The automotive industry is changing, Plastic Omnium too… In a complicated period where the industry is subject to various pressures (regulatory, inflationary, technological, geopolitical…), equipment manufacturers must reinvent themselves if they still want to exist tomorrow. For Laurent Favre, managing director of the plastic parts specialist (bumpers, tailgates, etc.) Plastic Omnium, it has become imperative to move up the value chain in order to continue to weigh in the commercial negotiations of tomorrow. In an interview at The gallery, he also mentions the need to reach the critical size on expertise to establish its competitiveness. Transforming a plastics manufacturer into a “tech company” is the challenge that Plastic Omnium has set itself.
Diversification and synergies
“Each time, we assessed the synergies with our traditional businesses before proceeding with a diversification“, explains the one who joined the French equipment manufacturer in 2019 after having been trained with German competitors. Thus, the diversification in the fuel cell comes from its fuel tank activities (in plastic) which led it to produce carbon fiber tanks (necessary to withstand the pressure of hydrogen).In the hydrogen car, the tank takes a larger place in the value chain as it remains expensive to produce and very high added value (the carbon fiber is a complex material.) By acquiring Optimum CPV and Swiss Hydrogen in 2017 then by founding a joint venture with the equipment manufacturer ElringKlinger, Plastic Omnium therefore decided to complete its offer with a complete and turnkey product by integrating the The group has also just acquired Actia Power, which enables it to be present in the electrification of heavy goods vehicles.
It is the same idea that led him to get into lighting. The advent of the electric car will free up many spaces on the bodywork, including the front end, which will no longer be constrained by the heating ventilation grille. Manufacturers will want to develop more light customization. And Plastic Omnium wants to be able to integrate these new functionalities into its plastic parts. The French company has even imagined LEDs encapsulated in plastic. This is what led him to buy the lighting activities of the Indian Varroc.
Plastic remains a driver of innovation
But Plastic Omnium’s move upmarket will not only come from its diversifications. The company founded in 1946 by Pierre Burelle works on new functionalities around the plastic material. In 2018, it presented a prototype car whose body was entirely made of plastic promising to be as robust as a steel version, but significantly lighter. On the other hand, in 2018 the group sold its historic business of manufacturer of dumpsters, the famous garbage cans for buildings, which no longer contributed anything in terms of innovation.
The challenge for Plastic Omnium is therefore to reposition itself in the value chain. Laurent Favre believes that market dynamics can no longer be in the perspective of growth in volume, but rather in value. “In 2030, 40% of Plastic Omnium’s 15 billion euros in sales will come from products that we do not currently have in our portfolio”he explains.
Industry challenger and troublemaker
Through this strategy Plastic Omnium also aims to enter the very closed circle of major French equipment manufacturers such as Valeo and Faurecia, now Forvia (and to a lesser extent Michelin). Worse, he poses as a challenger by going to titillate him directly on their trades. On lighting, he will oppose the leader Valeo, but also Faurecia which has just completed a very structuring merger with the German Hella, and specialist in lighting.
On the fuel cell, the company is attacking Symbio, a joint venture between Faurecia and Michelin, and directly Faurecia, on the part of the tanks. These companies are all real behemoths compared to small family businesses. In 2019, the pre-crisis period, Plastic Omnium had generated 9 billion euros in turnover. This is ten billion less than a Valeo or a Faurecia (which has since increased in size by a third after the takeover of Hella). But if Plastic Omnium does not have the same financial resources as its compatriots, it believes it can become the free electron in the sector.
“We have a long-term family shareholding“, recalls Laurent Favre, referring to the Burelle family (60% of the capital). In other words, the Levallois-Perret firm can count on the lightness of its hierarchical structure to be agile and seize opportunities, in complete independence and not letting the market dictate his roadmap.He can also count on the iconoclast Laurent Burelle, who led Plastic Omnium between 2001 and 2020. The patriarch, who keeps an eye on the group at the top of the board Board of Directors, is an informed industrialist who appreciates the entrepreneurial audacity of Plastic Omnium’s transformation plan.An adventure to follow…