France is known around the world for its fine food and wines, its culture, tourist destinations and luxury goods.
But there’s more to the story—starting with high- performance, cutting-edge industries. Year after year, France continues to outrank Germany as Europe’s #1 host country for foreign direct investment in manufacturing.
But clichés and myths have a life of their own.
“French labour costs are too high” they say. Or “The French are always on holiday.” Or “High taxes are a killer for companies based in France.”
If outdated ideas have prevented you from investing in France in the past, we’d like to offer a few hard facts that may change your mind.
In this White Paper, we debunk eight myths about France, its regions and its auto industry. These include:
- new policies
- interviews with experts and investors
- recent international research highlighting the appeal of France
MYTH #1: [Competitiveness] “French labour costs are too high”
Figures for 2019 confirm that French labour costs are comparable to those of Germany, Belgium, the Netherlands and Luxembourg. Critically, recent policy initiatives have moved to cut taxes and social contributions, and bring both into line with European averages.
France vs Europe—competitive minimum wage, reduced employer contributions
A battery of reforms have cut French social contributions and put them on a sliding scale. As a result, the employer’s share has been slashed to about 13% of the previous contribution for salaries near the French minimum wage.
In 2020, France’s gross minimum wage (based on a 35-hour work week) stood at €1,539.42.
Employer contributions after allowances were 6.20% or €94.
Minimum wages in Europe
Sliding scale for employer contributions makes France more competitive
Thanks to these measures, France has become one of Europe’s most competitive labour markets for low salaries in recent years.
In most other European countries, employer contributions are based on a flat rate, which weighs far more heavily on low salaries.
Taken together, employer and employee contributions represent 32% of total pay in France, compared with 39% in Germany, 38% in Italy and Sweden, and 36% in Spain.
(Source : RFI 2017)
Focus on Hauts-de-France: Competitive salary costs
Skilled workers cost less in Hauts-de-France
And of course these national trends apply at regional level. Compared with other regions across Europe, Hauts-de-France offers a marked competitive advantage to businesses that employ skilled workers.
HAUTS-DE-FRANCE: LOWER COSTS THAN COMPETING REGIONS…
Labour cost benchmarks:
Hauts-de-France—lower costs than our European neighbours
Research by NFI and EY in 2016 revealed a striking salary gap between Hauts-de-France and our European neighbours:
Myth #2: COMPETITIVENESS “Productivity is foreign to France”
Interview: Olivier Silva, Plant Manager, Maubeuge Construction Automobile (MCA) Renault-Nissan Group
Today Renault-Nissan’s Maubeuge plant is a national standard-setter for productivity, innovation and labour relations. We spoke with Plant Manager Olivier Silva in September 2019.
« Our productivity is nearly twice the French average for bodywork assembly plants. »
What about productivity?
O.S. MCA holds the record in France, with 100 vehicles per employee per year
In fact, our productivity is nearly twice the French average for bodywork assembly plants. (Ed: Renault Group’s 2020 target is 60-90 vehicles per year at all of its plants.] It was this level of productivity and production quality that brought Daimler to the region.
How is your plant in Hauts-de-France different from other automotive factories, in France or abroad?
O.S. One of our main advantages is that the plant here is very compact—you can cross it on foot. [Ed: the plant’s total surface is 83.46 hectares, including 23.8 ha of covered buildings). That allows us to optimise inventory. It’s also helped us manage parts more profitably, and has reduced our cost price per vehicle. And our employees are genuinely engaged, which is a big benefit. But above all, we’re at the
cutting edge of innovation, especially in the areas of connected industry and assembly line automation.
In your view, what is Hauts-de-France’s greatest strength?
O.S. When you arrive in northern France as a plant manager, you quickly realise just how attractive the region is for an export-oriented business. We are literally at a European crossroads, sharing borders with Britain, Germany, and the Benelux countries. Multi-modal transport is another strength in the region, with shipments moving easily between waterways, road and rail. Last but not least, Hauts-de-France has a strong industrial culture—and above all a strong automotive culture—that makes it easy to work with partners.
