Like many competing companies in the auto industry, Peugeot faces challenges in managing its labor and human rights conduct. Facing serious competition from both Asian producers and from regional competitors off shoring production, the company is challenged to operate in accordance with its code of conduct. Accounting for overall practices in the industry, Peugeot manages to scrape by with respect to its human rights practices.
The best-selling auto brand in France, Peugeot is No. 2 behind Volkswagen in passenger car and commercial vehicle sales in Europe. Peugeot makes cars and light commercial vehicles under the Peugeot and Citroën brands. It also offers parts (Faurecia), transportation and logistics (GEFCO), and financial services (Banque PSA Finance) for dealers and customers. Other products include motorbikes, scooters, and light-armored vehicles. The Peugeot family controls more than 45% of the voting stock.
Recent Events
In September 2007, the Middle East Executive Motoring News Wire reported that Iran’s government is looking into the possibility of claiming compensation from Peugeot due to a large number of its 405 model catching fire and subsequently killing around 150 people, reported the Iran Daily. It is believed the fires were caused by a fault in the vehicle’s fuel system. The Peugeot 405 is manufactured locally, under license, by Iran Khodro; the story first appeared last December.
A February 2007 BBC report stated that the unveiling of the European Commission’s plan to cut CO2 emissions from cars has opened a new phase of a lobbying war between the motor industry and environmentalists. However, according to the report PSA Peugeot Citroën is not far from meeting the voluntary targets established by the Commission.
Country Risk
The Company has 12 production centers in Europe and some in China, Iran and Latin America. It’s 2007 sales by country are as follows: Europe (34%), Asia/Pacific (28%), South America (24%), Other (14%).
With commercial presence in more than 150 countries, the company is focusing its strategy of international development in three zones: Latin America, China and Eastern Europe. In 2006, PSA Peugeot Citroën sold more than one million vehicles internationally. Up 4% year-on-year, these sales accounted for a full 31.8% of the Group’s worldwide sales. Major international markets included Latin America, with 215,000 units, China (202,500) and Eastern Europe (180,000). PSA Peugeot Citroën has several production sites in these development zones, notably in Brazil, Argentina and China. This trend explains the shift away from the UK.
Labor Relations
Peugeot workers are represented by Amicus, the Transport & General Workers Union, and the AEEU in the UK, and are represented by a number of unions in France.
In 2006 PSA Peugeot Citroën closed its only UK factory at Ryton near Coventry to build a new plant in Slovakia. According to the Transport & General Workers Union, this resulted in 2,300 UK workers losing their jobs. To the dismay of employees and the Union, Peugeot ended up accelerating the closure of the Ryton plant by six months and refused to link redundancy pay for Ryton workers to a new pay deal.
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