Recession: but on the bright side

Despite record unemployment and a contracting economy, it is still possible to find some good business news

19 June 2013

FRANCE is officially back in recession, unemployment levels have hit a record high and confidence among households and businesses in the economy is low. However there are firms and entrepreneurs keen to show that success can be made, even in a recession – although it is impossible to tell if they are the ‘green shoots of recovery’ or the exceptions that prove the rule.

First the bad news: France officially entered a recession after figures released in mid-May showed two consecutive quarters of negative growth. The same month France also recorded its highest level of unemployment, 3.224 million, beating the 1997 record of 3.195m. Of those finding employment, 80% are only taken on on short term contracts.

Despite this, it is still possible to find good news for the future of the French economy, both in the short and long term. Pôle Emploi, France’s employment agency, in its annual recruitment requirements survey, found especially strong demand for jobs in areas such as personal service, like domestic help and carers, as well as certain niches requiring high-level qualifications, notably IT engineers.

Employers report that their biggest problem is finding people with the right qualities, as applicants often lack “experience, qualifications or motivation”, Pôle Emploi analysts said. France and Germany have also promised ‘concrete’ measures to be taken together to tackle youth unemployment – young people being hardest hit by the recession.

A larger trend is the return of companies to France who had previously left to take advantage of cheaper production costs in developing countries. Industry Minister Arnaud Montebourg hailed the recent decision by Nissan to build Micras at Renault’s plant at Flins-sur-Seine in Yvelines as an example of “things that are in the pipeline”.

The union Force Ouvrière states that the arrival of Nissan Micras at the Flins site will mean a new team of 1,000 staff.“We’ll be obliged to take people on – it’s good news for the factory, for Renault, for France,” confirmed CEO Carlos Ghosn on Europe 1 radio. The plan should see an extra 82,000 cars a year made at Flins by 2016, the firm states. This is on top of the current 120,000 cars, including the Clio 4 and Renault’s electric car Zoé, and 3,600 employees.

Mr Ghosn said the other option for Nissan, which works in close partnership with Renault, was to continue making Micras in India and exporting to Europe. The choice of France, he said, was a result of “competitivity agreements” the firm signed with the unions, saying “the efforts the workers have made are starting to bear fruit”. This included non-re-placement of some retirees, a salary freeze this year and an increase in annual working hours, in return for which Renault said it would not shut French factories and it would boost cars built in France to 710,000 in four years, up from 530,000 last year.

Union officials state they believe the return to France of Micra production could be followed by other models by partner firms. Unconfirmed reports cite the possible production of a Nissan van at Sandouville in Seine-Maritime or developing Daimler’s Citan range in Douai. Mr Ghosn said other car mak-ers may be tempted to manufacture more cars in France.

This came as the first 40 new Toyota Yaris models built for the American market left Toyota’s factory in Onnaing in the Nord, in a project which was set to see 100 a day made by this month. Previously the factory, opened in 2001 and now employing 4,000, only built these small cars for the European market. The firm has just received the official label “Origine Garantie France” (French origin guaranteed) for the cars. The label was also recently awarded to certain models of Peugeot and Citröen.Economics newspaper Les Echos said that “Toyota is keen to relocate production because of the strong currency and high energy costs in Japan after Fukushima”, adding that the Onnaing plant benefits from modern factories and substantial state support including some social charges relief. The lesson from Onnaing is that being in France does not have to mean putting up with work costs that are prejudicial to industry”.

The economic benefits of moving to France do not just apply to the motor industry. Other firms returning include Rossignol skis, which has brought back the manufacture of 80,000 pairs of skis a year from Taiwan to its traditional base in Sallanches, Haute-Savoie. The PDG at the time of Rossignol’s return, Bruno Cercley, said this was not “philanthropy”, but a “logical” decision, as the firm uses French raw materials.

Jura-based opticians Atol, who claim to be the only ones making their frames in France, also decided, several years ago, to bring production of them back from China, citing “insufficient quality”.France’s biggest toymaker, Smoby (also based in the Jura) has increased staff in its French operations to 450 from 360 and reduced its Chinese production from 40% to 20% since it was taken over by the German Simba-Dickie group in 2008.

Certain innovative businesses have been surfing on the “Made in France” brand such as the firm “Le Slip Français” (French pants) from the Dordogne which has received huge amount of attention for its scented underwear.

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