Focus on France Ian Sparks reports from Paris

EURO-REPORT

FOCUS ON... France

Ian Sparks reports from Paris on the continuing row about industry’s costs.

IF timing is everything in politics, then France’s Industry Minister Arnaud Montebourg may now regret launching his latest campaign to urge consumers to ‘buy French’ on the same day that a leading industry boss branded him a ‘retard’.

While Mr Montebourg was shown posing incongruously on the front of Le Parisien magazine sporting a Breton shirt and holding a French-made food processor, the head of Mitsubishi France chose the same afternoon to launch a scathing attack on policies he said were sending thousands of jobs overseas.

The minister’s publicity drive was aimed at rousing patriotism among French consumers in the face of ten per cent unemployment and a dwindling industrial output. On Le Parisien’s inside pages, he urged readers to forgo foreign imports, even if they were cheaper, in a bid to keep their own countrymen in work.

He said: “My priority is ‘Made in France’. There’s a choice that’s more important than any other, and that is to preserve France’s industrial base.”

But his efforts were swiftly eclipsed by comments from Jean-Claude Debard, the French boss of Mitsubishi’s dealer network in France, at what should have been the otherwise uneventful launch of a new car in the south of France.

Mr Debard chose the moment to accuse the industry minister of pretending to be a champion of jobs while actually supporting policies that damaged the entire car industry. He said Mitsubishi was in a joint venture with France’s Peugeot and Citroen to supply a new electric car, and the entire French auto sector represented 25 per cent of France’s turnover and 10 per cent of the nation’s jobs.

And he added: “Meanwhile this moron, this retard, increases ecological taxes, reduces the speed motorists can go on the Paris ring road and motorists all suffer as a result of him. He is stupid and understands nothing, and you can quote me on that.”

The French media did quote him on that, and within three days Mr Debard had stepped down from his job quoting ‘personal reasons’. Mistsubishi’s headquarters in Japan also issued a separate apology for his ‘discourteous remarks’.

Mr Debard may have fallen on his sword, but his remarks triggered a deluge of similar, if less graphic, criticisms of Mr Montebourg’s handling of the industry. Renault’s chief operating officer Carlos Tavares said French labour laws gave the company ‘no choice’ but to force production overseas.

He added: “Fewer than a quarter of the 2.83 million cars that rolled off our assembly lines last year were made in France. Making the same Renault Clio in France rather than in our Turkish plant is €1300 more expensive and half of the gap is due to labour costs. Within Renault, the French plants are the weakest. It’s not only a matter of cost, it’s a matter of flexibility.”

French brewers have also accused the government of ‘decimating their market’ with plans to slap a hefty 160 per cent tax on beer sales, while leaving them unchanged on wine and spirits.

The excise increase is aimed at raising €500 million a year for health and pensions while discouraging consumption of the least expensive alcoholic drink. But it will raise the price of half a pint of beer by almost 20 per cent, with the cost of a glass in a bar going up from €2.50 to €2.70.

A spokesman for the industry group the Brasseurs de France said: “Our labour costs are already crippling, and many smaller breweries will not survive this latest blow when sales drop. France’s 450 brewing companies are devastated.”

The spat has also spread abroad to Belgium, which sells 32 per cent of all its beer to neighbouring France. Belgian MP Bart Tommelin even called for immediate retaliation, demanding his country slap an equivalent tax on imported French products like champagne, camembert and Calvados.

Shock measures

Just days later on 4 November, French industrialist Louis Gallois also handed Francois Hollande the findings of his government-commissioned report on how to kickstart the French economy – but critics are already saying the president is unlikely to heed its advice.

Mr Gallois – the former head of defence giant EADS – has prescribed slashing €30 billion from payroll taxes and loosening labour laws to boost competitiveness. He also suggests slicing €20 billion off employers’ social contributions and 10 billion off those paid by workers in a series of ‘shock measures’. And he has come up with 21 other key recommendations that he describes as a ‘tough but necessary’ way to revive French industry.

He said on 4 November: “The French people need to support this collective effort which could be a magnificent project for our country – winning back our industry. But this will require real patriotism.”

But President Hollande quickly snuffed out any expectations of the radical reforms suggested by Gallois. His Social Economy Minister Benoit Hamon said: “We feel this report is a contribution. But it’s the government that governs.”

French daily Le Figaro said the report now risked ending up stuck on a shelf alongside a similar review ordered by Sarkozy when he took office in 2008. That report, by economist Jacques Attali, also called for an overhaul of labour laws and cuts to employers’ social charges.

“It will simply end up in a whole cemetery of buried reports,” the paper added. n