The final counterattack of Shenlong?
Editor’s note: This article is from “Future Car Daily” (WeChat public ID: auto-time), author: Pan Lei.
Author | Pan Lei
Edit | Liang Chen
After three consecutive years of decline in sales and a plunging of more than 60% in the first half of this year, it is reported that Dongfeng Group and PAS (Peugeot Citroen Group) joint venture car Shenlong Automobile began to seek to “change” to a greater extent.
Recently, the future car daily (ID: auto-time) obtained a screenshot of the consultation document between Dongfeng Group and PSA. The text shows that on July 16 this year, Dongfeng Group Chairman Yan Yanfeng and PSA Group President Tang Weishi were in Paris. The “Dongfeng-PSA Strategic Alliance Committee” was held, saying that Shenlong will continue to promote organizational optimization. On December 1, 2019, the new organization will be officially launched to prepare for 2020.
The document said that this is the first time in the history of the two shareholders to reach a consensus on the internal control level of Shenlong Company, and to change the situation of poor cooperation in the past. The new organization will eliminate the lengthy mechanism that requires the signing of both parties for the existing one-by-one business.
In addition to institutional adjustments, the document also mentions layoffs, with 8,000 employees currently being reduced to 5,500 by the end of the year. In 2022, the total number of employees fell to 4,000. This means that the layoffs will reach 50%.
In addition, the “F99 Capacity” optimization plan to improve cash flow will continue to be promoted: One factory of Shenlong Automobile in Wuhan will be relocated to the Shenlong No. 3 Plant. The existing Shenlong No. 1 factory will be collected and stored by the government. Adjusted from industry to business. The value-added income generated by the government and Shenlong Company is 50% each, and it is expected to replenish cash flow of 4.9 billion yuan. The Shenlong II plant will be sold along with the equipment and is under negotiation.
Dragon Car is a joint venture established by Dongfeng Group and PSA in 1992. It has two brands, Dongfeng Citroen and Dongfeng Peugeot.
On August 12, in response to the above-mentioned layoffs and the transfer of factories, the relevant person in charge of Dongfeng Group responded to the future automobile daily report: “The information on layoffs is not true. We are now working on a policy of rest.”
And said that in the cold winter of the overall market, in order to get out of the predicament and reverse the unfavorable situation as soon as possible, the company is actively analyzing the problems, re-adjusting the plan, and formulating the gradual goals and actions. At present, Shenlong Company is actively expanding various channels to properly divert surplus personnel due to low capacity utilization rate at this stage and improve internal operation efficiency. For example: in shareholdersWith the support of the company, the company will organize employees to support the brothers within the Dongfeng Group; organize employees to deploy to the company’s off-site factories across the region; and study the introduction of temporary rest policies.
In response to the abolition of the Wuhan Shenlong Automobile Plant and the Second Plant, the above respondents said: First, this is the need for urban planning adjustment. According to the latest industrial planning of Wuhan Economic and Technological Development Zone, to build new car capital, accelerate the upgrading of urban regional functions, and promote the rapid development of regional economy, it is necessary to adjust some industrial layouts. The new plan involves the construction of a block in the Wuhan plant of Shenlong Company.
Second, the need to increase the contribution of corporate social value. With the development of Wuhan Economic and Technological Development Zone, the surrounding area of Wuhan Shenlong Factory has been surrounded by residential areas, commercial service areas and health education areas. Shenlong Company actively responded to Wuhan’s “Hug the Blue Sky” plan, optimized the production capacity layout, assisted the urban area function upgrade, and helped the Wuhan Development Zone to create a better livable and suitable environment.
Third, the need for healthy development of the company. By optimizing the layout, the company’s Wuhan regional production capacity is further concentrated to achieve intensive production. After the implementation of the production capacity layout project (code name F99), the Wuhan plant will build a production capacity to the Shenlong Automobile Manufacturing Group, and the overall operating efficiency will be improved. At the same time, the Shenlong Automobile Manufacturing Co., Ltd. is the benchmark for the PSA Group’s global vehicle production base. One of them has won the PSA Golden Palm Award for Best Lean Factory twice. Its advanced equipment and management level are more conducive to further improve product quality and reduce costs, and also meet the company’s future development needs in space.
The above-mentioned response from the relevant person in charge of Dongfeng Group confirmed to some extent the documents reached on the “Dongfeng-PSA Strategic Alliance Committee”.
The well-known auto industry analyst Jia Xinguang said in an interview that the problem of Shenlong is in the foreign side.
From the above documents, this time Shenlong is going to major surgery on the decision-making system, and it can be seen that Shenlong intends to complete its work in 2020.
But the hard part is that since April 2017, Shenlong has experienced up to six institutional reforms and more than 10 high-level personnel turmoil, and from the current results, it has not worked.
This time, will it be the Jedi’s Jedi counterattack?
Hope is.
