PSA deal aims to create win-win for Opel, French engineering firm

November 21, 2018 12:03 CET

When PSA Group confirmed in September that it planned to transfer 2,000 engineering jobs at the Opel engineering center in Ruesselsheim, Germany, to Segula Technologies, the question on many people’s minds was: Who?

It’s a fair question. Segula is a French engineering company that has been active only since 2000. The company’s 12,000 employees work in the fields of automotive, aerospace, energy, naval, railways, and oil and gas, though automotive work makes up about 55 percent of Segula’s business.

The so-called “externalization” of PSA Group work to Segula would increase the size of Segula’s automotive division by 40 percent, said Laurent Germain, group managing director for Segula Technologies.

It’s part of a pattern of sharp growth at the privately held company, which has increased its revenues to about 700 million euros this year from 345 million euros in 2013, and is hoping to add an additional 4,500 employees in the coming year.

“The aim of Segula is to become the world leader in automotive engineering activities,” Germain said in an interview at the Paris auto show. Segula has activities in 28 countries, but 50 percent of the turnover — and 6,000 employees — are in France.

The Ruesselsheim agreement, if ratified by German unions, would give Segula a strong presence in Europe’s largest automotive market, and one where spending on r&d tops 3 billion euros a year, Germain said.

“That is about one-third of global automotive research and development spending,” he noted, adding that it was likely to increase to as much as 6 billion euros by 2023. “This is precisely why we want to increase our presence in Germany.”

Easing a potential headache

For PSA Group, the deal eliminates, or at least delays, a major personnel decision.

When PSA acquired the perpetually money-losing Opel/Vauxhall from General Motors in 2017, CEO Carlos Tavares said that combining product development and r&d would be a major driver of synergies.

The Ruesselsheim technical center, with 7,000 employees and, now, a greatly reduced workload, has been in the crosshairs.

PSA has shifted some functions there, such as light commercial vehicle development and electric cars, but there still appears to be an oversupply of engineers.

“We analyzed the situation in depth,” Anka Felder, Opel’s labor director, said in an interview posted on Opel’s Twitter feed last month. “A strategic partnership is by far the best solution to keep the highly qualified jobs here on site.”

She said that by having a partnership with Segula Opel would “tackle the overcapacities that have been created by the decreasing workload from external parties.”

Felder added: “Therefore, there was a certain level of relief that we are presenting a plan that could sustainably safeguard 2,000 jobs in Ruesselsheim.”

If the deal gets final approval, expected by the end of the second quarter next year, PSA engineers will essentially work for Segula rather than Opel at first, Germain said.

“They will work on the same projects in the same locations,” he said. Segula will honor a commitment made by Tavares that jobs at the technical center will be safe until at least 2023.

Although the Ruesselsheim project was an open-bidding process, PSA is very familiar with Segula’s capabilities.

Segula has already completed three similar externalizations with PSA Group. Three years ago it took over operations at the test facility in La Ferte Vidame southwest of Paris; it operates the group’s body shop activities in France; and manages process engineering activities at PSA’s joint venture in China with ChangAn, known as Capsa.

“It’s probably why PSA chose us,” Germain admitted.

“We want to use the competencies of these 2,000 [Ruesselsheim-based] engineers to increase our market share with other German automaker such as VW, BMW and Daimler,” Segula Group Managing Director Laurent Germain said.

Ambitions for Germany and China

While Segula’s activities in Ruesselsheim would start with existing PSA Group projects, the ultimate aim is to use the work there as a bridge to win more contracts in Germany — and ultimately China.

“We want to use the competencies of these 2,000 engineers to increase our market share with other German automaker such as VW, BMW and Daimler,” Germain said.

Segula specializes in engineering a new car “from A to Z,” said Vincent Fournier, executive vice president and commercial and technical group director at Segula. Fournier said the largest projects — with fees of tens of millions of euros — involve creating a new model on an existing platform, though Segula would not name any specific projects, citing confidentiality rules.

More and more automakers are outsourcing this kind of model development, because they need to devote resources and money to future technologies, Fournier said. In addition, the creation of new segments and subsegments, many centered on SUVs or crossovers, has led to increased demand.

“The market is growing due to new technologies,” Fournier said, “and at the same time you have a real multiplication of body types on the same platform.”

Segula hopes that making inroads with German automakers will help land new contracts in China, the world’s largest auto market. “In China, the signal of a successful engineering company is to work with German automakers — and having thousands of engineers in Germany helps you win market share in China,” Fournier said.

Germain acknowledged that the potential Opel agreement has put Segula in a spotlight that it might not be accustomed to, but he said the company was trying to embrace it.

“It’s a structural change,” he said. “We’re becoming better known, because our customers are relying on us more, and they are giving us more responsibilities.”

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