Myth #3: HUMAN RESOURCES “The French are always on holiday”
Stereotypes die hard. Some investors just can’t seem to let go of the idea that “France is the land of endless holidays.”
True, employees working for businesses in France get five weeks of paid holidays a year, but the annual number of days off for French workers hasn’t budged since 1982.
And other countries are even more generous.
France offers fewer days off than other European countries
Above and beyond paid holidays, absenteeism is sometimes seen as a drag on employee engagement.
You might think that workers would be tempted to abuse France’s very comprehensive national healthcare system, but once again, that myth isn’t borne out by the experience of businesses operating in Hauts-de-France.
Interview: Pierre-Jean Eraud, Manufacturing Director Dunlop Goodyear Amiens
What can you tell us about employee engagement and absenteeism at your company?
Our employees are hard-working and loyal. We’ve seen no sign of abuse, and very few leave us. Average employee age is 42, and they stay with us a long time. We set high standards for working conditions: our workplace complies with requirements for noise, lighting and cleanliness. And we use two indicators to measure absenteeism, including
work interruptions of under 30 days, which account for 2.6%-2.7% of the total. That puts Amiens in the top three of our 13 plants in Europe.
Myth #4: FLEXIBILITY “French labour rules are too rigid for businesses to succeed”
Are all the French lazy? Some clichés are still alive and well, and working hours in France is one of the biggest. When France introduced the 35-hour work week, it left a lasting impression—but today’s legal framework allows for a wide range of adjustments.
Under certain conditions, French law allows companies to partially suspend operations or negotiate a new performance contract with workers, including an increase in working hours with no rise in salaries.
Let’s take a closer look at a few key measures.
New labour rules make working hours more flexible
French law provides for a 35-hour workweek, but this can be increased to:
44 hours for 12 weeks under an industry-wide agreement
46 hours for 12 weeks under a company-wide agreement
a maximum of 60 hours per week instead of 48, under an agreement between the company and French labour officials
Did you know?
In France overtime is limited to 220 hours a year (versus 150 hours a year in Poland, for example). And the French ceiling can be raised to 350 hours under a company-wide agreement.
HR management is more flexible under the new French rules
A 2017 order issued by the French Cabinet created a nationwide employment/competitiveness agreement that gives companies greater flexibility to create and preserve jobs, increase internal mobility, and reduce working hours.
Under the latest reforms, company-wide agreements take precedence over industry-wide agreements and employment contracts, even when the company-wide agreement is less favourable to employees. Affected areas include:
- changes in working hours (for a limited period)
- overtime pay/compensation
- number of RTT (required vacation) days representing compensation for overtime
Temporary workers give businesses more flexibility
By hiring employees on short-term contracts, companies can adapt more easily to fluctuations in production.
They can also transfer responsibility for training to temporary employment agencies.
Today France is a major market for temporary employment, with 750,000 full-time equivalent workers on short-term contracts at any given time. And project-specific contracts (CDI à la mission) offer yet another limited-term employment option.
Case study — Dunlop Goodyear
Interview: Pierre-Jean Eraud, Manufacturing Director Dunlop Goodyear (Amiens).
Strong labour relations are essential to keeping a factory at maximum competitiveness. We take a closer look at the region’s Dunlop Goodyear tyre plant, operating in Amiens since 1958.
« The labour climate was favourable. It only took about two months from starting the talks to changing our workplace organisation.»
What is your production schedule like these days?
P-J.E. We operate nearly year-round—24 hours a day, 357 days a year.
How would you describe labour relations at your plant?
P-J.E. [labour relations are] very positive and constructive. All the relevant French unions are represented at the plant.
There’s open dialogue and a shared commitment to making our site one of the best in the group.
And what explains this, in your opinion?
P-J.E. You can’t stay productive without solid labour relations and organisation.
