Sarkozy Vows to Raise Manufacturing by 25% Over Next 5 Years

'France must keep its factories. France must preserve its industrial base.'

President Nicolas Sarkozy launched a drive on March 4 to reverse an accelerating decline in French industry, protect jobs and raise manufactured output by 25% over five years.

"You show us that we can be productive and competitive," Sarkozy told workers at a Eurocopter plant in southern France. "France must keep its factories. France must preserve its industrial base."

The French leader said 6.5 billion euros (US$8.84 billion) would be assigned to support research and investment from funds raised by a special bond -- "the grand national loan" -- he intends to issue later this year.

"I wish we could attract capital for our businesses and industries," he said, complaining that at present, only a quarter of French savings end up invested in company stocks. He said a new national savings scheme would be set up in September to raise cash for industry and that government representatives would take a more active role in companies in which the state owns a stake. He hinted this would mean an end to outsourcing of French jobs abroad, a policy which could put France in conflict with EU single market rules.

"I can't accept that one car company PSA Peugeot Citroen has two-thirds of its workers in France while another has only one third here, even though the state owns 15% of it," he said, referring to Renault.

"Building factories overseas is fine, if we can win market share. But what I can't accept is making cars abroad to bring them back to France."

Renalt has been criticized in France for investing in plants in Romania while cutting jobs at home but, under European Commission rules, states are not allowed to discriminate between firms working within the European Union.

"There are state representatives on the boards. They're not just there to pick up their attendance fees or to see what the end of year profit looks like, but to pursue a true industrial policy," Sarkozy said.

French manufacturing was already in trouble before the financial crisis, with the number of people employed in the sector dropping 15% in a decade. The decline quickened last year, with 200,000 jobs lost.

French unemployment rose sharply in the fourth quarter of 2009 to 9.6%, wiping out the country's gains on the jobless front over the past decade, official figures showed on March 4.

Last year, Sarkozy mocked Britain for abandoning manufacturing in favor of financial services but in fact industry accounts for only 16% of GDP in both countries, having declined from 22% in France in 1999. France and Britain are now largely dependent on service industries and finance, while 30% of the German workforce is still in industry.

Home to high-profile engineering marvels such as the Airbus jet, TGV train and Ariane rocket, Paris has prided itself on defending its manufacturing base while the "Anglo-Saxon" world moved to a post-industrial model. But, despite frequent state intervention and subsidies, France has not escaped the global trend that has seen manufacturing switch to Asia and Eastern Europe's low-wage and yet increasingly skilled workforces.

Nevertheless, Sarkozy has made it a priority to fight back on behalf of industry, flying around the world to market Rafale jets and Areva's latest nuclear power plants to Arab, Asian and Latin American clients. He has had only mixed results. While French engineering giant Areva has a draft accord with India for two nuclear reactors, the United Arab Emirates decided to go with a South Korean offer despite Sarkozy's lobbying.

Meanwhile, Brazil has yet to make a decision on whether to buy the French Rafale and is under fierce pressure from the United States to buy its F-18 fighter instead

This week Sarkozy upset France's NATO and EU allies Eastern Europe by confirming plans to sell powerful warships to Russia, putting jobs in naval shipyards ahead of concerns over the Kremlin's reliability as a partner.

Copyright Agence France-Presse, 2010

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