Showing the Manufacturing Business in france is not over. I met one of europes most influential car executives at his paris headquarters. Five years ago you were facing a near death experience. We need to keep being agile. We understand how important this is. We need to move around the roadblocks. The more chaotic the world around us is, the more of an the more agility is an asset for a company like ours. They own numerous brands. In 2018, the combined Group Reported record earnings. Its auto unit made a return on sales of 7. 6 . Rivaling its german peers. Profit was driven by sales of the european car of the year. The record result was also helped from the company psa bought from General Motors and turned around after two decades of losses. Psa was on its knees. They lost 8 billion over two years. Most Industry Execs counted them out. They were too slow. Then he came in and in the matter of a few years he proved improved efficiency. Formula wasround called back in the race, cut the number of models in each brand, make more profit on each, reduce the number of platforms they are made on, and cut costs, everywhere. He was capable to convince other people the number of models that used to have i think the manufacturing complicity was about to revamp the product lineup. It was hard to convince them to do that. Because it is affecting be organization and reducing the costs was painful. The key was the repositioning of the brands that had been confusing customers. Ds on top, peugeot in the middle. We want to focus the Creative Energy of the company on the more limited number of products, completely aligned with the markets in which we operate. The transformation can be seen in the share price. Reaching a low at the end of 2012. Since his appointment was announced at the end of 2013, the shares have more than doubled. Psa has been transforming itself for years. I visited the birthplace of peugeot and eastern france where the vast plant is being modernized. The peugeot brothers started a rolling steel mill in 1810. Making coffee, pepper, and salt grinders. Even cages. One of the things they branched out into was bicycles. They were also making carriages and carts that needed horses. Then the idea came up to the brothers peugeot, what if we put an engine in front of our carriage. Fastforward to the second half of the 20th century and peugeot was one of the most prestigious and industrial jewels in france making cars for a growing middle class. In the 1970s it was bought from bought a struggling brand. By the time the Global Financial crisis hit in 2008, the Company Became on wielding. Producing too many models on too many platforms. With brands that confuse consumers. Between july, two thousand seven and the end of 2008, the share price drop more than 80 . The company was burning through billions. Peugeot needed outside help. By 2013, talks started for the french state and chinas motor to buy 14 each. For the family to half its holdings and Carlos Taveras was appointed. Taveras started his career as a test driver at renault. By 2011, he was renaults chief operating officer, second to only carlos ghosn. Then came the bloomberg interview. Taveras laid out his personal ambitions. Surprising actually. You have somebody who is the right hand and for a very successful company. Didnt have any of the problems you see today saying how would you like to become a ceo and i have to leave my company, i will. He didnt last much longer after that. No matter, by the end of 2013 he was appointed to the top job at peugeot. He announces turnaround plan, back in the race. He is a ruthless cost cutter. He had to be. That is why peugeot has similar margins to bmw, but some of that has to do with restriction charges. And just experience. He has been in the industry a long time. If you look at the end, you can see it. We are in central paris. If you look over here you could see the former headquarters of the psa group. I said former headquarters, Carlos Taveras moved the headquarters to the suburbs because it is cheaper. Part of a costcutting drive. The new headquarters is about eight miles from the center of paris. Coming up, we will look at how taveras, injected a costcutting culture into the company. And to get more from the man himself. We started from a very simple recognition that if we are in trouble, it is not because we are working enough. We are working like hell. In his five years at the helm, Carlos Taveras has managed to return not just profitability but a german carmaker as well. The interesting thing is we have french cars coming off the production line and german cars coming off the same line. Two quite distinct cars. When taveras first visited, his message was clear. The first time mr. Taveras came we were in the body shop. He sees the manager and asks what is your value . What is the return on investment . The manager stood there stupefied. That wasnt something we were used to working with. Today, that has changed. We have changed the culture from the manager to the operator, we think about the cost price. We know we have to be competitive. With countries where prices are lower. How did you go about selling your visions to the workforce . It was not very sophisticated. It was quite simplistic. People when i came to the psa group were working