Many indicators recently published are reassuring. France would escape from a recession and knows a growth rate between 1 and 2%, to the difference of several economic partners as the United States and Germany. We note a significant employment improvement and if household consumption is stagnant, it is because these ones are still constituting an important precaution saving. On the other hand, the spectacular degradation of foreign trade, in a context of a stagnant household consumption, an item which frequently, and sometimes wrongly, is considered as the reason of that deficit. That must lead to a much deeper analysis on its origin and about the policies which have been followed to remedy to that and as we see, without any success.

The trade balance deficit went from 66 billion in 2020 to near 86 billion euro in 2021. During the last 12 months, it has reached 120 billion. The increase of the energy bill, caused by the low availability of the nuclear power plants and by the fossil fuels prices increase is far from explaining this degradation because it has just represented around 20 billion compared to a deficit which has increased by more than 50 billion. This situation is all the more worrying that since more than ten years and if we except the share of the measures adopted to soften the consequences of the Covid-19 pandemic, the priority of the economic policy adopted by the successive governments, has been to “restore enterprises competitiveness” through a reduction of social charges, corporate taxes and recently the so-called production taxes, which have taken the place of the former professional tax.

So the supply side policy has failed and the foreign trades results are bringing the proof of it. This phenomenon has been connected with the country de-industrialization against which it has been decided to fight with public supports which can bring results only on the long term. But the employed indexes are not always convincing. The fall of the number of jobs in the industry first comes from productivity gains and the use of machines. The fall of agricultural jobs had been much more spectacular than in the industry and that has not impeached the French agriculture to remain the first or the second one in Europe according to the chosen criteria. It must also be taken into account the externalization of some technical functions which have allowed the birth of French giants in the computer services as Cap Gemini or Dassault Systems. When their teams work for a French industrial group, they contribute to its development without that the related jobs are taken into account.

The same observation is true for the share of the industry in the GDP. Its diminution can also come from the growth of the services activities, which has not been chosen as an objective by the State, as it is sometimes affirmed, but which results as regarding tourism from a strong and localized demand, or regarding the banking sector from an accumulation of know-how which has been able to attract clients. So the French economy is more diversified which is not a handicap and the eternal and unfavorable comparison with Germany comes also from the near lack of tourism in the other side of the Rhin and of the weakness of its banking sector. But the limited relevance of these indicators must not hide the reality which is reflected in the foreign trade figures with a continuous loss of market shares of the industrial production inside the national territory.  

Two reasons are frequently quoted to explain this realty, the excessive labor costs and the overvaluation of the euro. They are not justified. Labor costs in the Germany industrial centers have always been superior to the costs observed in France. That has not, in any case, affected the results of the exports of these companies. Regarding the euro, to look at the Italian situation is enough. The country has substantial trade surplus, despite its much higher dependance to fossil fuels imports.

That French anomaly has a much deeper origin, the weakening of the corporate culture which has been especially important in the major groups with their strategic mistakes, which has even sometimes provoked their disappearance, and with their relationship with their suppliers. To quote the François Michelin formula, the most important person in an enterprise is the client. So the first priority must be to identify their needs, which could be different according to the country where they operate. Then it is necessary to produce these goods in the best conditions, to identify and to put into operation the new production techniques allowing to be competitive and to follow seriously the markets evolution and the apparition of new products. At last, the enterprises must have at their disposal the commercial teams in charge of rightly managing relationship with clients and suppliers.

But these jobs are poorly valorized in France and it is enough to look at the professional career of the executives to notice that very rare are these who have, during their careers, occupied these essential functions. They came out with the best ranks from the high schools, have started their careers in the administration and even in the ministerial cabinets before getting straight to an executive job. So very few, to the difference of their German colleagues for instance have started their professional life in the company. Before getting the job, their professional environment was the administration, the political world, merchant bankers, consultants and lawyers cabinets. So they have chosen to stay inside this world and their action has been focused on the management of their assets portfolio through mergers, acquisitions and sales of businesses which gave them a much higher mediatic visibility, compared with the daily life of the production and the sale of their products, yet essential regarding their financial results and the survival of their activities.

The disappearance of national industrial jewels, like Alcatel after the acquisition of Lucent in the United States or Pechiney with its hazardous operations with Alcan or Alcoa has resulted from that. The Renault low achievements with its participation into Nissan and its investments in Russia and in Brazil are testifying of that as the disastrous acquisition of the ABB turbines by Alstom which was near to lead the company to bankruptcy, have largely contributed to give a negative image of the France industry.

It must be added the indulgency of the banking system regarding the payments practices of the large groups to their suppliers. They try to get from them the margins they have not been able to make with their clients with, atop of that, excessive payments delays. That has decisively contributed to weaken the middle size enterprises, frequently family businesses, without any criticism from the State. It would be more efficient to stop the current process to penalize this kind of behavior than to promise subventions.

The corporate culture, it is a set of behaviors which allows to the companies to prospering through the organization of a fair sharing of the created value between the salarymen, the executives and the shareholders, and to its executives to understanding the needs of their clients to better satisfy them. To give back to these priorities the essential role they have in the success of the enterprises, their executives must be impregnated with that but that cannot be done in just one day. So their recruitment modes must be changed, leaving a larger place to internal promotions. France will not reverse the current trends if its political leaders don’t take into conscience of that necessity and if they don’t deliver the appropriate political messages.