It never rains but it pours for France’s beleaguered President, beset with complex issues at home and abroad that see some labelling the country in the same terms as the UK in the late 1970s.
His predecessor, Nicolas Sarkozy, is rumoured to be on the comeback trail and must be congratulating himself somewhere on having delivered Francois Hollande such a hospital pass.
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From day one of Hollande’s incumbency – bizarrely travelling down the Champs Elysees in a tiny car and eccentrically appearing to poke his head out of the sunroof – in a torrential downpour to boot if you please – the almost daily headlines of economic gloom continue to swirl around his Presidency with ever-increasing rapidity.
Never mind the prospective Mayoral candidate for Paris having been involved in a highly entertaining spat with the London occupant of City Hall – and very few emerge unscathed from Boris Johnson’s acerbic wit – it is Hollande who has been hoovering up the bad news as would a dry sponge.
The latest in a long line of economic woes that come set against a background of huge unemployment and increasingly desperate austerity measures, is the attempt by PSA Peugeot Citroen to right its listing ship.
PSA has been engaged in selling a significant part of the family silver – namely most of its logistics arm GEFCO to Russian Railways for EUR800m (US$1.1bn) and coming up with an ingenious sale and leaseback on its swanky Paris HQ – but the automaker has now embarked on its most audacious move yet -a EUR3bn capital increase in full cahoots with the French government and Chinese partner Dongfeng.
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By GlobalDataPSA had reportedly been burning through a toe-curlingly large EUR200m a month – although one analyst told me this amount was reducing – and is embarking on a bitterly-contested mass redundancy programme that will see up to 8,000 jobs disappear into a French economy already groaning under massive jobless figures.
Despite more encouraging fourth quarter numbers that saw assembled vehicles sales up 4%, the numbers dipped on an annual basis worldwide by nearly 5%.
Overall market contractions in the European zone – down 1.6% with Russia also falling 5.4% – were nonetheless offset by impressive China growth of 19.1% and it is to PSA’s Chinese partner Dongfeng the French automaker has turned.
PSA is seeking a huge EUR3bn (US$4.1bn) capital increase in a deal that could see both parties stump up the figure, although the precise share each would fork out is not yet clear, while even more cash could be sourced through “alternative capital increase scenarios.”
Into that financial whirlpool is stepping none other than France’s ebullient – and from this side of the English Channel anyway – pretty left-leaning Economic Redevelopment Minister Arnaud Montebourg – a man never seemingly able to resist a bit of industrial dabbling from the State.
Indeed, Montebourg’s office in Paris confirmed to me comments the Minister had made earlier saying such a massive intervention would be an act of “industrial patriotism.”
We had quite a lot of “industrial patriotism” in the UK in the late 1970s and 1980s and not much good it did either the public purse or the various industries involved – British Leyland anyone?
But it seems Gallic patriotism knows no bounds and Montebourg’s invoking of it may stir something deep in the heart of the French who are loath to see a national icon in trouble.
But how far will the French State actually go in opening its threadbare coffers to PSA and how much bang will Dongfeng exert for its buck?
That the Chinese are an ever-increasing power in world industry and politics is not in doubt and there is a small precedent for overseas involvement with PSA selling off its GEFCO arm to the Russians.
Would France be prepared to let PSA be tossed to the economic market wolves or is it something endemic in the country that will simply not let PSA go?
Some of those Q4 recent numbers are encouraging for sure and the Metzler analyst believes the automaker’s current and future model line up is the right way to go.
But if – as many believe – Hollande’s is a lame duck Presidency – maybe there are those – such as the ever-fizzing Montebourg – who may be positioning themselves for a future leadership bid or even a tilt at the Elysee Palace itself in a race against Sarkozy if he stands.
Those inaugural days for leaders are often full of windy rhetoric laced with bland platitudes for the future.
But as Hollande’s tiny car made its way down the vast Champs Elysees with a drenched President gamely trying to look, well, Presidential, such an inauspicious start is now beginning to look suspiciously like an omen for his tenure at the top.
