Last year, as Covid-19 first swept across Europe, a French textile company tweeted that it would start making surgical masks. Within hours, the Ministry of Health asked how much it could produce; two days later, Les Tissages de Charlieu had made 100,000 masks for hospitals and French officials.
“Our goal was to relocate a very simple commodity – to prove that it can be done,” said Antoine Saint-Pierre, co-director of the company based in Charlieu, a textile town for more than 500 years. The company has also started manufacturing millions of tote bags, generating a fifth of the emissions of those imported from China, according to the company.
The supply chain disruptions caused by the pandemic have made ‘national economic resilience’ and ‘relocation’ essential manufactured goods – whether vaccines, semiconductors or medical equipment. protection and textiles – buzzwords of industrial policy across the western world. But this is particularly the case in France, where the return of manufacturing production and overseas jobs has become a hot topic ahead of next year’s presidential election.
Candidates from all political backgrounds fought to convince voters of their vision of how to reverse the country’s industrial decline, which saw industry’s contribution to the French economy halved between 1970 and 2020 at 11%.
Meanwhile, the government of President Emmanuel Macron, who has long believed that Europe should regain its economic sovereignty, proudly points to the 830 million euros it has distributed to companies since 2020 to support relocation projects.
“We gave a helping hand during the crisis to ensure that manufacturers do not stop investing. It was our obsession and it worked very well, ”Industry Minister Agnès Pannier-Runacher told the Financial Times. She added that more than 10,000 industrial companies have benefited from financial support from France’s EU recovery plan, of which more than 620 have been specifically helped to relocate their activities.
Still, economists wonder if such a range of cash injections is the right way to restart domestic manufacturing. They may be supporting small businesses like Les Tissages de Charlieu, but can they change the French industrial fabric?
The textile industry provides a vivid example of the issues at stake, as well as some of the reasons economists are skeptical.
At the heart of the French industrial revolution, the sector was ravaged at the end of the 20th century by the relocation of production to Asia and Eastern Europe, where costs are lower and regulations less stringent. Today, 90% of textiles and clothing purchased in France are manufactured abroad, according to 2015 data from INSEE. Ethical consumers also have limited visibility into factory working conditions or the origin of raw materials.
That changed somewhat during the pandemic as textile imports fell. With more than one million euros in state aid that Les Tissages de Charlieu received to help it make tote bags, the company has also more than doubled its workforce to reach 180 people, or the equivalent of 10% of the population of Charlieu. His tote bags are also greener.
The state has shown a “very good commitment” to the relocation, said Saint-Pierre. “There has been a real change in the rhetoric and actions of the government. ”
However, the question of whether the relocation of textile production can reverse France’s industrial decline is debatable, economists argue.
“Reshoring” is often a “polite word for protectionism,” said Isabelle Mejean, an economist at Sciences Po. “We don’t know exactly what this means,” she added, even though it is often presented as that can “solve everything”, whether it is more economic sovereignty, jobs or resilience to climate change.
Mejean and Xavier Jaravel, member of the French Economic Analysis Council which independently advises the government, advised in April, the government would do a better job of boosting French industry and protecting supply chains if it favored “vulnerable inputs with high technological content”.
They warned that “imperfectly targeted industrial policies would be costly for consumers, without fundamentally improving [economic] resilience ”and cited priority sectors such as aeronautics, electronics and chemicals. Textiles came far second to last, before “others”.
Despite this, Pannier-Runacher defended Macron’s industrial record. Leaving aside the effectiveness of France’s recovery plan, which will take time to materialize, she pointed to a clear increase in industrial jobs between 2017 and 2019, when the pandemic reversed the trend.
“We have created the conditions to improve France’s competitiveness,” she said.
Yet, while surveys show that the business climate in France has become more attractive thanks to corporate tax cuts and labor market reforms introduced by Macron, the manufacturing sector remains depressed and the trade deficit for industrial products. continued to widen.
Patrick Artus, chief economist at Natixis, argues that France must compare itself to Germany, which has retained the more lucrative parts of its land-based industrial power base, including its Mittelstand businesses, automobile manufacturing and initiatives research and development.
Rather than simply offering cash donations, France should specifically further reduce corporate taxes which are 50 billion euros more than Germany per year, improve technical skills and put more public money at risk. when financing innovation and high-tech start-ups.
“You can embark on a fairly aggressive relocation while protecting the national industry,” said Gilles Moec, chief economist of insurer Axa. “As a free trader, I don’t think we should give up the good fight that in general international trade is good, and is defined by specialization. You won’t do everything better at home.
Back in Charlieu, Saint-Pierre half accepts. He believes that it would be “crazy to say that all production should come back to France”. But he also argues that many manufacturing processes can be relocated, creating thousands of jobs while reducing the environmental impact of production.
“We don’t need de-globalization, we just need to find a balance,” he said.
Additional reports from Eir Nolsoe