What's the current state of reindustrialization in France?

16 Oct 2023
Business
Estimated reading time : 8 minutes
What's the current state of reindustrialization in France?
16 Oct 2023
Business
Estimated reading time : 8 minutes

Industrial issues have never been more important.

The Covid crisis and the war in Ukraine have shown us the limits of an economic model based on hyper-dependence in terms of resources and supplies.

They revealed the vital need for French industry to assert its sovereignty over upstream and downstream production processes.

Since 2017, France has been recreating factories and industrial jobs.

But where does France really stand today? What are the challenges of reindustrialization and what levers can be used to restore France’s manufacturing standing?

These are just some of the issues analyzed by Anas Voy Gillis, associate researcher at IAE Poitiers and specialist in reindustrialization, at the opening of Investor Day 2023.

And debated by all the speakers throughout the morning.

France’s reindustrialization: between optimism and caution

The roots of France’s deindustrialization run deep.

The importance of the manufacturing industry has fallen from 30% of GDP in 1950 to 10.5% today (OECD).

While the trend in factory start-ups since 2017 has returned to positive territory and is naturally generating optimism, the situation nevertheless remains fragile.

“When it comes to reindustrialization, we need to be optimistic but cautious. France is not alone in its determination to increase industry’s share of GDP. ” Anaïs Voy Gillis

France’s de-industrialization has had the indirect consequence of reducing the supply of training and, consequently, the shortage of skilled manpower, which cruelly disadvantages today’s industrialists.

“The weight of the manufacturing industry in France is 10.4% of GDP according to OECD data, on a par with Greece for a European average of 16.5%. In 1990, France was at 18% of GDP.

Moreover, France is not alone in embracing this investment trend.

Global competition over the need to strengthen production chains is fierce, and not everyone is going to be a winner.

To come out on top, France will need to adopt a systemic approach.

Indeed, reindustrialization is not just about factories.

Many actions need to be taken simultaneously: availability of resources (water, energy), housing, skills, urban planning…

Nevertheless, France has a serious advantage: its strong industrial history, particularly in the Hauts-de-France region where this culture is part of its DNA.

For the record, the Hauts-de-France region ranks 2nd in France and Europe for industrial investment in the latest EY attractiveness barometer.

Investor Day - Anaïs Voy Gillis

Industry, a whole new image to rebuild

Opening new factories isn’t everything.

Industry suffers from an image marked by obsolescence and hard work.

“Deindustrialization has produced extremely negative images of industry, which has become an emblem of social decline. “

It is no longer attractive.

How can you make people want to train and recruit talents in these conditions?

“How do you attract young talents who have already mastered chat GPT when the average French industrial machine park is 19 years old? Digital technology is helping to make industry more attractive. ”
Max Blanchet, Senior Managing Director of Accenture Stratégie – Head of Industry 4.0 for Europe

The revival of French industry will require a radical change of image.

Gone is the idea of an all-male factory, working in difficult conditions on obsolete machines.

We need to rebuild and create a new industrial myth that goes beyond the factory floor.

“We need to show what industry really is and break down the stereotypes. Yes, there are industries that fit these clichés. But industry is everywhere, and people regularly pass by an industrial site without realizing it or knowing what’ goes on there. “

One sole objective: to seduce and rekindle French people’s interest, especially the younger ones.

It is therefore crucial to communicate on the transformation of industry, its digitalization, which opens the door to new, high value-added professions and missions in line with the expectations and skills of the younger generation.

“We need to show young people that industry is interesting and recreate an interest in the sector.
Show them that the job can be exciting, and that they can make a real contribution to the world’s future. ” Vincent Mégret, SKF Managing Director

“One of the first obstacles to reindustrialization could simply be the unavailability of skills” Anaïs Voy Gillis

The 4 challenges of reindustrialization

“The challenges for industry are manifold and must be met in parallel with the challenges of reindustrialization”.

For Anaïs Voy Gillis, reindustrialization goes beyond factories and is based on 4 fundamental challenges:

1. The modernization of production facilities
2. The decarbonization of industry
3. Cooperation between public and private stakeholders
4. The creation of a genuine purchasing policy

1. The modernization of industrial sites

Industry 4.0 is underway.

Today, you need to invest in your production facilities to improve productivity and adapt to changes in demand.

In particular, this involves the robotization and automation of factories.

All highly industrialized countries have a high level of robotization. It’s not a question of labor costs, but of competitiveness.

“All highly industrialized countries have a very high rate of robotization. Moreover, a third of the robots installed in France have reached the end of their service life and are therefore obsolete. ” Fabien Laleuf, Managing Director France, ABB

Our companies urgently need to embark on their digital transformation now, or they risk being left behind in 5 years’ time.

“The development of Industry 4.0 is a unique opportunity to fully reconcile technology and the ecological transition, in the interests of creating more skilled jobs and improving business competitiveness. ” Fabien Laleuf, Managing Director France, ABB

Learn more about the challenges of corporate digitalization

 

La ré

The automotive industry: a double-edged conversion opportunity in Hauts-de-France

The automotive industry plays an important role in the region.

30% of the vehicles produced in France come from the Hauts-de-France region.

The development of electric mobility is a real opportunity for the sector.

The process of conversion is well underway, with the establishment of gigafactories and major investments from long-standing manufacturers.

But the network of subcontractors is still heavily dependent on the production of combustion-powered vehicles.

This raises the crucial need for investment in the modernization of an entire ecosystem’s production tools, in order to conquer these new markets.

Discover why the French EV market is the place for you

2. The decarbonization of industry

” Environmental issues cannot be limited to decarbonization alone. It’s a huge issue that’s going to require a lot of investment, but unfortunately, it’s not the only one. “

Decarbonization is now at the heart of business development models.

