The current debate about the industry is dominated by the idea of repairing a past that has gone wrong: relocation, reindustrialization, a return to made in France or made in Europe. These terms are ambiguous. Delocalization cannot essentially consist of bringing back to France or Europe activities that we would have moved to China or elsewhere. In addition, relocations in the strict sense of the term – closing a factory and transferring its activity to another location – have been few. And they weigh little in the balance of lost jobs.
What has happened with globalization is a complex reorganization of value chains, where the share of activities carried out in France by assembly companies, their subcontractors and their suppliers has been reduced, more or less abruptly depending on the cases, sometimes reaching almost zero, since in certain sectors of consumption. (Made in France, according to INSEE, represents 81% of the total consumption of the French, but only 36% of manufactured products).
Large French companies have actively played this game of international deployment of value chains, both to reduce costs and to satisfy growing markets. There is therefore a very important French offshore economy. French companies employ around six million people abroad, more than half of them in services. German industry, located in niches with greater added value, has, on the contrary, favored exports from its territory. Therefore, it is very vulnerable to the production costs of this national territory, as we see today with energy.
There is much to do to recover production on national (and European) soil, especially for goods of daily consumption. But the challenge is not to organize the great repatriation of factories that have migrated to the other side of the world. It is about developing new activities, taking or resuming strategic positions in the value chains, even in the logistics links (ports in particular) and reducing our dependencies.
For this, it is necessary, above all, to understand the new geography of value and independence, which does not simply overlap with that of physical production. We have to look at the future in a different way than in the rear view mirror. What is emerging before our eyes is, of course, a very different situation (neoprotectionism, pandemic, Ukraine). But there are also profound transformations, much less visible, in the ways of production, especially under the effect of the digital revolution.
They are new links between techniques, organizations and imaginations that are redefining what we can call “industry”. It’s about understanding these new realities, which move us further and further away from conventional imagery. […]
Deindustrialization? yes and no
Has our country, like others in Europe, “deindustrialized”? Of course, behind this term there is a reality, which imposes itself on our landscapes – although we notice more the rusty blast furnaces than the new activities, sometimes very sophisticated, that are created in the secret of aluminum boxes unmarked with the outskirts of our cities or in our countryside.
In recent decades, our country has undeniably lost industrial substance, especially in the sectors of daily consumer goods (domestic appliances, leisure electronics, toys, clothes, etc.), today massively imported and which, obviously, would greener and sometimes cheaper to re-register in shorter chains.
Sending wood from our forests to China to be used as furniture is absurd. These examples could be multiplied. But the return of “deindustrialization” must be put into perspective. Industrial production carried out on national soil has more than doubled its volume since the seventies, despite a large air pocket after the financial crisis.
So where do the declines in employment come from, which have been massive and continuous since the 1950s? The first explanation is the change in statistical scope that we have just mentioned, the transition of subcontracted activities from the heading “industry” to the heading “service”. Purely optical effect, then.
The second explanation, by far the most important, is that of productivity gains: thanks to mechanization and automation, an hour of work today is four times what it was thirty years ago. Third, market losses account for some of the decline, but probably barely more than 20%. It is also worth noting that manufactured goods, in relative prices, are becoming less expensive compared to services. Think about what you get for 1,000 euros if you buy a sophisticated industrial good, a car or a computer, which incorporates an extraordinary amount of work and knowledge, and what the same sum brings you in the field of services or building.
2021, a prosperous year
Industrial employment, moreover, does not decrease in a continuous and homogeneous movement, like that of an inexorably retreating glacier. It’s actively renewing itself, even if we don’t realize it. Economist Laurent Davezies has shown that even in the darkest period, the decade after the financial crisis of 2008-2009, many industrial jobs continued to be created in a large number of French municipalities.
Between 2009 and 2019, 190,000 private industrial salaried jobs were created in 6,400 municipalities. After the shutdown of the Covid, 2021 was a prosperous year, according to the firm Trendeo. Today, the great bleeding seems to have stopped.
