French draper becomes the touchstone of reindustrialization

Last year, when Covid-19 first swept Europe, a French textile company tweeted that it would start making surgical masks. Within hours, the Ministry of Health asked how many could produce it; Two days later, Les Tissages de Charlieu made 100,000 masks for French hospitals and officials.

“Our goal was to bring a very simple basic product ashore – to prove that it was possible,” said Antoine Saint-Pierre, co-director of the company, which has been based in Charlieu, a textile town for more than 500 years . The company has now also started manufacturing millions of shopping bags, which the company claims cause a fifth of the emissions of those imported from China.

Supply chain disruptions caused by the pandemic have made “national economic resilience” and “reshoring” of critical industrial goods – be it vaccines, semiconductors, or protective equipment and textiles – buzzwords in industrial policy across the western world. But this is particularly true in France, where the return of manufacturing and foreign jobs has become a hot topic ahead of next year’s presidential election.

Candidates from across the political spectrum have struggled to convince voters of their vision of reversing the country’s industrial decline, which resulted in the industrial contribution to the French economy halving to 11 percent between 1970 and 2020.

Meanwhile, the government of President Emmanuel Macron, who has long believed that Europe should regain its economic sovereignty, proudly points to the 830 million euros it has paid out to companies to support reshoring projects since 2020.

A bag from Les Tissages de Charlieu © Les Tissages de Charlieu

“During the crisis, we gave a boost so that manufacturers wouldn’t stop investing. It was our obsession and it worked really well, ”Industry Secretary Agnès Pannier-Runacher told the Financial Times. She added that over 10,000 industrial companies have received financial support from the French EU recovery package, with more than 620 specifically assisted in rebuilding their activities.

However, economists doubt whether such a wide range of cash injections is the right way to revitalize domestic production. They can empower small businesses like Les Tissages de Charlieu, but can they transform France’s industrial fabric?

The textile industry provides a vivid example of the problem and some reasons for economists’ skepticism.

At the center of the French industrial revolution, the sector was devastated at the end of the 20th century by the relocation of production to Asia and Eastern Europe, where costs are lower and regulations less stringent. According to Insee data from 2015, 90 percent of textiles and clothing bought in France are made abroad. Even ethically minded consumers have only limited insight into the working conditions in factories or the origin of the raw materials.

That changed somewhat during the pandemic when textile imports fell. Thanks to state aid of over 1 million, the carrier bags are also greener.

The state has shown a “very good commitment” to onshoring, said Saint-Pierre. “Government speech and actions have really changed.”

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But whether reshoring textile production can reverse the decline of French industry is debatable, economists argue.

“Reshoring” is often a “polite word for protectionism,” said Isabelle Mejean, an economist at Sciences Po. “It is not clear what it exactly means,” she added, although it is often portrayed that it can “solve anything”, be it more economic sovereignty, jobs or resilience to climate change.

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Mejean and Xavier Jaravel, a member of the French Economic Analysis Council, which provides independent advice to the government, recommended in April, the government would better stimulate French industry and protect supply chains if it gives priority to “vulnerable inputs with high technological content”.

They warned that “imperfectly well-targeted industrial policies would be costly to consumers without fundamentally improving them”. [economic] Resilience ”and named priority sectors such as aerospace, electronics and chemistry. Textiles were well ahead of the second to last, ahead of “others”.

Nevertheless, Pannier-Runacher defended Macron’s industrial record. Aside from the effectiveness of the French economic recovery plan, which will take some time to implement, she pointed to a net increase in industrial jobs between 2017 and 2019 when the pandemic reversed the trend.

“We have created the conditions to improve France’s competitiveness,” she said.

Industrial white-collar jobs line graph (in millions) showing industrial jobs rose in France three years before the pandemic
Line chart of companies outsourced and outsourced in France per year shows that since 2020 more companies have come to France than have moved abroad

But while polls show that France’s business climate has become more attractive thanks to corporate tax cuts and labor market reforms initiated by Macron, manufacturing remains depressed and the trade deficit in industrial products has continued to grow.

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Patrick Artus, chief economist at Natixis, argues that France faces Germany, which has left the more lucrative parts of its industrial energy base on land, including its midsize businesses, automobile manufacturing, and research and development initiatives.

Instead of just offering money, France in particular needs to further lower corporate taxes, which are 50 billion euros annually higher than Germany’s, improve technical skills and jeopardize more public money in financing innovations and high-tech start-ups.

“You can be pretty aggressive offshoring and still protect the domestic industry,” agrees Gilles Moec, chief economist at the insurer Axa. “As a free trader, I think that we shouldn’t give up the good fight, that international trade in general is good and is defined by specialization. You don’t do everything better at home. “

Back in Charlieu, Saint-Pierre half agrees. He thinks it is “crazy to say that all production should go back to France”. But he also argues that many manufacturing processes can be innovated, creating thousands of jobs while reducing the environmental impact of manufacturing.

“We don’t have to deglobalise, we just have to find a balance,” he said.

Additional coverage from Eir Nolsoe

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