Exclusive: Peugeot takes low-cost step with Moroccan outsourcing

Wed Nov 5, 2014 11:23am EST
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By Gilles Guillaume and Laurence Frost

PARIS (Reuters) - PSA Peugeot Citroen (PEUP.PA: Quote) will open an engineering center in Morocco with consulting firm Altran (ALTT.PA: Quote) in the first major step under new boss Carlos Tavares to increase the French carmaker's footprint in lower-wage countries, sources said.

Peugeot will outsource some research and development functions to the new Altran center, creating 1,500 jobs, two people familiar with the plan said, as the carmaker weighs an eventual investment in low-cost vehicle assembly in Morocco.

The site in Casablanca will specialize in computer-assisted design, modeling and technical documentation. The move could pave the way for an assembly plant to follow in the footsteps of French rival Renault's (RENA.PA: Quote) no-frills car factory up the coast in Tangier.

"Morocco is on its radar," one source said. Moroccan officials are in "serious discussions with several carmakers including PSA".

A Peugeot spokesman said there were no plans for a low-cost assembly plant and would not confirm the Casablanca R&D center. Paris-based Altran, an engineering services specialist, said there was "no new contract" with Peugeot, declining to respond to further questions.

Peugeot shares rose following the Reuters report and were up 1.8 percent at 9.42 euros as of 1605 GMT (11:05 a.m. EST), valuing the company at 7.2 billion euros.

The Moroccan R&D move is an important step for Peugeot as it seeks to regain competitiveness, and a symbolic win for the North African kingdom reflecting its growing industrial sophistication in sectors such as cars and aerospace.

But any impact on jobs in France, where Peugeot is already reducing its engineering workforce, would be unpopular with unions and sensitive for the government.   Continued...

A Peugeot logo is seen on a car which is displayed at PSA Peugeot Citroen headquarters in Paris April 14, 2014. REUTERS/Benoit Tessier