Posted Nov 20, 2022, 3:11 PM
In what state is French industry in your opinion?
Following the Covid crisis and the supply difficulties, we have witnessed the realization that industry is fundamental, a real awakening in the political world in general, after decades of deindustrialization. This was already the case in the United States or in Germany, not in France.
Coming out of the pandemic, demand surprised everyone, order books filled up strongly, apart from the automotive sector for the reasons we know in semiconductors. This period of euphoria for industrialists lasted until August or September, when everyone realized the explosion in energy prices. Gas and electricity bills will increase by four on average, and in some cases much more.
Yet industrial production continued to progress further in September…
It is true that we are in a paradoxical situation , at a tipping point for the industry. We continue to have well-stocked order books, to produce but with strong questions about our future costs, with shortages of labor and components. The energy bill for industry could rise from 15 billion euros in 2019 to almost 60 in 2023.
What negative signs do you detect? Bankruptcies? factory project cancellations?
The “whatever it takes” has kept all businesses alive, even those that should have disappeared. It is certain that bankruptcies will resurface.
But I am especially worried by the risk of relocation or the risk that the relocation movement will seize up. I know several manufacturers who tell me they regret their investment made 6 months ago, which they would not have made if they had known about the evolution of energy prices. I take it as a first signal that does not bode well.
The government detailed this Friday the terms of the 10 billion euros in aid to businesses in the face of the energy crisis. Are you satisfied, while employers have been worried for weeks about the vagueness in this area?
It is true that after the major means put on the table to help households – nearly 100 billion in total – the awareness was later for companies . The economic world needs aid, not to prevent the inevitable rise in energy prices but to make it sustainable. With regard to SMEs, a sort of “shock absorber” has been put in place which will enable part of the energy bill to be covered. For ETIs and large companies, help desks have been provided but with parameters that have been constantly changing.
The details provided by Bercy on Friday go in the right direction, in particular the simplifications and the removal of the criterion on the loss of gross operating surplus for the first level of aid capped at 4 million euros. Aid will be easier to access and closer to the reality of business needs. This suits us, even if we have to agree that the bill will remain heavy for SMEs.
Will this be enough to fight on equal terms with Germany?
I don’t know how to say it, no one is currently able to assess with certainty what the German plan of 200 billion euros consists of. We have few discussions with our German counterparts at the moment, they are panicked by soaring gas prices – which I can understand because of their dependency – but I have to say that their plan caused a stir among us . We must be treated on an equal footing with them. If this were not the case, we would go back to the crenel about the French plan of 10 billion. But the real solution involves a gas price cap system at European level. A solution seems to be emerging in Europe, let’s wait for more details.
Doesn’t the real threat to European industry lie across the Atlantic, with the American IRA (Inflation Reduction Act) plan?
In the United States, you have energy in abundance. It makes a difference! This explains why certain large groups are considering reinvesting there rather than in Europe. Regarding the IRA, the President of the Republic has already had the opportunity to say that it was an attack on fair competition. But before talking about recourse to the WTO, let’s look at what we can do concretely to defend ourselves. In this respect, I am in favor, like the Prime Minister, of a Buy European act to impose a European preference.
Is this a form of assumed protectionism on your part?
I don’t see it as protectionism, I call it realism. If some build barriers, it is normal that we do the same. For strategic sectors, it is normal to buy European rather than American or Asian. If we want the industry to return to Europe, we cannot content ourselves with legal provisions, we also need European political support for the industry, as the Americans are doing.
What is your initial assessment of France 2030?
It is the result of the first investments for the future that have enabled France to continue to innovate, with the addition of tools such as the research tax credit (CIR). The necessary transition to carbon-free energy will be very expensive, so it is important that “France 2030” is maintained at a good level, and that each sector obtains aid to move forward. For now, we can say that this plan remains ambitious. Despite the problems of competitiveness, I believe in the future of French industry, particularly through products with high added value.
Beyond “France 2030”, what other measures do you think are necessary to facilitate reindustrialisation?
The State has set climate transition and decarbonization as a major strategic axis. This requires clear and tenable objectives. Let’s take what is being done with the announced end of thermal engines in Europe. Europe has decided to put an end to it in 2035. It is extremely ambitious, but the new Euro 7 standard in preparation already almost condemns the production of heat engines in the short term. The Americans have chosen the path of incitement, which seems more tenable. In France, the retraining of all employees in the heat engine sector is shaping up to be a perilous challenge.
You mentioned Germany. The employers and the metallurgy union signed an agreement providing for salary increases of 8.5% in total in addition to a bonus of 3,000 euros…
All is relative. First, it should be noted that the increase in wages – which will take place in two stages, in 2023 and 2024, like the payment of the bonus – must be compared to inflation at just over 11% in Germany in 2022. In France, in the metallurgy, wages have increased by 3.5% on average this year, for inflation around 6%. Compared to the years of low inflation, of course the acceleration in the rise in prices has an impact on wage policies. With inflation, there have already been and there will be significant wage increases in companies that can, but that does not mean inconsistent increases.
The executive intends to legislate value sharing. In your opinion, what reform should be made?
First of all, the recent declarations of Elisabeth Borne in your columns, calling for waiting for the end of the negotiation at the end of January between social partners, reassured us about the method. It was necessary. I do not see the point of negotiating if some want to pass a reform by amendment before we succeed. Now, be careful not to mix everything up. What employees are asking for is wages. But this discussion must take place company by company and not within the framework of this negotiation. Profit-sharing and profit-sharing complete the picture, in that they make it possible to associate employees with the fruits of success. All the tools are there and the big companies have taken them over. No doubt we can think about adaptations for the little ones. But I warn that there can be no question of imposing new obligations on them. The sharing of value is the business of the companies, it is up to them to decide.
On the pension reform, everyone agrees on the issue of the employment of seniors. The metallurgy industry has practiced early retirement a lot to manage its age pyramid. How do you approach the case?
First of all, we must be clear, the Head of State has announced it, the pension reform will raise the legal retirement age and this is necessary to guarantee the sustainability of the system with the extension of the duration of life. Suffice to say that making employees leave at 55 as provided for by certain special schemes is not a good thing.
Now, if an employee started working at 18, has had a difficult job, you have to be able to consider him leaving before, this must be discussed with the unions. It is necessary to work on a certain flexibility around the shift in the retirement age but by integrating the increase in life expectancy. We must also work on hardship – I prefer to speak of wear and tear at work – and be able to offer a second job in the second part of their professional life to employees aged 45-50. All this involves a training effort. However, the current system is too difficult to read and the circuits are complex.