new investment.