France Promises No New Money to Support Auto Industry
Government officials would like to see France’s auto industry emulate Germany’s by upgrading technology and quality; growing its presence in emerging markets; and forming a single organization representing OEMs and suppliers.
PARIS – France wants to save its auto industry jobs without spending any more money.
Industry leaders met in late November with the ministers of industry and labor, who announced a second generation of the automobile pact created in 2009 when the first economic crisis struck. But they offered no details.
A key element of the original pact was an agreement by auto makers to pay suppliers more quickly. It also set up a committee including both auto makers and suppliers called the Platform for the Automotive Industry.
The ministers have given the PFA until Feb. 12 to come up with new programs to protect automotive jobs in France using existing resources.
“If we support these businesses, it is evident that the main reason is to support employment,” says Xavier Bertrand, minister of labor and health.
The ministers would like to see France’s auto industry be more like that of Germany’s. Their second-generation goals include:
A formal organization speaking for both suppliers and auto makers, like the German industry’s VDA.
A faster move upscale for French auto makers, based on technology, quality and being “made in France,” all qualities of the German industry.
A greater French presence in emerging markets, such as the German auto makers have.
Auto makers and small suppliers in France are not doing as well as Tier 1 parts makers such as Valeo and Faurecia that count the German auto makers among their major customers, the ministers say.
They say in a press release that France will energetically work with “all the public financial tools that exist” to preserve the country’s industrial footprint.
Existing resources to be used by the PFA for the second generation of the automobile pact include a E750 million ($1 billion) “car of the future” research program; the government’s bonus/malus system that rewards buyers of fuel-efficient vehicles and penalizes purchasers of gas hogs; and a fund for modernizing suppliers, in addition to standard support of industrial investment.
However, a unified industry organization is unlikely.
Auto makers have their group, the CCFA, while FIEV represents suppliers. FIEV Chairman Claude Cham, a vice president of the auto industry platform, says the FIEV board didn’t elect him to eliminate the organization.
Preserving automotive jobs and averting layoffs during economic downturns is a priority of the government, but some industry players are acting on their own. Renault already has outsourced most small-car manufacturing to lower-cost countries, and PSA Peugeot Citroen recently announced it would shed 5,000 jobs in France.
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