PARIS - A senior management shake-up inside PSA/Peugeot-Citroen has highlighted some of the obstacles CEO Jean-Martin Folz faces as he tries to reshape the tradition-bound company.
Long-time PSA executive Jean Wolff has resigned suddenly as executive vice president in charge of engineering and purchasing.
Wolff will be replaced by Jean-Louis Silvant, currently head of manufacturing. Silvant also becomes head of the platform division that has been headed by Roland Vardanega. Vardenaga takes over the manufacturing job from Silvant.
PSA insiders say the moves signal problems in the restructuring launched by Folz in early 1998.
The sources say it also points to a quandary for Folz: How to change an organizational culture not accustomed to bringing in executives from outside.
Silvant, Vardanega and Wolff have spent most or all of their careers in PSA - Silvant since 1961, Vardenaga since 1967 and Wolff since 1975.
PSA had little to say about Wolff's departure. 'He is 60 and is leaving for personal reasons,' said Frédéric Saint-Geours, executive vice president in charge of the Peugeot brand.
Sixty is the age of retirement in France.
But PSA insiders say the main reason for Wolff's departure and Vardanega's reassignment run deeper.
In the scheme laid out in 1998, Wolff's purchasing division was also made responsible for body and chassis engineering, powertrain and electronics.
The engineering division, which employs about 8,000 people, also provides staff for the platform division, led since 1998 by Vardanega.
The platform division is in charge of developing new vehicles through four seprate departments: three for cars and one for powertrain.
PSA executives say that cooperation between the engineering and platform divisions is critical to the success of Folz's organization. But relations have not gone smoothly, sources say.
Silvant's appointment as the combined head of engineering, purchasing and platforms is meant to improve efficiency by putting all PSA engineering operations in one hand.
'The platform policy is right in its principle,' said an insider. 'But the revolution inside the engineering departments happened extremely quickly. Meanwhile, some of the men had a Peugeot background, while others came from Citroen.'
In addition, the source said that many people had to move between PSA's technical centers in Velizy, La Garenne, Carrières in the Paris area and Sochaux, in southeastern France.
'Naturally they were a little destabilized,' he said.
Meanwhile, Wolff was seen as a purchasing expert rather than a product man by car development engineers, said one PSA insider.
Silvant, who joined Peugeot in 1961 and was Peugeot's vice-president for manufacturing from 1986 to 1998 under former CEO Jacques Calvet, is considered a strong, determined leader, even though not an engineering specialist.
'He often opposed Calvet,' said another source. 'And you cannot fool him.'
Silvant is also said to be trusted by the Peugeot family.
However his appointment is considered a temporary solution. He is 62, two years older than Wolff.
Vardanega's move to the manufacturing division is not being viewed as a promotion, even though he will manage PSA's worldwide manufacturing operations and a total of about 90,000 workers.
Though trained as an engineer, sources say Vardenaga was not suited for the platform job because he spent most of his career in human resources positions. His specialty has been in dealing with unions.
Sources say the changes underscore a major dilemma for Folz - how to find and promote a new generation of top managers from within PSA.
Unlike Renault, PSA has only rarely brought senior executives in from other companies.
Folz, who arrived in 1997 as CEO-designate, is the only recent newcomer to PSA's top management.
There was a sign of change last January with the hiring of former Ford stylist Jean-Pierre Ploué, 37, as Citroen's chief designer.
Sources say that Folz also realizes that pay levels for PSA top executives must be improved- especially compared to Renault - to prevent defections.
He has appointed a vice-president, Jean-Louis Grégoire, to deal with that issue.
Getting and keeping good senior managers is an important issue for PSA. After Renault formed an alliance with Nissan in March, 1999, a top PSA executive told Automotive News Europe:
'We certainly could not do what Renault is doing, because we are unable to divert fifteen or twenty managers and send them to Tokyo to fix Nissan's problems.'