PARIS - PSA/Peugeot-Citroen plans to outsource more components because of pressure on internal resources and the growing technical complexity of some parts.
'We won't outsource existing components,' said PSA purchasing director Herve Guyot in an interview. 'But with our new projects a greater proportion of components will be bought in.'
PSA has decided to buy seats for the Peugeot 307 - the successor to the lower-medium 306, due later this year - from French supplier Faurecia. Another example is a plan to outsource shock absorbers on a future project.
Shortage of internal resources to handle component development is a key factor, said Guyot.
PSA is also selling major component operations. In October, it said it would sell control of its steering systems business to Koyo Seiko of Japan. PSA's French steering component plants in Dijon and St. Etienne will be put into a joint-venture company, 51 percent owned by Koyo Seiko and 49 percent by PSA.
In November, PSA sold its La-Barre-Thomas (LBT) operations in Rennes, France, to CF Gomma SpA of Italy. LBT supplies Peugeot and Citroen with antivibration components, seals, and water and air hoses. CF Gomma specializes in rubber components.
Guyot said PSA is outsourcing manufacturing as well as development because it is difficult to optimize production without also taking responsibility for development.
PSA is also starting to favor the use of component modules.
'At first, we were skeptical about the benefits of simple supplier assembly of modules,' said Guyot.
But PSA executives now believe that second-generation modules with significant integration of functions and supplier input can offer cost savings. Guyot said the company is looking to outsource door modules, cockpits and front ends on future platforms.
Guyot said the decision to increase outsourcing has also been prompted by a growing emphasis on the return on capital within the PSA group. In the past year PSA has focused more on where it is putting its resources.
In areas such as foundry operations and stamping, PSA has competitive production and development capacity in-house, said Guyot. 'But we may have to make choices between projects,' he added.
The growing use of cast aluminum parts, for example, will require investment from PSA and could be outsourced, said Guyot.
And while PSA wants to keep major stamped parts in-house, capacity limits are pushing the company to outsource more of the structural and smaller parts.