French cloth maker becomes touchstone of re-industrialisation


Last year, as Covid-19 first swept across Europe, a French textiles company tweeted it would start making surgical masks. Within hours, the ministry of health asked how many it could produce; two days later, Les Tissages de Charlieu had made 100,000 masks for French hospitals and public workers.

“Our aim was to onshore a very simple, basic commodity — to prove that it can be done,” said Antoine Saint-Pierre, co-director of the company that is based in Charlieu, a textiles town for more than 500 years. The firm has now also begun making millions of tote shopping bags, generating one-fifth of the emissions of those imported from China, according to the company.

Supply chain disruptions wrought by the pandemic have made “national economic resilience” and “reshoring” of critical manufactured goods — be they vaccines, semiconductors or protective equipment and textiles — industrial policy buzzwords across the western world. But that is especially so in France, where the return of manufacturing production and jobs from overseas has become a hot-button issue ahead of next year’s presidential election.

Candidates across the political spectrum have vied to convince voters of their vision of how to reverse the country’s industrial decline, which has seen industry’s contribution to the French economy halve between 1970 and 2020 to 11 per cent.

Meanwhile, the government of President Emmanuel Macron, who has long believed Europe should reclaim its economic sovereignty, points proudly to the €830m it has handed out to companies since 2020 to support reshoring projects.

A Les Tissages de Charlieu bag
A Les Tissages de Charlieu bag © Les Tissages de Charlieu

“We provided a boost during the crisis to ensure that manufacturers did not stop investing. It was our obsession, and it worked really well,” industry minister Agnès Pannier-Runacher told the Financial Times. She added that over 10,000 industrial companies got financial support from France’s EU recovery package, with more than 620 specifically being helped to reshore their activities.

Yet economists question whether such a wide range of cash injections is the right way to reboot domestic manufacturing. They may bolster small companies such as Les Tissages de Charlieu, but can they change France’s industrial fabric?

The textiles industry provides a vivid example of the issues at stake, as well as some of the reasons why economists are sceptical.

Central to France’s industrial revolution, the sector was savaged in the late 20th century by the offshoring of production to Asia and eastern Europe, where costs are lower and regulations less stringent. Nowadays, 90 per cent of textiles and clothes bought in France are made abroad, according to 2015 data from Insee. Ethically minded consumers also have limited visibility into factory working conditions or the origins of raw materials.

That changed somewhat during the pandemic, as textile imports fell. With the over €1m of state aid that Les Tissages de Charlieu received to help it make tote bags, the company is now also more than doubling its workforce to 180 people — equivalent to 10 per cent of Charlieu’s population. Its tote bags are greener too.

The state has shown a “very good commitment” to onshoring, Saint-Pierre said. “There has been a real shift in the government’s speech and actions.”

However, whether reshoring textiles production can reverse French industrial decline is a moot point, economists argue.

‘Reshoring’ is often a “polite word for protectionism”, Isabelle Mejean, an economist at Sciences Po, said. “It is not clear precisely what it means,” she added, even if it is often presented as being able to “solve everything”, be that more economic sovereignty, jobs or resilience to climate change.

Mejean and Xavier Jaravel, a fellow member of France’s Council of Economic Analysis which provides the government with independent advice, recommended in April the government would do a better job of boosting French industry and protecting supply chains if it prioritised “vulnerable inputs with high technological content”.

They warned that “imperfectly targeted industrial policies would be costly for consumers, without fundamentally enhancing [economic] resilience” and cited priority sectors such as aeronautics, electronics and chemicals. Textiles came a distant second last, before “others”.

Even so, Pannier-Runacher defended Macron’s industrial record. Leaving aside the effectiveness of France’s recovery plan, which will take time to come through, she pointed to a net increase in industrial jobs between 2017 and 2019, when the pandemic reversed the trend.

“We have created the conditions to improve France’s competitiveness,” she said.

Line chart of Salaried jobs in industry (million) showing Industrial jobs rose  in France for three years pre-pandemic
Line chart of Businesses oshored and offshored per year in France showing More businesses came to France than moved abroad since 2020

Yet while surveys show that France’s business climate has become more attractive thanks to corporate tax cuts and labour market reforms introduced by Macron, manufacturing remains depressed and the trade deficit in industrial products has continued to grow.

Patrick Artus, chief economist at Natixis, argues that France needs to benchmark itself against Germany, which has kept the more lucrative parts of its industrial power base onshore, including its Mittelstand businesses, car manufacturing and research and development initiatives.

Rather than just offering cash handouts, France specifically needs to further reduce business taxes that are €50bn higher than Germany per year, improve technical skills, and put more public money at risk when financing innovation and high technology start-ups.

“You can engage in pretty aggressive offshoring and still protect domestic industry,” agreed Gilles Moec, chief economist at insurer Axa. “As a free-trader, I don’t think we should give up the good fight that in general international trade is good, and is defined by specialisation. You will not do everything better at home.”

Back in Charlieu, Saint-Pierre half agrees. He believes it would be “crazy to say all production should come back to France”. But he also argues that many manufacturing processes can be reshored, creating thousands of jobs while also cutting the environmental impact of production.

“We don’t have to de-globalise, we just need to find an equilibrium,” he said.

Additional reporting by Eir Nolsoe

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