The COVID-19 crisis seems to have accelerated the France’s efforts to return industrial production capacities to France. That could create thousands of new jobs — but not all production can be brought home.
Smoke rises from factory stacks in Santes near Lille in northern France
After decades of deindustrialization, France is seeking to rebuild its native industry
Mid-sized French company Auer decided to shift its production away from boilers using conventional fuels to energy-saving heat pumps a few years ago.
For that transition, the family firm deemed it necessary to bring back to France parts of its production capacity back from countries such as Poland and Serbia.
“We are reshoring the production of enameled steel tanks, because they are a strategic element of our heat pumps. That helps us protect our innovations,” Auer Director General Lionel Palandre told DW.
“Thereby, we are reducing our overall production costs through automatization and lower transport fees while no longer having to deal with lengthy transport delays,” he added.
Reshoring plans nearly abandoned
But that reshoring process all but ground to a halt last year due to the pandemic.
“The French market had practically collapsed because of COVID-19, and it was unclear when it would pick up again. That made us question our decision to relocate,” Palandre explained.
“But when we then received the offer of government support, we knew we had to go for it.”
Lionel Pandre, director general of Auer in France
Auer Director General Lionel Palandre is convinced that reshoring production will help protect innovations
The manufacturer obtained a government subsidy of €800,000 ($946,000) towards its latest €5 million investment in new production facilities at its headquarters in the northern French town of Feuquieres-en-Vimeu. This year, Auer will be adding 10 jobs there.
France bets on reshoring
The company is not an isolated case. Bringing industry back to France is part of the country’s plan to relaunch its pandemic-hit economy.
“We are providing €500 million of government support to 500 companies that are reshoring,” the country’s industry minister, Agnes Pannier-Runacher, told DW.
French industry minister Agnes Pannier-Runacher
French industry minister Agnes Pannier-Runacher explained how France wants to bring back industry
“Our country has been deindustrialized for 30 years — industry only represents 12% of our GDP now, compared with 23% in Germany. And yet, it’s the backbone of our economy — we want to restrengthen our industry.”
She added that the pandemic had underlined the downsides of global supply chains.
“Companies have realized that offshoring can make them less competitive when global supply chains are suddenly interrupted. Plus, when you are producing locally, you can react much more quickly to market developments and it’s easier to come up with new prototypes,” she explains.
The pandemic has also seen customers rethink what kind of products they’d like to purchase, states Julien Bianchi, director general of clothing and shoe manufacturer TBS. The company sells its products to wholesalers, and at its roughly 40 shops across France.
“More and more clients entering our shops are specifically asking if our clothes are made in France — there’s a real appetite for locally produced goods,” he said.
Last year, that convinced Bianchi to transform a prototype workshop in Saint-Pierre-Montlimart in western France into a small production area that currently has seven employees. That number will be boosted to 10 this fall.
“Our production costs there are 30% higher than in Turkey where we still produce a large part of our clothes,” he explained. “But we are making a profit with these clothes made in France and can’t keep up with demand.”
Bianchi says the company is now in a “growth crisis”: “We have orders for 16,000 items per year, but only a yearly production capacity of 11,000.”
TBS plans to scale up to 30 employees at its new unit over the next few years. It’ll spend €500,000 to set up a new shop floor and purchase new machinery. The manufacturer is hoping the government will pay for half of that investment.
France lifts further restrictions
‘Hundreds of thousands of jobs’
And companies like Auer and TBS could be only the beginning, thinks David Cousquer, CEO of Trendeo Consultancy, which has been monitoring reshoring activity in France over the past few years.
Logo of French company Auer
French company Auer, known for its energy-efficient heat pumps, is among numerous French companies betting on reshoring
“In 2019, about 20 companies reshored production capacities. That number rose to 30 last year, and will probably reach 80 this year,” he told DW, adding that hundreds of thousands of jobs could be created in the long run.
But there are limits.
“For now, only small- and mid-sized serial production units are being reshored,” he said. “And we won’t be able to bring back all of our industry — we no longer have enough qualified personnel.”
Auer plans to reshore even more jobs
Auer’s Palandre is determined to go through with the company’s reshoring plan, regardless. “We will add another 50 to 70 jobs over the next five years and train up the new personnel ourselves if needed,” he said.
To accommodate them, the company will construct a new hangar by September next year.
“In order to be competitive, we need to stay in control of our innovations and critical components — especially in a fast-evolving market, such as the one for eco-friendly heat pumps,” he said.