FRANCE UNVEILS SWEEPING PLAN TO REVIVE FLAGGING INDUSTRIAL BASE / THE FINANCIAL TIMES

September 12, 2013 5:44 pm

 

France unveils sweeping plan to revive flagging industrial base

 

By Hugh Carnegy in Paris

 

French President François Hollande announces a new industrial policy at the Elysée palace on Thursday

 

 

France has unveiled a sweeping plan to revive its flagging industrial prowess that underscores efforts by the Socialist government to reconcile its interventionist instincts with a more pro-business approach.

 

In a high profile announcement at the Elysée Palace, President François Hollande laid out a 10-year industrial policy based on supporting no fewer than 34 sectors, spanning new technologies in areas ranging from renewable energy to robotics and medical biotech.

 

But Mr Hollande was at pains to stress that the plan was different from great industrial projects championed by French leaders in the past.

“This is not about going back to the grand plans of the 1960s and 1970s. Those times are over,” he told the audience, which included a number of France’s top executives. “Our policy is neither liberal nor dirigiste, it is not Rhinelandish or Anglo-Saxon. It is French, pragmatic.”

He said the aim was to reverse a trend in which France has lost 750,000 manufacturing jobs over the past decade, slipped from a trade surplus to a heavy deficit and lost ground to neighbouring competitors.

Arnaud Montebourg, industry minister said in an interview with Le Monde newspaper that industry’s share of national output had fallen to 11 per cent, less than in Germany, Italy, Spain – and even the UK.

The plan was put together by Mr Montebourg, a fiery leftwinger who has battled publicly with prominent industrialists such as Lakshmi Mittal , the steel magnate, over job cuts, campaigned for more protection of European companies and is driving a “Made in France” campaign that aims to bring home jobs lost abroad.

 

In his speech, he evoked past presidents responsible for building such pillars of the French economy as its nuclear industry and high-speed train network. “Following in the tradition of de Gaulle, Pompidou and Mitterrand, we have made the choice to engage in an industrial policy,” he said.

But the normally flamboyant minister reined in his rhetoric, dropping his habitual references to Jean-Baptiste Colbert, the 17th century father of French industrial dirigisme and protectionism. “We will trust company executives to implement these plans,” he said.

Mr Hollande said: “The state is not a substitute for private initiative because it is the industrialists who know their markets, their customers and their technologies. But the state can give a framework to accompany and stimulate them.”

The plan, citing an assessment by McKinsey, the US consultant, aims to create 450,000 jobs over 10 years and create added value of €45bn – equivalent to 40 per cent of the current value of exports.

It is an effort to stimulate activity at a time when unemployment is rising towards 11 per cent of the workforce and the economy is struggling to recover from recession. This week, the government lowered its projection for growth next year to less than 1 per cent of gross domestic product.

 

Financial constraints have also helped limit the amount of state funds the government can commit to the industrial plan. Mr Montebourg indicated it would be backed by €3.7bn in new money, to be channelled through state institutions that lend to and invest in companies, led by the newly constituted Bank of Public Investment.

 

The government is placing as much emphasis on helping already-established technologies and projects to gain traction via state co-ordination, regulation and public contracts.

The 34 sectors selected include existing projects by EADS, the aerospace group, to produce electric powered aircraft; by PSA Peugeot Citroën to produce a car that consumes less than two litres of fuel every 100km; and a new generation of high-speed trains that travel at up to 350km an hour.

 

Other sectors covered include “intelligent” textiles, cloud computing and cyber security.
Echoing a longstanding French refrain, Mr Hollande called on the EU to change its competition doctrine to allow companies to merge more easily to “promote European champions” and to adopt a trade policy “worthy of the name, to combat vigorously unfair trade practices, both internal and external”.

 

Copyright The Financial Times Limited 2013.