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COMMISSION
OFTHE
EUROPEAN COMMUNITIES
GeneralSecretariatCOM(79)591 final
Brussels,»November 1979
FOROFFICIAL USEONLY
REQUEST FORRECONVERSION LOANN°273,PURSUANT
TOARTICLE 56OFTHEECSCTREATY,ONBEHALF OFTHE
SOCIETE MECANIQUE AUTOMOBILE DUNORD(FRANCE)
(Communication fromtheCommission totheCouncil)
C0M(79)591final

COMMISSION
OFTHE
EUROPEAN COMMUNITIES
INTERNAL DOCUMENT
COMMUNICATION TOTHECOUNCIL
Subject :Requestforreconversion loann°273,pursuant toArticle 56
oftheECSCTreaty,onbehalfoftheSociety m6canique
automobile duNord(France).
I.BASICINFORMATION
Applicant
Finalbeneficiary
Project
Situation
Amountofinvestment
Loanrequested
Interest rebate
Jobscreated:Société mécanique automobile duNord
:Société mécanique automobile duNord
:Creation ofafactoryproducing gearboxes
formotorvehicles
:Trith-St-Léger(Nord)(Nord/Pas-de-Calais)
:FF1,570million (+267,000,000 EUA)
:FF210million(+35,600,000 EUA)
:1,068,000 annuallyforthefirstfiveyears
:2,500jobsintended bywayofpriority for
former ECSCworkers
II.CONFORMITY WITHARTICLE 56OFTHEECSCTREATY
Nord/Pas-de-Calaisisanoldtraditionally industrial regionofhigh
population densitywith3,920,000 residents on2.2%ofFrenchterritory .
Forseveralyearsithasrecorded persistent declineinemployment .This
trendistheresultofadaptation problems experienced byprevailing
industries ontheonehandandthegeneraleconomicsituation onthe
otherhand.
On31March1979,theproportion ofunsatisfied jobapplications totota
workingpopulation was8.6%intheDepartment ofPas-de-Calaisand7.7%
intheNordDepartment compared withanational Frenchaverageof6%.
Provision^oddress:RuedelaLoi200,B-1040Brussels-Téléphoné350040-35 8040-Telegrophic oddress:.COMEURBrussels.-
Telex:iCOMEURBRU 21877.

Haltedbrieflyin1975,thefallinpersonsemployed inthecoal
minesofNord/Pas-de-Calaiscontinued atanaverage rhythmof4,000
jobsayearasthefollowing figures show:
Totalemployed at31December 1965 107,679
31December 1975 44,297
31December 1976 40,757
31December 1977 36,505
31December 1978 32,389
By1985-1986 ,coalminingshouldhavevirtually ceasedin
Nord/Pas-de-Calais,Regional employment inthesteelindustry
reacheditsmaximumlevelwith39,400atthestartof1975.Since
thenithasdeclined .Persons employed were33,500at31March1979,
whichindicates afallof6,000jobsinrathermorethan4years.
Theseredundancies occurred mainlyintheSambreandValenciennes
areas.Moreover recentdecisions takenwillcreate5,850redundancies
inthe3USIN0Rfactories oftheValenciennes areafromnowtothe
endof1980:
-5,000attheDenainfactory (3,500in1979and1,500in1980)
550in1979attheValenciennes factory
300attheAnzinfactory .
TheregionofBoulogne-sur-Merhasincurred duringthecurrentyear
1,000redundancies intheferro-manganese worksoftheAcieries de
Paris-Outreau (A.P.O.).
Inall,conversion fromcoalminingandsteelconcerns alargepart
oftheregionandindirectly almostalltheNord/Pas-de-Calaisregion
inparticular becauseofitseffectonsub-contractors andsuppliers .
Alltheregional sectorsdirectly concerned :intheNorth,theDouai,
SambreandValenciennes areasand,inthePas-de-Calais :thedistricts
ofB§thune-Lens andBoulogne havebeenclassified ,moreoftenfor
severalyearspast,bytheFrenchGovernment asareaseligible for
priority aidforregional development ;thismeasure bythepublic
authorities hasalreadyfostered important industrial investments .In
thisway,over10years,projects aidedbythepublicauthorities
haveinvolved :
-inthedistrict (arrondissement ) „onnn.,iy,UU0jobsofBoulogne-sur-Mer '
-inthedistricts ofBethune andLens 7,400jobs
ofwinchFrançaise demécanique atDouvrm
Société detransmissions automatiques
àRuitz
Firestone atBethune

