“Before we realized, in March 2020, that we did not know how to produce masks or medicines, no one was talking regarding reindustrializing the country.” Ano Kuhanathan, economist and scientific advisor to the Rousseau Institute, puts us in context. He is invited on November 23 to Mouans-Sartoux, alongside Louis Gallois (former president of SNCF, the EADS group and co-president of Fabrique de l’Industrie), to debate the question of reindustrialization.
“Reindustrialization will not happen.” It’s catchy but do you really mean it?
This is indeed a bit strong but, unfortunately, we are not far from the truth.
What’s stuck?
Since Covid-19, there has been a demonstrated political will to reindustrialize the country, it’s true. Concretely, what measures, what actions have we seen? None. We only have speeches. This is an observation. Reindustrializing the country is expensive, in terms of land, equipment and employees. Who pays? Because in the end, let’s not kid ourselves, the product made in France will always cost more than the one made in China. Is the consumer ready to make the financial effort? The answer is no. A number of studies, on fair trade for example, have demonstrated that during surveys carried out on these issues, there is a gap between consumer intentions and the final consumer basket. Because there is a reality: the tight budget of a large majority of French people.
Are there any solutions or is it ruined?
We need a real industrial policy. This is the solution. With indicators of success. Who measure what is happening, who report. And there is none of this. Reindustrializing is a question of solidarity. A notion that does not appear in public debate. Reindustrializing is expensive, as we have said, and everyone must take their share of this additional cost. The State first, then businesses and the consumer. Everyone must play the game but there must be a counterpart. Otherwise no one plays. The State first. If he concedes reductions in production taxes and corporate inheritance taxes (dear to family businesses), he must demand compensation. If this effort is made, companies will have to reduce their margins and commit to investing in research and development (to innovate) and increase wages. We will not be able to run industries with poorly paid employees who are unhappy at work. Yet instead, our businesses are focused only on profit. A mistake to initiate reindustrialization.
If we follow this plan, will we get there?
Alone, I don’t think so. Germany tried with the automobile and today it is being overtaken by China, its main customer which currently produces as much and as well. Because the Chinese have invested massively. Another example, Intel is arriving in Germany to set up the largest semiconductor factory in Europe, but for what purpose? We don’t have a smartphone industry, video games or computers. Last year Europe needed 5-cent or even 50-cent chips, not 200-euro chips that go into smartphones. And we’re putting public money into it. With an announcement that goes “wow” but which does not advance reindustrialization. Far from there.
We will have to bring the issue back to the European level and change the rules of the game. We can see it clearly, we have the impression of playing Monopoly, everyone is cheating, except us (smile). Finally, our regulations are putting obstacles in our way and in the meantime, the market is moving forward. We must get away from these rules established in the 90s. In particular the budgetary and competition rules. And think differently. Instead of thinking regarding the automobile industry, let’s think regarding mobility; instead of construction, let’s think regarding housing, etc.
And if the territories start to reindustrialize, can they show the way nationally?
Let’s be realistic. The small SME that will succeed in producing locally in Saint-Etienne will not wake up the Prime Minister. On the other hand, it should be noted that the industrial sites are located in medium-sized towns in France. This is where we need to pull out all the stops in terms of housing, training, infrastructure and attractiveness to contribute to the dynamism of these areas. Still floating questions….