This plant has accepted change, including a move to six-day shifts. That presented significant challenges, but our employees were aware that everyone has to make an effort to stay competitive—especially when they saw other Dunlop plants forced to close because they weren’t productive enough.
How long did it take you to implement that change?
P-J.E. The labour climate was favourable. It only took about two months from starting the talks to changing our workplace organisation.
What did your employees get in return?
P-J.E. They get four consecutive days off, and they work 32 hours a week on average, with no reduction in salary. That gave the new system appeal. But there was also a freeze on salaries, although that didn’t trigger any industrial action.
In our industry, you have to understand that people are the key to productivity. Without our labourmanagement dialogue and the new schedule, we wouldn’t have been able to raise our production capacity.
So concretely, what did these changes do for you?
P-J.E. They gave us greater control of our manufacturing capacity. Depreciation is spread over a longer period, with the plant operating for longer hours.
Myth #5: FLEXIBILITY “It’s impossible to fire people in France”
French labour reforms have made economic layoffs much simpler. Companies can now use a wider range of criteria to eliminate jobs, including the size of their workforce and their sales trends.
These criteria for economic redundancies took effect on 1 December 2016:
Myth #6: THE ECONOMY “France is not a manufacturing country”
France is famous worldwide for its luxury goods, food and wine, tourism and thriving culture.
But international business leaders don’t associate France with industry. Many still believe that France has no high-performance manufacturing, and some even think that France has never entered the modern industrial age.
They couldn’t be more wrong. Statistics tell a completely different story.
The hard facts show that France is the European leader in foreign industrial investment, and Hauts-de-France is the leader in France.
France is Europe’s no. 1 Host country for foreign investment in manufacturing
In 2018 foreign industrial investment in France rose by 5%. And with 339 new projects (including 80% extensions), France remains the leader in Europe.
Among the top 5, the United Kingdom recorded the largest drop in industrial FDI (-35%, with 140 projects). It fell from second to fourth place, just ahead of Poland (129 projects).
Case study — Toyota Motor Manufacturing France
Interview: Luciano Biondo, President – Toyota Motor Manufacturing France (TMMF) Onnaing from 2017 to 2020.
« We’ve invested €1.5 billion in our Hauts-de-France plant since it opened in 2001. »
What does the “Made in France” label mean for Toyota, and what practical difference does it make?
L. B.: Our sales people say it makes a big difference. A car’s origin is often third or fourth on the list of priorities for customers, and French-made vehicles carry a lot of clout—especially in the domestic market. Our plant’s success shows that, even in 2020, it’s still possible to build compact cars in France.
How does your plant compare with the competition?
L. B.: Labor costs can be higher here than elsewhere, but employee engagement and good labor relations more than make up for those costs. We’ve achieved 20% efficiency gains in the past four years. And logistics costs are lower and easier to contain than in other European countries. Being in France puts us right where our customers are.
How does your plant in Hauts-de-France stand out from the rest?
L. B : It’s all about location. Some 110 million people live within 300 km of our plant, mostly in towns and cities. Local and regional governments are keen to create a business-friendly environment and support industry and job creation.
What advice would you give to businesses considering investing in the area?
L. B.: Some businesses and investors are put off by France’s tradition of collective bargaining. That’s a misguided view—a negative stereotype that needn’t apply. As our experience shows, sitting down with employees and union representatives and talking through the issues can lead to positive outcomes.
France also has a reputation for bureaucracy. But central government, local authorities and development agencies are working hard to cut red tape and make life easier for investors.
Examples like ours go a long way toward breaking down these stereotypes. Investors need to know that France will welcome them with open arms.
FOCUS on Hauts-de-France : Competitive labour cost
France’s no. 1 host region for industrial FDI
For four years running, Hauts-de-France has ranked as France’s top region for foreign industrial investment. The strong industrial culture of our workforce and our outstanding regional infrastructure make us the region of choice for production sites.
(source: Business France 2019)
Myth #7: COMPETITION “The auto industry? That’s in Germany!”