However, other environmental aspects should not be overlooked:

  • Water resources management
  • The preservation of biodiversity
  • Microplastics pollution

This leads to much broader questions, such as the choice of raw materials and suppliers (impacting scope 3), product lifespan, recycling…

“This necessary adaptation is also a significant opportunity for innovation. “
Anaïs Voy Gillis

“The ecological transition is a key challenge for companies. SKF is trying to be part of this transition in order to offer its customers the most neutral and efficient solutions possible. To do this, it’s necessary to think in terms of eco-design, throughout the product’s entire life cycle.
For aeronautical bearings produced in Valenciennes, we work on various aspects such as weight and speed, materials, longer maintenance intervals, reconditioning…”. Vincent Mégret, General Manager, SKF

La réindustrialisation des entreprises vers l'industrie décarbonée

3. Cooperation between public and private stakeholders

To successfully reindustrialize a region, you need to create solid ecosystems.

France suffers from a lack of cooperation in terms of skills, research, demand…

All the socio-economic players (academic, industry, startup, institutional and industrial stakeholders) need to unite and coordinate their efforts.

“France suffers from a lack of cooperation. It can be based on co-investment, sharing innovation and skills, as well as on the question of demand” Anaïs Voy Gillis

Public authorities have a vital role to play in ensuring the convergence of local interests, and in providing financial support and training for employees.

The example of Dunkirk and ArcelorMittal, a winning duo for the energy transition, which took the floor during the first part of Investor Day 3.

ArcelorMittal is based in Dunkirk and represents 400 direct and 200 indirect jobs.

As a steel producer still powered by fossil fuels (coal), the nature of the site’s activity makes it a major producer of CO2.

The challenge: how to produce the same amount of steel in a carbon-neutral way.

“Our roadmap must meet the challenge of producing the same amount of steel but in a carbon-neutral way as quickly as possible. It’s not just an environmental issue, but also a competitive one. “
Thierry Flament, Director of the ArcelorMittal Dunkirk site

On the other hand, Dunkirk alone accounts for 21% of France’s industrial emissions.

The Urban Community (CUD) has announced the ambitious goal of achieving -35% greenhouse gas emissions by 2035 and carbon neutrality by 2050.

This challenge calls for close collaboration with all the manufacturers and SMEs present in the region, in order to reconcile public and private issues.

“Our decarbonization strategy is highly ambitious, with a target of carbon neutrality by 2050. We’re working on regional planning to ensure that businesses are welcomed and developed. We have over 20 major projects that represent €36 billion of investment over the next 10 years. “
Rafaël Ponce, Chief Administrative Officer, Urban Community of Dunkirk

This gave rise to the Collectif CO2, of which Thierry Flament, Director of the ArcelorMittal site in Dunkirk, is a member.

The ArcelorMittal site’s decarbonization target is in line with that of the CUD.

To achieve its industrial transformation, Arcelor needs strong public support.

Of the 1.7 billion, the cost is estimated at around €850 million.

The strong, long-standing ties between industrialists and local authorities have also enabled the development of a co-construction approach to talent training (implementation of an educational pact), innovation, resource planning, etc.

Territorial dynamics and synergies are beneficial not only for manufacturers, but also for the region as a whole, since they help to promote its industrial attractiveness.

“In Dunkirk, we’ve been practicing circularity for some 40 years. The synergies we can achieve with public authorities and other manufacturers are a natural fit with these issues and enable us to share investments and common solutions. ” Thierry Flament

“This joint roadmap is a huge undertaking. The GIP Euraénergie acts as a link between the economic fabric and local authorities to accelerate this transformation. ” Rafaël Ponce

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4. The creation of a genuine purchasing policy

The final lever for reindustrializing the region is to create a virtuous circle of purchasing, thereby increasing demand and thus domestic production.

“There will be no lasting reindustrialization if there is no one to buy French products. ” Anaïs Voy Gillis

We need to restore the balance of trade:

  • increase French production
  • and thus reduce the country’s trade deficit

A challenge that can be based on 4 pillars

  1. Public procurement
  2. Exports
  3. The end consumer

    “On this last point, purchasing power is often emphasized. However, when it comes to products manufactured in France, you are sometimes on a par with products imported from Asia. If I compare a pair of 1083 jeans with a pair of Levi’s jeans, I’m in the same product and price range. The former is manufactured in France, generating taxes and consumption in France, while the latter is produced on the other side of the world, with the attendant environmental impact. “

  4. Industrial companies

    “How industrial companies are working on their purchasing policy to try and source from local or national players. “

At corporate level, this means the end of the price logic.

And therefore the introduction of a reasoning on the scale of the ecosystem or region.

The aim is to bring new production volumes to local manufacturers.

The latter will then be able to produce more, earn more and ultimately invest in new sites or expand their existing ones.

The regions are the right lever to create this ecosystem dynamic, as they are capable of drawing up a territorial roadmap.

“As soon as everyone decides to move in the same direction, it has to be done collectively. Without this collective choice, reindustrialization will remain wishful thinking. “

Do you have a development project in Hauts-de-France?

Reindustrialization is well underway in France.

A lot of things need to be put in motion around factories to ensure that it becomes a reality: availability of resources, energy, housing, skills…

Reindustrialization must be systemic and involve all stakeholders, from the local region to the end consumer.

“It will be complex, long and costly. But it also means giving ourselves the means to be independent and support our social model. It means giving ourselves and future generations the means to build the country they want, while preserving their values and the model to which we are all attached. ” Anaïs Voy Gillis

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