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AB 2000 studies

Alain Boublil Blog


The imperative industrial necessity

When, in 1969, Lionel Stoleru published his book, the imperative industrial necessity, he doesn’t doubt himself to which point the issue of the role of the industry in the French economy will become, during the following fifty years, a major public preoccupation. The Glorious Thirty are at their top. Unemployment doesn’t exist thanks to the growth and to an atypical demographic curb, the barrel of oil costs only a few dollars but inflation is high. Foreign exchanges are mainly devoted to the supply of commodities and globalization is an unknown concept even if Japan rise in the sectors using high technologies starts to worry. It will be necessary to wait for the last years of the president Georges Pompidou mandate to see the major decisions regarding industry occur in the nuclear sector and in the high-speed train for instance. Since that, there is no year without economists and political leaders are worrying about the France “industrial decline” or its de-industrialization.

The point is that many industrial jewels have disappeared or went under foreign control.Then the trial of the globalization, which would be at the origin of these difficulties, comes. It is examined as the Europe one which would deprive France of the necessary tools of the industrial policy. The excessive costs of labor and of the social protection system are also denounced. Rarely are put forward the action of the executives of these enterprises, where sometimes the State is represented in the boards. Credit Lyonnais and Dexia bankruptcies, the excessive indebtedness of France Telecom resulting from its costly foreign acquisitions or again Vivendi adventures are still in the memories and are well reflecting the evolution of the French companies during the Nineties but no lesson is drawn from that.

In the industry, the most emblematic failure is Alcatel one, a jewel of the telecommunication industry, with very strong positions in the treatment and the transmission of information. France has at its disposal, at the end of the last century the indispensable industrial tool for the development of the new digital technologies. Despite that, it disappears in less than ten years after the strategic mistakes of its executives. In order to replace its C.E.O., who had been appointed by Edouard Balladur ten years before who was constrained to resign for personal reasons, the State supports Serge Tchuruk candidature who had shown his qualities in the oil industry but who had no experience at all in the businesses of the company. He will make an “enterprise with no plants” (2001) and he will launch the merger, which will reveals itself a disaster, with the American Lucent (2006). The group will fall under the control of Nokia which will axe  two third of its employees in France, as a perfect illustration of this industrial decline.     

How that one can be measured? The industrial jobs diminution doesn’t constitute a criterion as significant as it is assumed. The fall of the number of agricultural jobs, caused by the working mechanization and by the increase of the size of exploitations to keep their competitiveness has not hurt the results of this sector. There is after that the reduction of the industry share in the country value-added. But also there the indicator reveals a trend which is not necessarily unfavorable because it also measures the rise of sectors which grow faster than industry. The French economy diversification, in computer services or in tourism, to the difference of Germany notably, is not by itself a bad evolution. That level, even if it is falling, remains, for example, by large superior to the United States one.

It is the poor achievements, and which are not stopping to deteriorate, of French industrial goods foreign exchanges for twenty years which must alert. The major groups did restructure themselves, and then modernized and some had been privatized during the Eighties and the Nineties. So the foreign trade balance became with a large surplus until 2003. It is at that moment that the de-localization turnaround occurred about which Renault gives a good example. The merger with Volvo had failed because the Swedish government was hostile to the presence of the French State in the capital. It was not a winner with the other solution because today Volvo belongs to geely, a Chinese company Geely. Then Renault has wanted to acquire Skoda. There, it is the Czechoslovakian president, Vaclav Havel who opposed to the merger and who chooses Volkswagen with this comment:”About cheese, of course, I prefer France, but regarding the car industry, it is Germany”. It is difficult not to remind these words when we see the French national police driving Skoda cars.

Then Renault turned itself toward Dacia, a low-range car manufacturer. At the beginning, it was not envisioned to import its models in France, but, despite that, it is what happened. In the whole Europe, the models of its brand which were giving it its strength and its financial results have been put into difficulties because the company was organizing the competition inside itself. Then it turned itself toward Nissan in protecting it against bankruptcy. That has closed to itself the doors of the three major markets outside of Europe, China, the U.S. and Japan and has incited it to put into practice a massive de-localization policy. In less than ten years, the numbers of jobs and of cars produced in France has been divided by two.

The European rules about public orders and companies mergers have, for sure, not helped the country which had always needed these industrial policy essential tools. But that has not impeached bright successes in several sector as aeronautics, luxury or pharmaceutical products, proof as if it was necessary, of that it did not exist a unique and global cause of this decline, i.e. the considered too high labor cost. Despite that, based on this too limited analysis, the State will proceed to massive taxes and social costs reductions to regain the industry competitiveness, which will be financed, for half by taxes increased on household, which will hurt growth and by half by the increase of the public indebtedness, which will force the State to impose restrictions in other areas. First, there will be the “Research Tax credit” , perpetuated in 2004 and whose cost (6.6 billion in 2020) makes it the biggest loop hold and whose inefficiency has just been denounced in several reports. After, in 2013, was introduced the costly “CICE”, which has been transformed into a permanent reduction of social charges weighting on enterprises.

These measures have not delivered the expected result since the trade deficit in manufactured goods has not stopped to increase, even during the tough recession caused by the Covid-19 pandemic. The analysis made by the State has shown it was wrong. What need the French industry, it is first a deep cultural transformation with a more appropriate selection of its executives, with an evolution of the clients-suppliers relations in the enterprises and with their banks which must to renounce to permanently incite them to make mergers and acquisitions. The first advantage of an enterprise is its culture and its CEO must carry it  because its success depends from it as companies like Michelin, Air Liquide, L’Oréal or SEB have shown it.

The capacity of France to attract foreign investments is also essential and we are right to be proud of that. But it depends at least from the human skills found on the territory and from infrastructures, which have high qualities, as from the social and fiscal environment. But that will not cope with the de-industrialization trend as much as the foreign investments of French companies will be superior to the investments in France of foreign companies.             


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