Germany is the undisputed leader in automobile production in Europe.
Government subsidies, combined with its focus on high-end models, rank the country third worldwide for assembly of private cars, behind China and Japan.
But France is moving up fast. Europe’s tighter environmental regulations work to the advantage of French automakers, who are rapidly expanding the electric car market.
The automotive industry is a strategic priority for France
France has made the auto industry a strategic priority, building on its history as a pioneer in the field.
Over 1,000 French auto manufacturing businesses have been launched since the earliest days of the
automobile, and the industry has had a profound influence on our country and its people.
French automakers set the pace in electric cars
Electric vehicles saw record sales in 2019, with the market for light electric vehicles reaching 42,000 units full year. That’s 37% more than in 2018 and a market share of around 1.9%.
The electric light utility vehicle market also shows steady growth, rising from 3,151 units sold in 2016 to 7,879 in 2019.
Did you know?
Labour costs: In manufacturing industries, sector agreements signed since 2016 have put France’s hourly labour cost (€38.3) below Germany’s (€38.8).
Source: INSEE, 2018
Source: INSEE, 2018
Focus on Hauts-de-France, France’s premier automotive region
French auto manufacturing is concentrated in a few strategic regions. Hauts-de-France ranks first by number of vehicles produced, making our region the place to be for auto industry projects.
We account for:
Interview: Luc Messien, Délégué Général, ARIA Hauts-de-France (Regional Association of Automotive Industry Professionals)
“Hauts-de-France has always been a welcoming place”
Why is Hauts-de-France still the core of France’s automotive industry?
L.M: Hauts-de-France has always been a welcoming place in every respect. Peugeot Citroën arrived in Trith-Saint-Léger in 1954, Renault set up in Maubeuge in 1969, and Toyota began operating in Onnaing in 1998.All three towns are on the outskirts of Valenciennes and Lille. And all three automakers continue to invest in these production sites to maintain their competitive edge.
An example: since 2018, Toyota has invested €300 million to deploy its New Global Architecture plant concept, designed to align its operations here with the group’s most competitive and innovative sites in Turkey and in Japan.
Meanwhile, Renault has invested to develop and produce electric vehicles at all three of its sites in Hauts- de-France. So Douai will host the Renault-Nissan-Mitsubishi Alliance industrial platform for Renault’s battery-powered cars of the future.
Meanwhile, the Kangoo ZE electric van is getting off to a promising start at Maubeuge, and the STA plant in Ruitz will produce gearboxes for electric vehicles starting in 2019. Renault plans to invest €1 billion across all of its sites in France, which of course will mean new jobs in our region.
As you can see, we have a history of welcoming automakers, and their plants rapidly become world benchmarks.
Aside from investments, what structural factors have attracted automakers to Hauts-de-France?
L.M: We’ve benefited from the region’s competitive infrastructures, from maritime to rail to road. One example is the Delta 3 combined transport platform in Dourges, which handles shipments by rail, road and waterway. It was set up in 2003 and has become one of Europe’s most efficient multi-modal transport hubs.
We’re also known for our excellent labour pool. Workers here are agile and adapt quickly when jobs modernise and industries evolve.
Finally, we’re located at the crossroads of Europe, halfway between the UK and Germany, and our flat terrain is particularly well suited to roads.
France makes the automotive industry a strategic
Of the French companies that filed patents in 2018, one in five was in the automotive sector.
This figure comes from France’s national intellectual property authority (INPI), and its 2018 rankings underscore the innovative power of French industry in general and our auto sector in particular. Once again Valeo and PSA led the field, filing over 1,000 patents.
The automotive sector accounted for many of the patents filed in 2018
Did you know?
Each year, the French State lends its support to innovation in the automotive sector. A key project for 2020 includes partnering with Germany to develop a next-generation battery segment, with funding from the French State set at €700m over five years.
