Why Renault-Oran cannot overshadow Renault-Tangier.
3 September 2013
Read by 1604 persons
For an amount equal to that invested by Morocco, Algeria can at best claim 10% of the capacity of the Moroccan plant
With the launch of the construction work of the Renault vehicle assembly plant in Oran, which was supposed to start last week, voices have been raised predicting a threat to the future of the Moroccan automotive industry, which nevertheless boasts an 18.4% improvement in its exports at the end of July (2.7 billion DH). Would the next production unit pose a real danger to Renault-Tangier? Nothing is less certain. The Oran plant is far from competing with that of the capital of the Strait. Explanations.
The fundamentals of strategic management mean that it is not the responsibility of a company, which is supposed to be profitable in the face of international competition, to do social work. But the entry into play of geopolitical considerations can change these universal rules. This is the case of French companies in their relations with the Maghreb countries, in this case Morocco and Algeria. Comparing the profitability indicators of the two projects can tell us a lot. In terms of production capacity, tax benefits, direct employment, logistics and costs, Tangier is far from risking exposure to competition from Oran.
In terms of production, that of the Renault-Tangier complex, initially, was 200,000 units per year and should reach 400,000 units by 2014/2015. Located on 300 hectares with a capacity for low-cost vehicles, the production of the Tangier plant is primarily intended for export to emerging markets, but will also be marketed in Europe. For the Oran site, covering 152 hectares, production will not exceed 25,000 cars/year initially, of the new Symbol, a model derived from the latest Logan without export to Europe, before exceeding 75,000 units/year by 2017/2019. In terms of employment, the Moroccan unit, benefiting from the low cost of labor, has created 6,000 direct jobs and should create 30,000 more indirect jobs. Meanwhile, that of Oran will initially create 350 direct jobs. On the side of the Algerian authorities, 8,000 direct jobs and 20,000 other indirect jobs are announced. And this, for a productivity almost ten times lower than that of Morocco.
In addition to production capacity, jobs created and export revenues, Renault-Tangier also benefits from several tax and logistical advantages.
In Tangier, first-rank suppliers or subcontractors are already established at more than 60% in the free zone. This unit also benefits from a five-year exemption from corporate tax, VAT reductions, training subsidies and financial aid for construction. The cost of the project, according to various sources, is 1.1 billion euros committed in two installments, including 640 million initially. The equity invested, capital and current accounts, amounts to 240 million euros, divided between Renault-Nissan France and the Moroccan Caisse de dépôt et de gestion, respectively at 51% and 49%. The financial contribution of the French car manufacturer, which is in the order of 122.4 million euros (compared to 117.6 million euros for the CDG), contributes 11.12%, but the essential part concerns its technology and know-how.
Conversely, the initial production of Renault-Algeria Production (RAP), whose start is scheduled for the second half of 2014, will consist in the assembly of kits imported from Romania or Turkey, while the engines will come from France, unlike Morocco where there are already local suppliers.
It is therefore surprising to note that the amount of Algerian investment of 1.1 billion euros is equal to that of Morocco, given that, according to AFP, the RAP will require an "initial investment of 50 million euros",
However, the initial production capacity represents 25,000 units initially compared to 200,000 in Tangier, or 10% of the capacity of the Moroccan plant. Subsequently, it would be 75,000 in Oran compared to 400,000 in Tangier, or 18% when it reaches its cruising speed.
Mohammed Taleb.
Published on September 3, 2013.
Posted online on September 3, 2013.
Libe.ma
With the launch of the construction work of the Renault vehicle assembly plant in Oran, which was supposed to start last week, voices have been raised predicting a threat to the future of the Moroccan automotive industry, which nevertheless boasts an 18.4% improvement in its exports at the end of July (2.7 billion DH). Would the next production unit pose a real danger to Renault-Tangier? Nothing is less certain. The Oran plant is far from competing with that of the capital of the Strait. Explanations.
The fundamentals of strategic management mean that it is not the responsibility of a company, which is supposed to be profitable in the face of international competition, to do social work. But the entry into play of geopolitical considerations can change these universal rules. This is the case of French companies in their relations with the Maghreb countries, in this case Morocco and Algeria. Comparing the profitability indicators of the two projects can tell us a lot. In terms of production capacity, tax benefits, direct employment, logistics and costs, Tangier is far from risking exposure to competition from Oran.
In terms of production, that of the Renault-Tangier complex, initially, was 200,000 units per year and should reach 400,000 units by 2014/2015. Located on 300 hectares with a capacity for low-cost vehicles, the production of the Tangier plant is primarily intended for export to emerging markets, but will also be marketed in Europe. For the Oran site, covering 152 hectares, production will not exceed 25,000 cars/year initially, of the new Symbol, a model derived from the latest Logan without export to Europe, before exceeding 75,000 units/year by 2017/2019. In terms of employment, the Moroccan unit, benefiting from the low cost of labor, has created 6,000 direct jobs and should create 30,000 more indirect jobs. Meanwhile, that of Oran will initially create 350 direct jobs. On the side of the Algerian authorities, 8,000 direct jobs and 20,000 other indirect jobs are announced. And this, for a productivity almost ten times lower than that of Morocco.
In addition to production capacity, jobs created and export revenues, Renault-Tangier also benefits from several tax and logistical advantages.
In Tangier, first-rank suppliers or subcontractors are already established at more than 60% in the free zone. This unit also benefits from a five-year exemption from corporate tax, VAT reductions, training subsidies and financial aid for construction. The cost of the project, according to various sources, is 1.1 billion euros committed in two installments, including 640 million initially. The equity invested, capital and current accounts, amounts to 240 million euros, divided between Renault-Nissan France and the Moroccan Caisse de dépôt et de gestion, respectively at 51% and 49%. The financial contribution of the French car manufacturer, which is in the order of 122.4 million euros (compared to 117.6 million euros for the CDG), contributes 11.12%, but the essential part concerns its technology and know-how.
Conversely, the initial production of Renault-Algeria Production (RAP), whose start is scheduled for the second half of 2014, will consist in the assembly of kits imported from Romania or Turkey, while the engines will come from France, unlike Morocco where there are already local suppliers.
It is therefore surprising to note that the amount of Algerian investment of 1.1 billion euros is equal to that of Morocco, given that, according to AFP, the RAP will require an "initial investment of 50 million euros",
However, the initial production capacity represents 25,000 units initially compared to 200,000 in Tangier, or 10% of the capacity of the Moroccan plant. Subsequently, it would be 75,000 in Oran compared to 400,000 in Tangier, or 18% when it reaches its cruising speed.
Mohammed Taleb.
Published on September 3, 2013.
Posted online on September 3, 2013.
Libe.ma
