French Auto Industry Embraces Competitiveness Clusters

In 2005, as China and India experienced rapid growth as low-cost players in the global economy, the French government could see the writing on the wall.

To compete with these emerging economic superpowers, French companies would need to step up their game.

The government announced a plan to spend €1.5 billion ($2.2 billion) over three years to form “clusters” of high-tech expertise that would allow French companies to collaborate with each other and university researchers so they could compete more effectively on a global basis, instead of with one another.

“The word ‘networking’ doesn't translate in the French language,” says Jean-Dominique Wagret, vice president of the Mov'eo automotive cluster. “So it's very important that we all work together.”

Today, 66 “competitiveness clusters” dot the French map, as cities long associated with certain product expertise are encouraged to cultivate advanced research that will secure France's place in the global economy, as well as create jobs.

The city of Nantes focuses on biotherapy and civil engineering; Chartres does cosmetics; Metz develops steel and innovative materials; and the mustard capital of Dijon handles food nutrition and nuclear energy.

Among the 66 clusters are 16 with global missions to reach beyond the French border for economic opportunities. For example, Lyon has plenty of companies in the urban transportation business, so one of its clusters is Lyon Urban Truck & Bus, with Renault Trucks and Irisbus Iveco among the founding members.

As an incentive for companies to join, the Lyon cluster offers employee training programs, business intelligence resources and shared testing and resource facilities.

Yearly membership fees for the Lyon cluster range from €389 ($578) for companies with fewer than 20 employees and €1,794 ($2,667) for those with more than 500 employees.

The Mov'eo (pronounced MOO-VAY-oh) automotive cluster is headquartered northwest of Paris in Normandy but includes the heart of the French industry.

Member companies include PSA Peugeot Citroen, Renault, Michelin SA, Faurecia SA and Valeo SA. Some 200,000 people work in the auto industry in the region.Mov'eo's goal is to develop R&D projects that improve safety, advance mechatronics and reduce reliance on fossil fuels.

With Eastern Europe becoming a low-wage hub for the region, France is challenged to keep its manufacturing base.

A labor study says the monthly cost of wages and benefits in France is €3,500 ($5,203), below that of Belgium, Germany and the U.K. However, those costs plummet to €837 ($1,244) in Czech Republic and €699 ($1,039) in Poland.