Together, France and Germany will launch an Airbus-like consortium to produce batteries for electric cars (Source: Reuters, 3 May 2019). By 2022- 2023, the new group plans to build two production plants, one in Germany and one in France, with 1,500 workers at each.
The sites will begin by producing enhanced liquid batteries and then move to more advanced technologies. Eventually this European industry will span the entire value chain, from extracting minerals to recycling used batteries.
Myth #8: STARTING UP “It’s too complicated to start a business in France”
French bureaucracy and procedures are often equated with red tape, but here, too, things have changed.
The French State has made a concerted effort to simplify business processes: the days of trotting from office to office in search of the right form are over. Today you can do it all on the internet, saving time and hassle.
Time required for start-up Ffrmalities in France is among the shortest in the EU
A foreign company can set up a business in France as quickly and easily as a French one.
World Bank data shows that it takes four days to complete the steps needed to start a company in France—a record for the European Union, where the average is 13 days. And France ranks sixth worldwide.
Source: World Bank 2018 (Figures correspond to the number of calendar days needed to complete all procedures to set up a business that can operate legally. If the process can be accelerated by paying more, this comparison uses the fastest option, regardless of cost.)
The World Bank also reports that it takes five steps to start a business in France, versus an average of seven worldwide.
Source: World Bank 2018
(Start-up procedures are the steps needed to set up a business, including interactions aimed at obtaining the required permits/licenses and completing all registrations, verifications and publications needed to begin operations. Figures are for companies with specific features, including ownership, size and production type).
5 major steps to start a business in France
- Select your business structure: Liaison office/Branch/Subsidiary
- Write up your legal notice
- Select your legal status and draw up your articles of association SA (business corporation) SAS (simplified joint stock company) SARL (limited liability company)
- Deposit social capital in a special account
- File relevant forms and register your company
How long will it take to process your application?
On average, count one month between completing the formalities and actual start-up. You can take the necessary steps on line at www.guichet-entreprises.fr.
The timeline may vary depending on whether your application meets all the requirements for processing and whether further documentation is required.
Can you start doing business before you set up your company? Yes, it’s possible.
Once you’ve drawn up and signed your articles of association and deposited the cash contribution, your business is deemed “in course of incorporation”. If you start doing business before you receive your registration number, you must indicate this on all documents and include an appendix to your articles of association describing any transactions undertaken on behalf of the company in this early stage and how they will be included into its operations once it is up and running. Once these formalities have been finalised, you are free to:
- carry out transactions and make purchases
- start selling
Need assistance setting up your business? Your business centre is there to help.
Whatever form your business takes, you’ll find help with all of the formalities at your nearest CFE business centre (Centre de Formalités des Entreprises). CFE staff can assist you with all of the formalities—including the forms and documents needed to create, change or close a business in France—and file them with the right authorities.
Registering a company or a branch office with the Trade and Companies Register (Régistre du Commerce et des Sociétés, or RCS) takes only a few days. Expect to pay around €50 for the administrative formalities and around €230 to publish a notice in the official journal announcing your company’s creation.
Focus on Hauts-de-France: A special invitation for you
We invite you to take advantage of an offer that you won’t find anywhere else in France:
in Hauts-de-France alone, the French State has partnered with regional and local authorities to assist investor companies with high-value projects.
Under our Contrat d’Implantation programme, we sign an agreement with you—not a legal contract but a good-faith commitment between our team and yours—to cooperate fully and make your project a success in every way.
When you sign this pledge, you can expect Hauts-de-France to provide enhanced support in strategic areas such as:
- getting administrative authorisations on a timeline that meets your needs
- ensuring that your recruitment and training efforts are successful as you ramp up your business
- developing a financial assistance package (including aid for recruitment, training, innovation, investment and more) for eligible projects
- introducing you to key players in the local and regional ecosystem to make your business at home in its new environment
- following up after you’ve moved in, to anticipate and resolve any issues that might arise as you scale up.
