Guide to Economic Development in the Global Auto Industry - S5

PSA's Kenitra plant rises in Morocco, a lowcost production strategy for both Europe
and Middle East markets.
now springing up to serve the plant, generating as many as 20,000 indirect jobs over the
next few years.
"The Moroccan automotive industry
is quite young, but we've had high-speed
growth in the last six or seven years," said
Khalid Qalam, the senior adviser for the
automotive industry at Invest in Morocco,
the government agency charged with luring
foreign businesses to the North African
kingdom.

GOALS THAT DOVETAIL

Morocco - a low-cost play
North Africa gave PSA new solutions for building
Middle East sales and exports
by peter sigal

T

en months might not seem like enough
expect to win any design awards for it.
time to build an automotive assembly
But what PSA did achieve, with the help of
plant from scratch. But that's the timeframe
Morocco's economic development authoriPSA Group needed in Morocco, where the
ties, is the establishment of a low-cost manugroup's new factory in Kenitra has just
facturing base for mass-market models, just
completed its first prototypes ahead of the
off the European mainland, in a region that is
start of production in 2019.
one of Tavares' crucial targets for growth and
How did PSA go so quickly from greenprofit.
field to a plant factory capable of eventually
Most of the cars and engines built in Keproducing 200,000 cars and 200,000 engines
nitra, a port city of 430,000 near the capital,
annually? The answer, PSA says,
Rabat, will be exported to other
lies in maximizing competitiveness
countries in the region - and potenand efficiency, two of CEO Carlos
tially to South America and Europe.
Tavares' favorite buzzwords.
It's part of PSA's recent push into
"To be the most competitive is
emerging markets, including India.
key," said Jean-Christophe QueComplementing the plant, PSA is
mard, PSA's executive vice president
opening a technical center that will
for Africa and the Middle East, who
employ 500 engineers.
was involved "from A to Z" in the
For Morocco, the PSA plant has
PSA's Quemard
plant's construction.
cemented the country's place as an
He refrains from providing too many
up-and-coming player in the global auto
details about the new operation: "We don't
industry. The project will create 5,000 steady
publicize how nice our equipment is or how
jobs, from blue-collar assembly-line workers
many robots we have," says Quemard. "This
to technicians and university-trained engiisn't our way of thinking."
neers, in a country that is seeking to diversify
Nor was the plant designed to make an
its economy beyond tourism and agriculture.
architectural statement, and PSA doesn't
An ecosystem of small and large suppliers is

Both PSA and Morocco speak of the key
figure of "1 million." Not long after taking the
top job at PSA in 2013, Tavares set a goal of
selling 1 million cars in Africa and the Middle
East by 2025, an increase of 40 percent from
2017, and growing profits fourfold by 2021.
Perhaps not so coincidentally, Morocco wants
to produce 1 million cars annually by 2025,
including all manufacturers. Last year, local
production totaled 341,802 cars, and 34,484
commercial vehicles - leaving the country
ranked in the mid-20s among auto-making
nations globally. But the potential is there to
crack the Top 20.
Tavares and Quemard, a former head of
purchasing at PSA, envisioned making 70
percent of those vehicles within the region.
"Clearly, to sell that many cars in the AfricaMiddle East region, you need to have them
locally produced," Quemard said.
That idea is what began the automaker's
hunt for a production site.
Quemard said PSA evaluated other options
in the area, including Turkey, which has a
strong automotive base but is subject to rising
wages and political volatility. Iran has been a
PSA stronghold but is now vulnerable to U.S.
economic sanctions. And South Africa offered
the prospect of a developed country, but it is
geographically remote.
All signs pointed to Morocco. In its favor:
France has deep historical ties to its former
protectorate. Most government and business
transactions are carried out in French, and
Peugeot and Citroen cars have been a presence
on North African roads since the dawn of the
motoring age.
"In some countries in the region," Quemard
reflects, "when you are talking about a taxi, you
don't say 'taxi' - you say 'Peugeot.'"
PSA had even relied on a Moroccan plant to
assemble vans in a joint venture with Renault
until 2010. And PSA already was buying

E C O N O M I C D E V E L O P M E N T G U I D E / J U LY 2 0 1 8

5



Table of Contents for the Digital Edition of Guide to Economic Development in the Global Auto Industry

Guide to Economic Development in the Global Auto Industry - Intro
Guide to Economic Development in the Global Auto Industry - S1
Guide to Economic Development in the Global Auto Industry - S2
Guide to Economic Development in the Global Auto Industry - S3
Guide to Economic Development in the Global Auto Industry - S4
Guide to Economic Development in the Global Auto Industry - S5
Guide to Economic Development in the Global Auto Industry - S6
Guide to Economic Development in the Global Auto Industry - S7
Guide to Economic Development in the Global Auto Industry - S8
Guide to Economic Development in the Global Auto Industry - S9
Guide to Economic Development in the Global Auto Industry - S10
Guide to Economic Development in the Global Auto Industry - S11
Guide to Economic Development in the Global Auto Industry - S12
Guide to Economic Development in the Global Auto Industry - S13
Guide to Economic Development in the Global Auto Industry - S14
Guide to Economic Development in the Global Auto Industry - S15
Guide to Economic Development in the Global Auto Industry - S16
Guide to Economic Development in the Global Auto Industry - S17
Guide to Economic Development in the Global Auto Industry - S18
Guide to Economic Development in the Global Auto Industry - S19
Guide to Economic Development in the Global Auto Industry - S20
Guide to Economic Development in the Global Auto Industry - S21
Guide to Economic Development in the Global Auto Industry - S22
Guide to Economic Development in the Global Auto Industry - S23
Guide to Economic Development in the Global Auto Industry - S24
Guide to Economic Development in the Global Auto Industry - S25
Guide to Economic Development in the Global Auto Industry - S26
Guide to Economic Development in the Global Auto Industry - S27
Guide to Economic Development in the Global Auto Industry - S28
Guide to Economic Development in the Global Auto Industry - S29
Guide to Economic Development in the Global Auto Industry - S30
Guide to Economic Development in the Global Auto Industry - S31
Guide to Economic Development in the Global Auto Industry - S32
Guide to Economic Development in the Global Auto Industry - S33
Guide to Economic Development in the Global Auto Industry - S34
Guide to Economic Development in the Global Auto Industry - S35
Guide to Economic Development in the Global Auto Industry - S36
Guide to Economic Development in the Global Auto Industry - S37
Guide to Economic Development in the Global Auto Industry - S38
Guide to Economic Development in the Global Auto Industry - S39
Guide to Economic Development in the Global Auto Industry - S40
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