like hell, 12 hours per day. Eventually more. The more they work, the more the results were red. We started from a simple recognition that was if we are in trouble, it is not because we are not working enough. We are working like hell. One of the early challenges was to bring frances unions into the fold. It is difficult in europe to take people out of the workforce. Peugeot took quite a hefty subsidy during the financial crisis, to save the company. They were very close to going bankrupt. I think the unions accepted they had to cut costs. It is being done from natural attrition as well. He has taken they love costs out of the business. A lot of costs out of the business. Carlos taveras was capable and after a couple of years, it is crazy because the political driven trade unions are reduced to science. Everyone was granting a significant bonus. It is not possible for them to speak anymore. Would the unions be more difficult as psa group grew more profitable . My company is representing 80 of the people. They have signed all of the strategic and performance plans and have been one of the big supporters of this that we have delivered over the five years. They understand this is a race. It is a competitive game. I ask this question to my unions in december, 2018. I told them look, we are profitable. Our situation is very good. I could hear that there are some contentions and small issues. I do not want the issues to grow. I asked my unions, should i ease a little bit on the accelerator. My unions said no way, keep it flat out. The back in the race targets were met two years early. The next stage of the plan is next. Back in the race and its Operational Excellence outcome is the foundation on which we are going to put this strategic, profitable plan. Back in the race was about restructuring and weeding out underperforming models, push to pass shifted the focus to expansion as taveras pushed to compete with bigger rivals. Psa gets about 80 of its revenue from the european market. Automakers faced a continued slowdown and eu Emissions Regulations are accelerating the adoption of electric cars. Sales in china sunk by one third last year. Making the carmaker more reliant on the european market. That explains its goal to increase sales outside europe by 50 by 2021. We will bring the peugeot brand to the u. S. And canadian markets. The second will be the indian market. Third, will be the russian market. These are the three big announcements on which we are focusing our energy and focus. To get there taveras expects his staff to go the extra mile. This is the concept of the extra mile you talk about. Everyone is doing the extra mile. If you manage the team only on the fact that we cannot fail, and we have a very ambitious goal, you are just adding tension to the organization. You are not giving anybody the possibility to fail. If somebody fails then the team loses. That person will be in trouble. If you want to keep the possibility of the members to fail, at the same time the team needs to win means each team member needs to go beyond their own objective. To cover the risk one cant fail fail and that is very noble. You spoke to bloomberg in 2013 and you were talking about how you like to be the leader of ford or General Motors. You have been thinking about being material for a chief executive for some time. Where does that belief come from . Possibly from the fact that since i was a teenager i have been passionate about cars. Then i became a mechanical engineer. After working for a carmaker, i went to nissan overseas. Japan. United states. I love this industry. It is such a highly competitive industry. Because there are many contradictory things. Capital intensive, profitability is not very high. The number one guy in the industry is making 10 , not a big number. There was an interview in the french newspaper, the fact that you are home at 7 00 every night having dinner with your wife, is that true . When i am working here, yes. That is why you have so much time pressure on this interview. Because you have to get home by 7 00 . Yes. Are you trying to show a new example . Im trying to show you that we are here to get results, not make hours. That is very important. It happens to some of my top executives. I tell them they are working too much. I said to one of them, im worried. You seem tired, you travel too much, you are working days too long. That is not good. I want you to keep bandwidth where you can step back and not always trying to solve operational issues every minute. The acquisition of opal give them a lot of heft when it comes to scale. Is it enough to fund the Autonomous Vehicle development as well as accelerate the switch to electric . By the end of this year, psa has pledged that each model developed by its brands will have an electric or hybrid version. You have to be very agile. Darwinian. If you dont change, you disappear. Opel is the latest automaker to benefit from the Carlos Taveras turnaround. Psa bought the germany based company from General Motors alongside a u. K. Brand in 2017. His task is to further integrate the company to save more money while driving vital investment to the future. As we move into new areas, such as the transition to electric vehicles and autonomous driving, you need scale, you have Huge Investments