3"
-intheDouaiarea 8,500jobs
ofwhichtheRégienationale desUsines
(factories )Renault
l'Imprimerie nationale atDouai
-intheSambrearea 6,200jobs
ofwhichChausson andFruehauf atMaubeuge
-intheValenciennes area 5,200jobs
"fwhichChrysler
Recently P.S.A. (Peugeot )Company)hasannounced theconstruction of
afactorytoproduce mechanical gearboxestoemploy2,500wageearners
in1985.
However,takingforecast redundancies intoaccount,themeansapplied
mustbestrengthened stillfurther,moreespecially toassistthe
development orsettlement ofsmallandmediumsizeundertakings capable
ofdiversifying thelocalindustrial fabricandmakingtheregional
economylessvulnerable toeconomic trends.
III.THEUNDERTAKING
-Style :Automobiles PEUGEOT &Cie
-Tradename :Sociétémécanique automobile duNord
-Seat :Paris
-Legalstatus :Private company
-Volumeofcapital andsharedistribution
Theprivate company hasacapitalofFF50,000,000 subscribed asto75%
bythePEUGEOTautomobile Company,20%byCHRYSLER FRANCEand5%by
theS.A.CITROENautomobiles .FF500,000capital hasbeenissued.
IV.THEPROJECT
Theindustrial development ofthePSAPEUGEOT CITROENgroupinthe
Valenciennes areaisbasedessentially ontheoutputofgearboxes.
A.Aims
1.Toproduceatarapidrateofturnover astandard gearboxfor
Grouprequirements .Thisgearbox,ofentirely newdesign,will
induecourseequipalltheaverage rangemotorvehicles ofthe
Group.
2.Todevelopthisgearboxinaworksofsufficient sizetoallow
forthefurtherpromotion ofseveralproducts whichmightbe
technically different (automatic gearboxes,forinstance).
B.Production worksforgearboxes
1.Location
Originally ,production wasallocated totheSMAEfactoryatMetz.
Theincrease inoutput,madenecessary bythearrivalofChrysler
withintheGroup,leitoleavingtheMetzfactorysite,whichhad
insufficient extension possibilities .
./.

Astudyisbeingmadecurrently ofinstalling afactory onasite
atTrith-St-L£gerintheValenciennes area.Thesiteproposed has
asurface areaof85haandborders ontheValenciennes aerodrome
andtheA2motorway .
2.Production
Themanufactured productisamanualtransmission gearcase,of
4and5speeds,designedformounting attheendoftransversal
engines.Thefirstinstalment isplanned onthebasisof3,200gear
boxesadayforachievement in1985.
3.Massproduction glan
Thisisdesigned toproduce 10to12,000gearboxesadaywhich
willachievefactorysaturation pointmaximum.
Thefirstphaseoftheplanwilltakeplaceinthenorthern half
ofthesiteandshouldinduecoursedoublethefirstinstalment
(2x3,000=6,000gearboxesaday).
THEMARKET
Thisprojecttocreate afactoryintended tomanufacture acertaintype
ofgearboxtobeusedbythreemakesofmotorvehicleintheGroupPSA
Peugeot-CitroSn complies withageneralpolicyfordeveloping mass
production ofstandard partsforgeneral usewithaviewtooptimising
theuseofthemeansofproduction andreducing unitcosts.
Thereisnorealmarketfortheseproducts,whicharequitespecialised
inddesign andwhichtheCompanywillsupplysolelytothethreemotorcar
manufacturers intheGroup.
Thelevelofactivity oftheCompanywilltherefore becloselydependent
onthelevelofactivity ofeachofthethreeparentcompanies .
Theprofitable character ofthisproject,whichdependslargely on
maintaining thelevelofactivity,alsodependsessentially onthe
contributions laiddownforitsfinancing .Theseareonlyjustified
becausetheywillreducecostsandtherefore alsojustifythisentirely
newsettlement ,whichisremotefromotherGroupproduction centres,
ratherthanincreasing production atexisting plant.
SOCIAL ASPECTS
Theprojects abovement ionedshouldcreate2,500additional jobsina
regionwhichiscurrently experiencing veryseriousproblems increating
newjobstoreplacethosewhichhavealready becomeredundant orwhichwill
becomesoshortly .

5
VII .FINANCING PROGRAMME
Thesummary financing programme (1979-1985 )isasfollows :
(inmillion FF)
Investments
Other expenditure1,568.5
468.6Own resources
Grants
ECSC Loan
Running liabilities1,437.3
316.4
210.0
79.7
2,037.1 2,043.4
VIII .CONCLUSIONS
(a)TheCommission considers that therequest inquestion complies
with Article 56,2a)ofthe ECSC Treaty andthat theinvestment
iseconomically sound .Inconsequence theCommission authorises
thegrant tothe Societe mecanique automobile duNord forthe
project tobecarried out atTrith -St-Leger ofaloan ofFF210million
maximum (+35,600,000 EUA )orofanequivalent value .Interest rebate
of1,068,000 EUAperannum will begranted forthefirst five years
following payment /payments ofthe loan .
(b)The Commission invites the Council toagree with this decision .