When Groupe PSA was looking for a base in the U.S., Atlanta won the French automaker’s heart with its blend of automotive executive muscle and skilled tech workers to help navigate an industry in the midst of a digital transformation.
Then-Gov. Nathan Deal even led a delegation to the company’s Paris headquarters to secure yet another win for a state that already is home to North American bases of the likes of Mercedes-Benz and Porsche.
But so far, Groupe PSA — the maker of the Peugeot, Citroen, Opel and other brands — hasn’t built much of a physical infrastructure in Atlanta, with executives working out of flexible office space since landing here.
And now, a decision made in the boardrooms of Europe could affect its appetite for a more robust headquarters in the city.
Groupe PSA and Fiat Chrysler Automotive announced Oct. 31 plans to merge to create the world’s fourth largest auto maker, with a capacity of 8.7 million vehicles per year and €170 billion in revenue.
FCA has deep roots in Italy but now is technically headquartered in the Netherlands. A major ingredient to its success is its portfolio of American brands, especially Jeep, as well as Ram, Chrysler and Dodge. That legacy means the company retains a major presence in the Detroit area.
Representatives from PSA declined to comment for this story on post-merger plans for Atlanta, but recent reports indicate that the companies are set to come out with a statement outlining binding terms of the $50 billion deal this week.
One reported outcome could be that PSA would be tapped as the lead partner, with group CEO Carlos Tavares leading the newly combined company. PSA under Mr. Tavares in the midst of a 10-year transformation plan that will see the reintroduction of the Peugeot brand to the U.S., though no timeline for that has been announced.
PSA was never in a hurry to jump back into the U.S. market. Unburdened by an existing model lineup here, executives have told Global Atlanta they planned to use technology to test-drive consumer and mobility trends before taking that plunge.
North America CEO Larry Dominique said earlier this year in an interview with Global Atlanta that unlike the German auto makers who have literally made their marks in Atlanta iconic headquarters buildings in Sandy Springs (MBUSA) and near the Atlanta airport (Porsche), PSA is not interested in owning property as it expands here. And he was noncommittal on the staffing levels needed to support its eventual growth plans, saying it was too early to tell.
A New Investment Strategy
The news of a mega merger in the industry will test metro Atlanta’s new foreign investment strategy, which prioritizes being more engaged with companies as they combine.
In the past, community boosters feared mergers for the “rationalizations” and closures they often brought, and it could be politically challenging to aid foreign firms buying up distressed assets.
That has been changing with the realization that foreign companies often enter the U.S. by buying into existing companies, injecting capital that creates jobs and reinvigorates outdated factories.
The metro Atlanta foreign-investment strategy completed under the Brookings Institution’s Global Cities Initiative found that local economic-development agencies were unprepared to support foreign investors in such transactions, even as 62 percent of new foreign-backed jobs were created by investors that had engaged in M&A activity.
The report also found that post-merger, local operations in a place like Georgia often find themselves competing for resources and investment with others in companies’ global systems, so it’s “imperative that economic-development organizations are able to present a value proposition to the parent firm for continued investment in metro Atlanta.”
John Woodward, senior director of foreign investment at the Metro Atlanta Chamber, said foreign investment brings new technology, innovative ideas and knowledge of foreign markets to the metro area. He will be watching the PSA deal, he told Global Atlanta in an emailed statement.
“It is important for the Metro Atlanta Chamber and our broader economic development community to pay close attention to activity in this space,” he said.
Without giving specifics, PSA and FCA said in their Oct. 31 release that they “would continue to maintain significant presences in the current operating head-office locations in France, Italy and the U.S.” No word from PSA on whether that applies to Atlanta.
The companies have reportedly said that they don’t plan to close any factories as a result of the merger, an assertion that has helped win the support of one major PSA shareholder: the French government.
Just before the merger was announced, PSA in October took home an innovation award by the French-American Chamber of Commerce Southeast for its digitally savvy approach to the future of mobility in the U.S. and beyond.