undertaken. One thing peugeot didnt have before opel was significant scale. The addition gives them scale , closer to 4 million units, and that allows these additional costs for new technologies to be divided over a wider product base. Opel lost nearly 20 billion over two decades. After a year with taveras at the helm it reported profits of nearly 1 billion in 2018. One horsepower and the first car of opel. Taveras kept the chief Financial Officer at opel to head up the division. Taveras, he says, change the way opel thought about making cars. The key point from my perspective was a new mindset. A mindset really focused on performance and implementing things. He also gave us a lot of freedom for important things of the business. In particular, design and the positioning of our brands. The big challenge at opel was how to make lowmargin cars in a high cost country. They got unions to eliminate nearly 4000 jobs through buyouts. Then there was a drive to reduce manufacturing complicity. Complexity. One of our car lines has 27 different steering wheels. Customers were not asking for this. We brought this down to eight. That is one tangible example. We have many more where we reduced complexity. We have many more. In the focus of everything we do, and helped us to improve the efficiency because it is an enormous cost driver. To get a better idea of what a german car should be, i met with a design director who showed me an experimental concept car. Youre a german brand and german precision is something which is ingrained in german engineering. And german design. That helps us to separate the brands with the three french ones and a british one and the german one in different directions, which is great and you can see that in the car. Tell me what i should be looking at when i am looking at the german precision. This very proud and bold face. It has all the technical elements. All of the hightech elements like radar, they are all inside, off the visor. I noticed i notice you do not have door handles. It is a concept car. We open up the whole side. You will see in one second. The whole side opens up. Despite initial success, psa faces formidable headwinds. The big question is still about scale and how to fund the Huge Investment needed to develop electric vehicles, self driving cars, and mobility services. He has been successful with suvs over the last few years. The fastestgrowing segment. Going forward, the fastestgrowing segment will be electric vehicles. Has boosted free cash flow. Does he have the technical ability to compete with its peers as opposed to just competing on price . Because are not as technically advanced as competition. When itcomes comes to making deals and alliances, it would make sense if they went to someone who already had pretty significant electric car technology. That is correct. Look at the german manufacturers. Since the financial crisis, they made Great Success of themselves in china. The turnaround in europe as well. That has allowed them to build their Balance Sheets and they have strong cash within the Balance Sheets and investing heavily and in electric and Autonomous Vehicles. It has not been the case for peugeot because it had to cut back to bring its cash flow back up to what we would expect for a european car company. Just this year, psa is said to have been in talks with Fiat Chrysler and jaguarland rover. Being bigger may not help the maneuverability of the company. You have to be agile. If you do not change, you disappear. You dont want to be bigger, you want to be compact and agile. Very darwinian. On the other side, if you are a significant change in recognition, very significant investments which will be a burden for your midterm plant and profitability. That may be a reason you would like to share the burden with other companies. Rnd may be burden of the reason on the other side. We are as you mentioned too small to have the leisure of not considering opportunities. That would be counterproductive. Yes, we are open. We are not targeting any specific company or entity. Just because we have a strong balance sheet, we are highly profitable. We are developing our autonomous technology. Why should we look for that as a simple goal . It is not a goal, it is an opportunity. If it comes on the table. In the past five years, taveras with the turnarounds has resurrected two struggling carmakers. He finds himself at the center of a rapidly changing border landscape as the biggest players talk mergers and alliances, it is an arena he clearly relishes. From now up until 2030 will be absolutely exciting. Despite the chaos, i am very excited. This pressure we have, the disruptions we have will create breakdowns in the industry and opportunities will be on the table. Yousef you are watching the best of daybreak middle east. The major stories driving the headlines this week. As new images of the oil tanker attack are released, the Trump Administration says it will send about 1000 more troops to the middle east amid rising tensions with iran. Confusion reigns as opec and its allies try to make a date for its next meeting, leaving oil markets in limbo. Speaking to bloomberg in tel aviv, the intel ceo is increasingly worried about the trade war and impact over chipmaker supply chains. Yousef first, the trump