Politique Internationale — Is there such a thing as French industrial expertise? If so, how would you describe it? And how is it seen in concrete terms across the country?
Florent Menegaux — France has vast development potential for industry. First, the country is well positioned in terms of its infrastructure. The road and railway network plays a large role here, but there are also many other factors, such as the power supply, which for the most part is carbon-free. And then the public authorities give companies a positive welcome, particularly research facilities, which benefit from a competitive environment. Lastly, we have a solid industrial heritage which is reflected especially in our dense network of sub-contractors, most of which are found on the outskirts of the major production sites. So, yes, France boasts genuine industrial expertise that encourages businesses to set up here and work with all the economic stakeholders!
P. I. — So much for France’s strengths, of which there are many. But the country also has drawbacks…
F. M. — Labour costs are still a real obstacle. In fact, France is one of the hardest-hit countries in Europe, with a very high rate of social security contributions. Wages in Germany, by comparison, are taxed at a much lower level. In France, bringing down national insurance contributions is a major issue. If we don’t, we’re going to carry on putting industry off. By extension, the French tax system as a whole dents industry. Take another example: the tax on production has dropped, it’s true, but it’s still a uniquely French phenomenon! In Germany, it is the opposite: the public authorities subsidise production facilities! Last but not least in terms of obstacles, we can’t gloss over this other problem we have in France: the lack of skilled labour. To tackle this situation at Michelin, we’ve gone straight ahead with setting up our own training schools, like our Talent Factory that opened recently in Clermont-Ferrand.
P. I. — Regarding this lack of skilled labour: what areas are most affected?
F. M. — Technical jobs are on the front line: electricians, electrical engineers and boilermakers, to give just three examples. There’s also a shortage of certain types of engineer. For all these professions, it’s a deep source of regret for me that apprenticeships aren’t developed more widely in France. There has been progress, and that’s to be welcomed, but it still isn’t enough. The comparison with our neighbours in Germany says it all: the two systems on the other side of the border – private with companies and public with education – overlap a great deal more so that the need for skills can be met. I’m more than happy to use Germany as an example because it’s a country that is close to us in enough respects to make the comparison relevant.
P. I. — We’re somewhat under the impression that France is forever lagging behind...
F. M. — Education is a deep-seated problem: in France, we tend to see scientific subjects and sciences in general as the sole preserve of experts, and that’s a pity. It’s a really good thing that maths is now part of the core curriculum again in secondary schools. We shouldn’t forget that science is all around us! We live in an increasingly technological world, and it’s essential that our children are given the tools they need to understand and transform it.
P. I. — Since you’ve mentioned the importance of education, how do you explain that girls are under-represented on science courses… which means they’re missing in industry?
F. M. — It’s true that science courses don’t attract enough girls. This is down to a dearth of information about the exciting jobs that these pathways open up, but also to the self-censorship of girls when choosing their careers. The proportion of girls on science courses won’t improve just like that. If we don’t do anything in the long term, the danger is that we will perpetuate this harmful situation even more. At Michelin, we are increasing the numbers of women on our teams, and paying particular attention to the proportion of women in management positions. Women now make up 40% of the company’s executive committee.
P. I. — In terms of these recruitment problems – for men and women
– are there practical implications for Michelin?
F. M. — I’ll take just one example: to set up a digital hub with several hundred employees, we focused first on the Lyon region, where we already have a foothold. But then, a few months later, we realised that we couldn’t hire people at the rate we needed. In the end, we created a new hub in Pune in India: the workforce there isn’t better trained than in France, but it is available immediately. And that’s a huge advantage: it means we don’t have to step up our efforts to expand the teams. And the result is that our workforce in Pune has risen quickly to 1,500 and the business is growing. We really have to be more aware of these problems in France.
P. I. — The key phrase for your strategy has become “everything must be sustainable and low carbon”. Is this applied differently depending on the ecological maturity of the market? In some countries, tackling carbon emissions isn’t a priority.
F. M. — First and foremost, this strategy is the only viable way to ensure the long-term development of a company like Michelin. The major climate goals have become priorities, and industry is a key lever for meeting them. The group’s strategy in this area is global: there is no difference in what we do depending on a particular country and its maturity on these issues. When we build a new plant, for instance, it incorporates the latest CO2 certifications irrespective of where it is located. Similarly, when we took the decision to stop using aromatic oils in our tyres, it applied to every unit in the group. Sustainability at Michelin applies everywhere and without distinction.
