2023-10-06 07:58:57
Published on Oct. 6, 2023 at 9:58 a.m. Updated on Oct. 6, 2023 at 9:59 a.m.
Morocco is a good summary of Plastic Omnium’s activity. In this country which should, in the near future, produce 700,000 cars per year, or half of French production in 2022, and has created 200,000 jobs in the automobile sector in twenty years, the equipment manufacturer has three factories in three of its five divisions (plastic parts, tanks, lighting), the other two branches being new energies (mainly hydrogen) and modules.
Lighting is the new addition to the group. After being outdone by its competitor Faurecia (now Forvia) in 2021 for the acquisition of the German Hella, one of the three leaders in the sector, Plastic Omnium bounced back a few months later by acquiring the Indian Varroc and the German AMLS to form a group which should achieve 1.2 billion turnover this year. “ We went into lighting, driven by Varroc’s main customers [qui était à vendre] », explains Laurent Favre, the general director of Plastic Omnium, “ and by conviction because the integration of lighting in exterior rooms [l’équipementier est le numéro un mondial des parechocs] would give us a unique position in the market ».
Lighting has become a central element for designers with increasingly complex and varied shapes. Electric vehicles are accelerating this trend since the entire front panel used to accommodate the radiators on thermal models (petrol and diesel) is now freed and often replaced by luminous elements. Another favorable underlying trend, chrome parts, now frowned upon for environmental reasons, are giving way to lighting effects. Finally, light projection (broadcasting messages on the ground), a specialty of AMLS, is developing. As a result, the global lighting market is expected to grow, in value, by 4.4% per year until 2030, a rate significantly higher than that of automobile production.
In its Tangier factory, which employs 820 people and achieves an annual turnover of around 120 million, Plastic Omnium produces 3 million units per year intended for the local market at 40% (Renault factories in Tangier and Casablanca and Stellantis from Kenitra) and 60% for export because, unlike many parts which, for logistical reasons, must be manufactured near the manufacturer’s site, lighting products, light and space-saving, can export. The “made in Morocco” front and rear lights supply factories of the Volkswagen, Stellantis and Renault groups in Spain, Portugal and even France.
A shadow over lighting in 2024
If Varroc was paid for a relatively low price (520 million euros, or less than half a year’s turnover), it is because the group was not in good health. “ At the time of the acquisition, the company was losing a lot of money with prices that were too low, operational performance was insufficient, structural costs were too high, etc. The first objective was to balance the operating profit, which was achieved on the month of June when we were starting from operational losses representing more than 10% of turnover. The goal now is to be as close as possible to balance in the second part of the year. », explains Laurent Favre.
If the company aims to go from 1.2 billion sales this year to more than 1.5 billion by 2027, with a margin of around 5%, the next two years risk being more complicated in terms of Sales. Plastic Omnium assures that order intake should exceed turnover this year, but this had not been the case previously. The delay being two to three years between the announcement of the order and its effective transformation into turnover, the equipment manufacturer will see its lighting revenues drop sharply in 2024 (around 1 billion) only to rise once more to from the second part of 2025.
Reservoirs, a “cash cow” profile
In reservoirs, which represented 2.5 billion turnover last year, the problem is different. Plastic Omnium must manage a declining market due to the growth in sales of electric vehicles, therefore without tanks, unlike hybrids, which even require more sophisticated products. “ We asked ourselves the question of what we were going to do with this activity. We quickly came to the conclusion that it was necessary to continue it by consolidating the market », indicated the general director. The ambition is to remain stable at around 17 million tanks sold per year by 2028, but by strengthening the group’s leading position, whose market share would increase from 23% this year to 30% in five years. The 40% mark is even targeted in 2035.
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« We will record a record order intake of 3 billion euros this year, therefore an amount greater than turnover. Our large customers want to ensure that they will maintain a logistical supply chain for thermal vehicles “. While the sales volumes of this type of car will drop sharply in Europe (marketing will be prohibited in 2035), they will remain significant in certain regions such as North and South America, Africa, the Middle East or Asia excluding China. And the group, which will no longer have to invest in this activity, should generate high margins, favored by its leading position, and a comfortable cash flow which will allow it to invest in other divisions.
Plastic Omnium’s Tangier plant (126 employees) supplies all the tanks fitted to thermal cars produced in Morocco, i.e. 466,000 pieces last year, for a turnover of 40 million. Figures in strong growth since the milestone of 550,000 units should be reached next year with the start of production for the Dacia Jogger, the assembly of which will be transferred from Romania to Morocco. Unlike lighting parts, tanks cannot be transported long distances.
This characteristic is even more marked for plastic and composite body parts (85% of front and rear bumpers), the group’s historical activity and the most important with more than 3.5 billion turnover and 66 factories in the world, with, here too, a number one position: one in six bumpers manufactured in the world is thus stamped Plastic Omnium. These bulky parts with multiple variations (taking into account finishes and colors, there are 147 types of front end of the Peugeot 208, the most sophisticated of which can include more than 30 different parts!) must be assembled close to the factory of the manufacturer customer which, in a just-in-time production policy, requests delivery within three hours by its supplier.
Lightness and aerodynamics
Located in Kenitra, north of Rabat, a few hundred meters from the assembly site of its client Stellantis, the Plastic Omnium factory, which has 240 employees, supplies the front and rear bumpers for the Peugeot 208 as well as all of the bodywork, i.e. 40 kilos of plastic, of Citroën’s Ami electric carts and its little sisters marketed under the brands Opel (Rock-e) and Fiat (Topollino).
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In total, 150,000 208 and 35,000 carts will be equipped this year, for a turnover of 35 million euros. And this is only the first step since Stellantis has started the construction of a second factory, which will be operational in two years. “ The manufacturer will go from one 208 produced every two minutes to one every minute », explains Jean-François Robert, the director of the factory. As for the carts, their commercial success should enable production to increase to 50,000 units next year. Like lighting – and unlike tanks – this division is favored by the ongoing electrification of the market, which requires more lightness and more aerodynamics to preserve autonomy. In addition, the development of driver assistance systems and accompanying radars and sensors favors plastic parts, which are transparent to waves unlike steel and aluminum.
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