To keep things simple for you, we set up a dedicated team for your project, with a single contact to manage all of the commitments set out in our agreement with your company.
If your business has complex needs, our Contrat d’Implantation programme can help make your project a success in Hauts-de-France.
Nord France Invest—Helping you launch your project in Hauts-de-France
When you set up in an unfamiliar place, you need reliable, independent and recognised partners.
That’s what economic development agencies are for, and they save you both time and money, since their services are generally free of charge for international companies. Their aim? Build a win-win relationship between the host region and prospective investors.
At Nord France Invest (NFI), the economic development agency for Hauts-de-France, we do just that, answering your questions and offering business solutions tailored as closely to your needs as possible.
NFI was founded in 1967.
Since then, we’ve helped 1,300 companies set up in northern France, and over the past 20 years, we’ve supported 113 investment projects in the automotive industry alone.
Because every case is unique, we adapt our approach based on the maturity of each project and the challenges it faces.
As a result, we’ve crafted a range of solutions for each stage in the business development process. Our services are 100% confidential and provided at no cost to you. Funding is provided by the Hauts-de-France Regional Council and the Hauts-de-France Chamber of Commerce and Industry.
Dedicated expertise every step of the way
Step 1: Compile and deliver the information you need
Once we have your specifications, we identify your specific needs, then work with our partners to provide a comprehensive response to all of your issues.
Step 2: Find the right solutions
We prepare a proposal setting out a range of possible solutions, from buildings and land to acquisition candidates and potential partners.
Once you’ve reviewed it and shortlisted the best options, we schedule the necessary site visits, coordinating everything to make the best use of your time.
Step 3: Develop a financial package and handle formalities
We identify relevant grants and other public aid and tap into every possible source of support.
We also place the powerful NFI network at your disposal, facilitating your relations with local, regional and national authorities and speeding up administrative procedures. And naturally we advise you on interacting with local decision-makers.
Step 4: Follow up
Working closely with our partners, we’ll help you find your place in the local business community and develop your network. But we don’t stop there: once your project is up and running, we’re still on hand to support you as you grow.
No, the French aren’t always on holiday, and no, they’re not afraid of hard work. And no, Germany isn’t the only country in Europe with a vibrant automotive industry.
And yes, France is a premium choice for foreign investors, particularly in manufacturing.
In fact, it’s becoming more attractive by the day. In its April 2019 report, EY notes that the number of foreign investment projects here soared 17% in 2019, ranking France first in Europe with 18.7% of all projects announced during the year, compared with 17.3% for the United Kingdom.
The French government has streamlined administrative, tax and labour-related paperwork, and it continues to simplify procedures, introduce greater workplace flexibility and cut employer costs. The effort has paid off—and the empty stereotypes that once made France less attractive are on their way out.
Above all, France offers genuine investment opportunities, particularly in the automotive industry. Auto making is in our DNA, as you can see from our commitment to the industry and the engagement of our workforce. As automakers forge new partnerships and major players such Renault-Nissan and Peugeot-Citroën strengthen their presence in Hauts-de-France, it’s clear that our automotive ecosystem is thriving and ready to welcome new players.
If you take a closer look at our region, you’ll see that we have the structural resources we need to welcome new arrivals and strengthen companies that are already in business in Hauts-de-France. And as you saw in our interviews with Olivier Silva of MCA and Pierre-Jean Eraud of Dunlop Amiens, many of our region’s plants are more competitive than their national and international neighbours.
Now that we’ve debunked the myths that were holding you back, the ball is in your court. We look forward to hearing from you.
Sincere thanks to these industry leaders for their time, expertise and contributions to this White Paper:
- Pierre-Jean Eraud, Manufacturing Director – Dunlop Goodyear
- Luc Messien, Délégué Général, ARIA Hauts-de-France
- Olivier Silva, Plant Manager, MCA (Renault Nissan)
- Philippe Farge, Délégué Régional Nord Est, Renault Group
- Luciano Biondo, President, Toyota Motor Manufacturing France