Reindustrialisation: what if Stellantis followed in Renault's footsteps?

macron.png

Renault confirms its reengagement in France month after month and thus offers us a less gloomy vision of electrification: this could be an opportunity to reverse a long term trend which has seen the interests of French manufacturers diverge from those of French employees, territories and subcontractors. The serious hopes that we can nourish would be made more consistent if Stellantis were to follow this logic in its turn. The employees of Mulhouse and their trade unions have expressed themselves in this sense to Carlos Tavares. The very cautious answer they obtained should encourage the politician to be more offensive.
As Florence Lagarde underlined on Friday, Luca de Meo (LDM) is keeping his promises and the major change of direction that he announced in terms of industrial strategy is confirmed month after month. Last September, as soon as he arrived, he circulated 18 pages corresponding to his first analysis and was already preparing a real social state of grace by writing:

"My vision for France is the following: we must reconnect with our territory. All the strong brands are leaders in their own markets. For us, it's about knowing what value we can bring to the country."
A little further on, cutting the ground from under the feet of anyone who might have feared that he was sticking to rhetoric, he added:
"We need to focus on the CMF-B-EV platform, developing a range of iconic, profitable electric vehicles with an entry price of less than €20,000, produced in France."

The idea is clear and easily understandable coming from a former member of the Volkswagen group whose credo has been the same for many years: the solidarity between a manufacturer and the territory is, in the true sense, fundamental and wanting to free oneself from it is a political and strategic error. In fact, the great automotive successes of German manufacturers such as Toyota or Hyundai-Kia show that a strong industrial commitment to one's country of origin, in spite of possible additional salary costs, is not a handicap, on the contrary.

LDM is asserting this idea loud and clear at the head of Renault, whereas his predecessors, refusing to accept the status of "national champion" for Renault, had done everything possible to undermine it in the eyes of the public, politicians and trade unions. In doing so, he distinguishes himself from his alter ego Carlos Tavares, who persists in the credo of the past two decades: the mass-produced A and B, thermal or electric, cannot be assembled in France. He took the 2008 out of Mulhouse in 2020 to put it in Vigo. Similarly, the 208s which were still assembled in Poissy to complement those produced in Trnava no longer come off the French assembly line but from the new Moroccan factory in Kenitra. The salvation of Stellantis is thus presented as still passing through relocations.

For the past year, there has been a lot of talk about reindustrialisation and it is likely that the forthcoming election campaign will make it a privileged theme and that the automobile dossier will - as is often the case - be one of those that the candidates will willingly evoke, sometimes to show how bad things are and sometimes to indicate the reasons, if not for satisfaction, at least for hope.

The extent of the damage is now well known and we will not go back over the figures for the drop in production and the number of employees nor over the very impressive and continuous deterioration of our automobile foreign trade. What is most striking in this respect is, in retrospect, the indifference with which this de-industrialisation took place: between submission to a kind of fatality of globalisation, an extremely liberal vision of European construction and enlargement and a very naïve adherence to the idea that the location of the design is more important in this industry than that of the assembly, French manufacturers were allowed to relocate massively the assembly of the vehicles which we are most fond of in France.

These are also the segments for which French brands have the greatest commercial legitimacy in Europe: the small vehicles in the A and B segments. LDM understands this: it is certainly important to be present in the C segment to increase the profitability of the company, but the B segment is so crucial for a Frenchman that we cannot "reconnect with the territory" by leaving Toyota the monopoly of the B segment made in France.
For the moment, the situation in France continues to deteriorate and the idea put forward by Emmanuel Macron on 26 May 2020 at the Valeo factory in Etables that electric or electrified vehicles would be the lever for the automobile revival is struggling to take shape.

According to customs statistics, our deficit on PHEVs for the last 12 months (from August 2020 to July 2021) would reach 2 billion and 60,000 vehicles, against 1.2 billion and 36,000 vehicles in 2020 and 0.56 billion and 28,000 vehicles in 2019. In terms of BEVs, the deficit reaches 1.4 billion and 70,000 vehicles, whereas in 2020 we still had a surplus in terms of quantity - but a 500 million euro deficit due to the higher unit values of imported vehicles - and we had a surplus in 2019.

Renault is contributing to this deterioration since the Zoé is selling less well and part of its clientele is being diverted by the Twingo imported from Slovenia. Renault's electric offer in France is also provided by the Chinese Dacia Spring. As for the rechargeable hybrids offered on the Captur and Mégane models, they are imported from Spain.
Faced with these figures, it seems urgent to react and Renault's announcements are obviously welcome since they give hope that the continuation of de-industrialisation despite the electrification that we are witnessing at the moment could stop in the years to come. For this reason, beyond the production tax cuts or the aid granted to Europeanise the design and manufacture of batteries, the various reports published in recent months are obliged to agree that it is basically the capacity to produce on a large scale that makes the difference.

Thus, in the CAE (Conseil d'analyse économique) note, we read:
"The competitiveness of the automotive sector in each country can be broken down into two major contributions.
- The first is low unit labour costs (wages divided by production).
- The second is economies of scale that reduce production costs and are directly related to the size of the national industry.
o These economies of scale are empirically well documented for the manufacturing sector: the productivity of individual plants increases (or production costs decrease) when nearby production increases.
o This is due to several types of localised spillovers that the economics literature has identified, such as more efficient sharing of local intermediate goods, equipment and infrastructure; more efficient local labour markets and training; localised technological externalities where clustering of firms promotes the emergence of new knowledge and innovations.

The fact that the management of French manufacturers has chosen to make sites compete with each other as the preferred tool for managing their industrial organisation and social regulation has led them to bring their French sites into a dynamic in which economies of scale are lost. This made it increasingly difficult to bear the high labour costs, while the fall in volumes and the ageing of the workforce and production tools were affecting productivity. The newly established foreign manufacturers were in the opposite situation and were very satisfied with their French sites.

Faced with these observations, it seems quite clear that the reindustrialisation of the French automobile industry is a collective choice which must be shared by our two manufacturers, the territories which host them and the State. Renault, without any real pressure from the Ministry of the Economy, which was preparing, as it has done for years, to watch French manufacturers continue to desert the region, has practically decided of its own accord that a Haut de France cluster on the BEV was feasible and could be linked both to the activities of Cléon and to a streamlined French-Italian R&D focused on the problems linked to the BEV. The Haut de France Region obviously supports this. Electrification appears to be a godsend here: public policies can intervene as a relay for the company's initiative and do their utmost to ensure that this choice is strengthened from period to period so that the Douai-Maubeuge-Ruitz triangle looks more like Wolfsburg than Aulnay in the future.
Today, the pending question is obviously that of Stellantis which assembles the DS3 e-tense and the Mokka at Poissy and is building its ACC factory at Douvrin but which has not yet announced any large scale BEV production for France. The best-selling vehicles, like the Mokka, Corsa, 208 and 500, will be in the A and B segments and most of them are currently assembled outside France.

Mulhouse lost the 2008 at the same time as it was electrified and is now calling for a BEV. It would be a pity if Stellantis maintained this doctrine for France and did not offer the country the opportunity to create a multi-constructor cluster in the north-eastern quarter that would allow it to return to the virtuous dynamic of volume growth that it has not experienced for many years. Since the politician has not had to do anything to make Renault move in the right direction, we can hope that he will work a little actively to make sure that Stellantis in turn returns to more favourable arrangements for the French site.

20/09/2021

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
randomness