Michelin, de-industrialisation and re-industrialisation: should the interests of consumers continue to take precedence over those of employees?

Michelin
The Michelin case is emblematic of a dynamic that we were told would cease in the "next world" that is supposed to come after the great crisis we are living through. It's obviously the opposite that happens from month to month. To understand it, we have to get out of the incantation to take the measure of the scale of the revolution to be operated so that the discourse on re-industrialisation emerges from the purely incantatory status in which those who want to keep the baby and the bath water maintain it.
 
During the July reshuffle, commenting on the great Bercy, which Bruno Le Maire seemed to have obtained when he left Darmanin for Place Beauvau, Les Echos emphasised the emphasis that the government intended to place on "reindustrialisation", relying in particular on the reduction of production taxes demanded loudly and clearly by the Medef for this reason. In the same way, at the time of the presentation of the "recovery plan" of September, Le Point had the headline, respectful of the government communication, "Bruno Le Maire bets on the rebirth of industry".
At the same time, to speak only of automobiles, Mercedes had announced in July that Daimler would sit on the commitments made by Dieter Zetsche to Emmanuel Macron in May 2018 and sell the factory. In complete contradiction with the announcements made by Emmanuel Macron on 26th May which favoured electrified solutions for the car industry, the government had to be content with the "lack of better" that the criticisable solution of the not very ecological boss of Ineos constitutes.
 
Bridgestone followed this up in September with the announcement of the closure of its Béthune site. Renault confirmed in the summer that the Spring (Dacia's EV), like the electric Smart cars bought by the French and subsidised by the government, would be imported from China.
 
Last week, it was Michelin's turn: to the general surprise, the management, eager to reassure its shareholders after the announcement of the operating losses of the first half-year and to "prepare the future" announced the elimination of 2,300 of the 20,000 French jobs. 
 
Without needing to exaggerate the posture of Saint Thomas, the least that can be said is that the brand of nails which would re-tie the industrial production to the French site is at this beginning of 2021 difficult to detect for the observers, the employees and the local elected representatives worried about the future of their territories and the durability of the worker jobs which still exist there.
 
From this point of view, the fact that one promises that there will be no dry redundancies and/or that one assures that the blue-collar jobs lost today will be compensated tomorrow by those of white collar workers associated with new activities does not change much to the affair: the jobs are indeed lost, the relocations undertaken by the groups concerned for many years within and beyond the EU are not slowing down but accelerating, the territories and populations that will eventually benefit tomorrow from redeployment towards new "high added value" jobs are not those that are the victims of the present disengagement.
 
There is no "de-globalisation" in the automobile in general and, even less so, in the tyre which "travels" better and for which the few protections envisaged and/or actually decided weigh very little.
 
One recalls for example the victory obtained in 2018 in Brussels by the Syndicat des professionnels du pneu (SPP) and the Syndicat national du caoutchouc et des polymères (SNCP) : Seeing many transporters letting themselves be tempted by low-cost Chinese tyres whose casings had almost no "retreadability", which strongly penalised the retreading activity that the tyre makers had committed to develop within the framework of the "Commitments for green growth", set up by the Ministry of Ecological and Solidarity Transition, they obtained a taxation that effectively blocked the development of this market.
 
We also remember that the United States did not wait for Trump to tackle Chinese tyre imports and that the Obama administration was able to activate a special clause linked to the People's Republic's entry into the WTO which aims to safeguard companies when their domestic market is disrupted by imports from the new member. Since Chinese tyre imports had tripled between 2004 and 2008, from 6.7% to 29% of US production, the clause could be and was activated.
 
The effects on employment in the tyre industry in the United States were not extremely noticeable because everything indicates that Chinese, Japanese, American and French tyre manufacturers had recourse to other import channels: it would be naïve to think that imports from China or elsewhere were the work of Chinese "new comers" who had little regard for environmental standards and wages in the face of virtuous "incumbents".
 
From this point of view, especially after ChemChina's takeover of Pirelli in 2015, there are diminishing differences between the two. They have organised themselves industrially and commercially on a worldwide basis and are therefore all united in defending a system that favours the free worldwide circulation of tyres, which has been and remains their operational working hypothesis. The few measures taken in the opposite direction have been rare because tyre manufacturers did not want them and/or supported them only weakly and have had a limited impact.  
 
If this is the case, it is not because the tyre industry is a "low-tech" industry in which the only relevant criterion for purchase would be price and the only defensible competitive basis would be manufacturing cost prices and, therefore, access to low cost countries where wages, taxes and regulatory constraints would be minimal.
On the contrary, innovation and technical progress are central and a large proportion of the choices made by original equipment manufacturers and aftermarket consumers are very sensitive to these arguments, which concern safety, durability, grip and, above all, the effect on consumption of the tyres chosen.
 
Quite simply, even under these constraints, tyre manufacturers can relocate and must integrate the characteristics of a market that they have helped to structure. The heart of the market in mature economies where the fleet renewal rate is low (below 5% for a country like ours) is the aftermarket which concerns an old fleet (11 years in our country) whose low average residual value gives the excellent technical arguments in favour of the "top of the range" tyre a very relative weight.
 
In this context, in a globalised economy, without taking carbon costs into account and without regulatory intervention to force - as was done in Europe in 2018 for heavy vehicle tyres - to push quality upwards, manufacturers submit and, de facto, promote a kind of Gresham's law of the tyre which implies that "the bad tyre chases the good tyre".
 
De-globalisation would imply breaking with this absolute privilege given to the interests, even if only short-term, of the consumer against the producers: the former Michelin employees will undoubtedly be the first tomorrow to rush to the Internet sites or advertising leaflets of the discounters in their region to buy first price tyres on promotion in order to be able to continue to run their 15 year old vehicles without having to mount on these vehicles sets of tyres which would cost more than their car on resale.
 
The question clearly raised by the Michelin case this week is very general : we remember in the world of car distribution that almost twenty years ago, to defend his reform of car distribution (the famous 1400/2002), the then Commissioner for Competition Mario Monti said he wanted to "put the consumer in the place of the driver" in the car system.
 
We can only de-globalise by attacking this credo head-on for ecological and social reasons. The current procrastination of the Brussels technocracy over the Carbon Tax at the EU borders indicates quite clearly that, for Brussels, the WTO and the management of the multinationals, this would be a revolution that would contravene all the doctrines, laws and managerial recipes that the real economy has been following for decades.
It is this highly improbable character of the revolution in question in the minds and actions of the elites who defended the treaties against whose effects they now claim to be fighting that made Christian Chavagneux write a few weeks ago that the cries of orfray uttered by politicians against Bridgestone's behaviour in Bethune sounded very much like what is commonly called "un bal de faux-culs"
 
11/01/2021
 
 
 
 
 
 
 
 

The weekly column by Bernard Jullien is also on www.autoactu.com.

  GIS Gerpisa / gerpisa.org
  4 Avenue des Sciences, 91190 Gif-sur-Yvette

Copyright© Gerpisa
Concéption Tommaso Pardi
Administration Juan Sebastian Carbonell, Lorenza MonacoGéry Deffontaines

Powered by Drupal, an open source content management system