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Last year, when Covid-19 first swept Europe, a French textile company tweeted that it would start manufacturing surgical masks. Within a few hours, the Ministry of Health asked how much it could produce; two days later, Les Tissages de Charlieu produced 100,000 masks for French hospitals and public officials.
“Our goal is to put a very simple basic commodity on shore-to prove that it can be done,” said Antoine Saint-Pierre, the co-director of the company, which has a history of more than 500 years in the textile town of Charlieu. According to the company, the company is now also producing millions of tote shopping bags, which account for one-fifth of the emissions of products imported from China.
The supply chain disruption caused by the pandemic has made “national economic resilience” and the “return” of key manufactured products—whether it’s vaccines, semiconductors, or protective equipment and textiles—become the buzzwords of industrial policy throughout the Western world.But this is especially true in France, where manufacturing production and the return of overseas jobs have become Hotkey problem Before the presidential election next year.
Candidates from all political factions are trying to convince voters how to reverse the country’s industrial decline. The contribution of industry to the French economy was halved to 11% between 1970 and 2020.
At the same time, the government of President Emmanuel Macron, who has long believed that Europe should reclaim its economic sovereignty, proudly points out that since 2020, it has provided companies with 830 million euros for Support reflow projects.
“We provided support during the crisis to ensure that manufacturers do not stop investing. This is our obsession, and it works very well,” Industry Minister Agnès Pannier-Runacher told the Financial Times. She added that more than 10,000 industrial companies have received financial support from France’s EU recovery plan, of which more than 620 are dedicated to helping them resume their activities.
However, economists question whether such extensive cash injection is the right way to restart domestic manufacturing. They may support small companies such as Les Tissages de Charlieu, but can they change the structure of France’s industry?
The textile industry provides a vivid example of the problems it faces and some of the reasons why economists are skeptical.
As the core of the French industrial revolution, the industry was hit hard by the shift of production to Asia and Eastern Europe in the late 20th century, where costs were lower and regulations were looser. According to Insee’s 2015 data, 90% of textiles and clothing purchased in France today are manufactured abroad. Ethical consumers also have limited knowledge of factory working conditions or the source of raw materials.
With the decline in textile imports, this situation has changed during the pandemic. Les Tissages de Charlieu received more than 1 million euros in state aid to help it manufacture handbags, and the company now has more than doubled the number of employees to 180 – equivalent to 10% of Charlieu’s population. Its tote bag is also more environmentally friendly.
Saint-Pierre said the state has shown “very good commitment” to local businesses. “The government’s speech and actions have undergone a real change.”
However, economists believe that whether the return of textile production can reverse the trend of French industrial decline is still inconclusive.
“Return” is usually “a polite term for protectionism,” says Isabelle Mejean, an economist at Sciences Po. “It’s not yet clear what exactly it means,” she added, even though it is often described as being able to “solve all problems,” whether it be more economic sovereignty, employment or adaptability to climate change.
Mejean and Xavier Jaravel, members of the French Economic Analysis Committee, provide independent advice to the government, Respected In April, if the government prioritizes “fragile inputs with high technology content,” the government will do a better job in promoting French industry and protecting the supply chain.
They warned that “poorly targeted industrial policies are costly for consumers and will not fundamentally improve [economic] “Resilience” and cited priority sectors such as aviation, electronics, and chemicals. Textiles ranked second from the bottom before “others.”
Even so, Pannier-Runacher defended Macron’s industrial record. Leaving aside the effectiveness of the French recovery plan, which will take time to achieve, she pointed out that there was a net increase in industrial jobs between 2017 and 2019, when the pandemic reversed this trend.
“We have created conditions to improve France’s competitiveness,” she said.
However, although surveys show that France’s business environment has become more attractive due to Macron’s corporate tax cuts and labor market reforms, manufacturing remains sluggish and the trade deficit of industrial products continues to widen.
Patrick Artus, chief economist at Natixis, believes that France needs to use Germany as a benchmark. Germany will keep the more profitable part of its industrial power base on land, including its Mittelstand business, automobile manufacturing, and research and development programs. .
France not only needs to provide cash subsidies, it also needs to further reduce the annual sales tax of 50 billion euros higher than Germany, improve technical skills, and put more public funds at risk when financing innovation and high-tech start-ups.
Gilles Moec, chief economist of the insurance company Axa, said: “You can engage in quite aggressive offshore outsourcing while still protecting domestic industries.” “As a free trader, I don’t think we should give up being in general international trade. Okay, and it’s defined by specialization. You don’t do everything better at home.”
Back to Charlieu, Saint-Pierre half agreed. He believes that “it is crazy to say that all production should be returned to France.” But he also believes that many manufacturing processes can be brought back ashore, creating thousands of jobs while reducing the environmental impact of production.
“We don’t have to go global, we just need to find a balance,” he said.
Additional report by Eir Nolsoe
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