P. I. — When you talk to your foreign counterparts, are they very aware of the strengths and weaknesses of French industry? Can they operate effectively in the environment in our country?
F. M. — Industrialists are pragmatic. They gauge the conditions of an economic environment quite quickly. If they think there are enough positive factors for investing, they can decide straightaway. Foreign decision-makers also pay great attention to the political climate. For example, systematic anti-European talk would worry them on a long-term basis. In the same vein, our partners find it difficult to understand the constant changes to the operating regulations in most sectors. The decision to build a plant always forms part of a long- term vision: the facility is going to operate for 40, 50 or 60 years. Suffice to say that if the rules of the game change all the time, some players will be put off investing in a country. But in France, we like to undo what has already been done on a regular basis… and then redo it. The unpredictable nature of some decisions taken by the authorities is a bad sign to send abroad.
P. I. — Are these same counterparts impressed by the top French companies that are found in several industrial sectors?
F. M. — France has several world-class industrial groups that are leaders in their markets. This can only be welcomed: these companies have become indispensable, and contribute directly to spreading l’excellence française. The quality of the industrial base is not exclusive to a handful of heavyweights: the density of SMEs and middle-market companies is also an important criterion for success. But France doesn’t have a big enough pool of middle-market firms. Once again, the comparison with Germany shows how far behind we are: our neighbour has a huge number of medium-sized companies with the ability to feed into the entire economy. For France to develop, we need to boost the support we give middle-market companies, which would also be to the advantage of the French multinationals that these firms regularly partner with. In addition, we shouldn’t think that their strong roots and wide scope gives our large companies lots of wiggle room: the state’s role by their side needs to be clearer. Public backing in the start-up phase of a new market is very useful. At the same time, it can be counter-productive when the company reaches cruising speed: it loses autonomy and agility if the state has a say in strategic decision-making.
P. I. — Where should the state be targeting its efforts? What would the fairest approach be?
F. M. — The state has to know when and how to help its companies so that its intervention can be the most effective. Some countries – China, for example – reserve their public contracts for their top national companies. That’s clearly a very substantial competitive advantage. Here again, we shouldn’t be so naïve: Europe has to adapt!
P. I. — The health crisis, the war in Ukraine, soaring energy prices, supply problems for many raw and other materials... does the current maelstrom incentivise manufacturers to operate in closed loops? Do they fall back on their position and safeguard the gains they’ve made?
F. M. — We firmly believe in working in ecosystems at Michelin. Acting alone wouldn’t make sense in terms of our hundreds of thousands of customers, our tens of thousands of suppliers and the complex nature of the issues we tackle. We create a dynamic that encourages cooperation. To take an example: we are developing Symbio, a joint venture with Forvia for developing hydrogen fuel cells. We are also expanding Add Up, a joint venture with Fives for designing and marketing metal parts and machines that use additive manufacturing technology. We have been collaborating for a long time in our research with CNRS. At a commercial level, we have joined forces with the Japanese company Sumitomo as part of a joint venture specialising in pneumatic distribution.
P. I. — We can’t help thinking that economic tensions destabilise cooperation channels...
F. M. — Operating in an ecosystem is very demanding, especially when we have to work with competitors! For instance, we have teamed up with Bridgestone to develop technology for obtaining recycled carbon black.
P. I. — What key lessons for the global economy have been learned from the health crisis? Are there processes, procedures or ways of doing things that should be put on the back burner for good?
F. M. — The main lesson is that globalisation has its limits. Over time, the economy had begun to operate with very few restraints. This gave the impression that all-out internationalisation combined with the hyper-specialisation of some geographic markets wasn’t a problem. But the pandemic really did rock the boat and showed how fragile this balance was. One of the things we realised is that in an extreme crisis, our reliance on China was becoming dangerous. The most glaring example was the difficulty in delivering masks.
P. I. — So, should we challenge the idea of globalisation?
F. M. — Absolutely not. Globalisation is a fact, and there’s no turning back. Let’s be clear about this: globalisation was – and still is – a good thing! It helps many people across the planet develop and boost their standards of living. At the same time, the pandemic has made us realise that we need to adjust and rebalance it urgently. This is important not just for people but also for the planet! Unbridled globalisation is no longer sustainable.
P. I. — In conclusion, is there anything especially French about Michelin?
F. M. — It’s probably a certain way of looking at humankind’s place in the world. Our system of French values is the direct result of the Declaration of the Rights of Man and of the Citizen. This is the foundation that has helped us develop a certain number of values that feed into our strategy on a daily basis.