Page last updated at 18:13 GMT, Friday, 27 February 2009

French fear for car industry aid

By Chris Mason
BBC News, Douai, France

Workers arrive at factory
The French car industry is symbolically - and politically - important

European Union leaders are preparing for an emergency summit this weekend to discuss, amongst other things, protectionism.

The EU's executive, the European Commission, is increasingly concerned that national rescue packages for the car industry may be protectionist and could lead to the closure of factories in Central and Eastern Europe, with jobs effectively repatriated to the richer West.

Officials in Brussels are currently examining loans offered by the Italian, Spanish, French, Swedish, German and British governments.

Registrations of new cars in Europe fell by 27% in January compared with a year earlier.

So how is the French car industry - and the government - handling the downturn? And how are they justifying their response to the European Commission?

Inside the offices of the General Confederation of Labour (CGT) trade union at Renault's car plant in Douai, near Lille, the atmosphere is jovial.

As shop stewards wander in from the production line at the end of the morning shift, they shake one another by the hand.

They pull chunks from baguettes to make ham-and-sardine sandwiches and pour themselves small glasses of Bourgueil red wine.

CGT shop stewards
Shop stewards of the CGT union fear for the future of the industry

The CGT is France's largest trade union. While members can share a joke over lunch, Roger Marie, who sits on its executive committee in Douai, tells me that workers are deeply concerned about the future.

"They are angry, but there is also a lot of despair, as everywhere. There is also the question of morale. Workers are obviously caught up in this crisis, but they are not responsible for it."

The economic downturn here is posing big questions for President Nicolas Sarkozy.

In his inaugural address in 2007, he said France needed to adapt to the fast-moving, modern world. Many interpreted that as a desire to see France embrace a more Anglo-Saxon style of capitalism; to roll up its sleeves.

But rhetoric now meets reality with the car industry, a French economic virility symbol, at stake.

Emergency loans

Mr Sarkozy has offered 6.4bn euros (5.7bn) in emergency loans to its carmakers. In exchange, they have promised to keep French plants open.

Roger Marie
Roger Marie says workers are deeply concerned about the future

"The whole automobile sector, from the manufacturers down to guys who sell car insurance and everyone in between, represents almost 10% of the French working age population," says Francois Roudier, the director of communications for the French Carmakers Trade Association (CCFA).

Tellingly, he also adds: "The auto industry's situation is quite different here from many other countries in Europe. There are now six nations in the world that can design, manufacture and sell cars - and we are quite proud to be one of them."

This last point is significant. The French car industry, dominated by names such as Renault, Peugeot and Citroen, is a home grown heritage industry.

It is not just financially important, but symbolically important - and that makes it politically important too.

If you don't give incentives for these big companies to restructure, you will rescue them for 2009 but they will be very vulnerable and they will be killed in five or 10 years
Nicolas Baverez, economist

As workers here in Douai make their way in for the afternoon shift, they swipe their name badges on an electronic reader that allows them through the imposing metal turnstiles next to the assembly line.

Many are aware of just how important Mr Sarkozy's cash injection is in keeping them in work, but they remain pessimistic.

Some are currently working just three days a week, but they are still receiving a full week's pay with the government making a contribution.

In the future, Renault will be able to claim back the time staff have been paid for but not worked. Some employees already owe the firm 60 days work.

This arrangement - requiring flexibility from the workforce - provoked a strike here last week; another is likely soon.

Bayart Pascal, 49, has worked at the plant since 1980.

Bayart Pascal
Bayart Pascal says the shorter working week is dispiriting for staff

"It's not affecting my family yet. But the shorter working week means there is no opportunity for productivity bonuses and we all owe the bosses so much extra time. It's dispiriting," he tells me.

But Mr Pascal is still in a job. As far as the Elysee Palace is concerned, that's a success.

However, critics question the French government's approach.

Nicolas Baverez is an economist and author of La France qui Tombe - or, literally, France is Falling.

He argues that plastering the jobs wound now will do little to heal France's chronic economic malaise.

"There is a real danger for Mr Sarkozy and for France. It's impossible to fight the crisis of the 21st Century with the tools of the 60s," he says.

"If you don't give incentives for these big companies to restructure, you will rescue them for 2009 but they will be very vulnerable and they will be killed in five or 10 years."

So there are big questions being asked as to whether this idea makes sense in the long term.

And it could yet be struck down in the short term. Unlike beauty, protectionism in Europe is not in the eye of the beholder.

It will be up to EU leaders gathering for a summit in Brussels at the weekend - and ultimately the European Commission to decide if what President Sarkozy is planning, and indeed other schemes, by Italy, Spain, Sweden, Germany and the UK, are legal.

Print Sponsor

France mulls more car sector help
20 Jan 09 |  Business
France plans 20bn euro stimulus
04 Dec 08 |  Europe

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Americas Africa Europe Middle East South Asia Asia Pacific