What about the future? What will be the effect of the war in Ukraine, the rise in energy prices, the weakening of supply chains, the return of inflation? It’s too early to tell. What is certain, however, is that the great return of workers imagined by some will not occur. Factories and warehouses will be increasingly automated, understaffed and training requirements will increase dramatically.
Boundaries increasingly blurred
Finally, some envision “black factories” that will operate continuously, day and night, with no lighting and no living beings other than guards and their dogs. Jobs will continue to be created essentially in services: business services and, above all, as is the case today, personal services, i.e. related to care, aging, trade and e-commerce, security, leisure , etc.
It is a paradoxical situation. On the one hand, we are a thousand times right in wanting to restore manufacturing activities locally, for multiple reasons: positive ecological impact of short circuits; domino effect in the rest of the activities; update of competences in the territories; less dependence on the vagaries of long supply chains. On the other hand, you must be aware that the impacts on employment will be mostly indirect and will remain limited.
The reality is that the boundaries between the world of services, that of manufacturing industries and the digital world are increasingly blurred and porous. Many services work exactly like industries (telecommunications, energy, urban services). Material production, on the other hand, mobilizes countless services (communication, IT, technical maintenance, not forgetting more everyday services such as real estate, cleaning, catering, etc.).
When we add up these activities that constitute the “productive heart” of the economy (excluding services to people), we thus arrive at a participation in national production that is between 30 and 40% (the calculation I owe to ‘economist Olivier Passet), much higher than that generally advanced by discourses on deindustrialisation.
From steel to “steel solutions”
The most important development refers to what in managerial neo-speak are called “business models” or “economic models”. Just as services are becoming industrialized, industry is becoming more “service-based.” As consumers, we increasingly deal with mixtures of goods and services, services including goods and vice versa.
The services accessible by your smartphone illustrate this fusion. Economist Michèle Debonneuil spoke of a “quaternary” sector, combining secondary and tertiary. Manufacturers no longer sell materials, objects, material systems. They sell features, solutions, performance, experiences. The steel industry no longer sells steel, but more or less specific “steel solutions” for this or that use.
In aviation, engine manufacturers sell flight hours and engine maintenance. Michelin invoices truck driving kilometers, airplane landings. Philips sells lumens, guaranteed lighting services for shops, airports and no longer (just) light bulbs. This pattern has long been common in professional sectors (B to B: business to business). However, it is in the process of being slowly but surely rolled out to sectors of the general public.
This evolution is still in its infancy, but it will fundamentally change our economy. It could be summed up as the shift from an economy of things to an economy of uses, often together with the shift from an economy of ownership to an economy of access. Take the example of travel. The economy of transport has for a long time focused on the automobile object and on the ownership of this object, a symbol of access to modernity. It is now moving towards a mobility economy. What matters to you or me is the ease and flexibility of movement, regardless of the mode used.
Urban youth already own fewer and fewer cars, and the range of services grouped under the term “MaaS” (Mobility as a Service) is expanding. Car sales are stabilizing, but long-term rental services are developing rapidly. Some predict that owning a car in the city will soon be as antiquated as owning a horse there!
This mobility economy, as we can see, is part of a more complex universe than that of automobile manufacturing. A complexity of a different nature, above all. Indeed, if it is incredibly difficult to mass-produce an object as complicated as a car, the new challenge for manufacturers is very different: it is to integrate into an economy of the city and the territories, in other words, to face the complexity of society, away from the closed and controlled world of the factory.
For all actors, the challenge is to move from rigid oppositions between public transport, soft modes and automobiles to a new vision where the car becomes a variant of public transport, thanks to the sharing and pooling of uses (car sharing, carpooling). […]
Is this shift to service models good for the environment? A priori, yes, since if I sell a service based on an object, my interest is that this object is as durable as possible. If I sell mileage, I have an interest in my tires lasting. A whole current of thought has developed around this idea, under the name of “economy of characteristics”. It’s an interesting path to progress. But experience shows that it is not a miracle solution.
This article is republished from The Conversation under a Creative Commons license. Read the original article.
Source : Le JDD