Among a long list of French industrialists treading a familiar path through Paris’ elite business universities, is Louis Schweitzer, whose storied and glittering career takes in a breathtaking canter through the rarefied air of the country’s very top jobs. Simon Warburton spoke to him on the fringes of the recent Forum on the European Automotive Industry (FEAL) in Lille.
Schweitzer graduated from the prestigious Ecole Nationale d’Administration (ENA) – think Oxbridge for business – whose alumni are colloquially known as Énarques – a cobbling together of the ENA acronym and ‘Monarque’ – such is the power by osmosis of those passing through its hallowed halls.
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Just to illustrate the point, Énarques from the University include many French Prime Ministers and Presidents, Emmanuel Macron being just one of them, while Schweitzer himself served as PM under François Mitterrand from 1984-1986. He then rapidly joined Renault in the same year and became CEO in 1992 before leaving in 2005.
Such a deep well of experience has not been allowed to run dry however, with multiple organisations requesting his patronage, culminating in the presidency of Initiative France, where the automotive sector figures highly in his in-tray.
As such, Schweitzer was guest of honour at the recent Forum on the European Automotive Industry in Lille, grouping suppliers, OEMs and government officials in France’s primary manufacturing region for the sector. Very much a hot topic in the North East French city was the white hot controversy surrounding diesel, a fuel seemingly assailed on all sides and whose future is now firmly exercising the minds of politicians as they wrestle with how to substitute jobs lost as the industry moves to cleaner power.
France is particularly affected by the shift away from diesel and the seemingly unstoppable march to hybrid and electric with the country now waking with a start from its decades-long – and tax advantageous – love affair with the fuel.
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By GlobalDataThis is serious stuff for France. Around 12,000 manufacturing jobs directly depend on the diesel sector, while many more will be spread through the spider’s web of supply chains keeping the machine well-oiled.
The reverberations as the industry tries to recalibrate to alternative fuels, is also trickling down the political chain with uncertainties wracking the brains of those directly involved in manufacturing diesel technology. Only recently, two French Mayors from Onet-le-Château and Rodez and in whose regions lies an injector factory, called for an end to ‘diesel-bashing,’ while extraordinarily, reports circulated earlier this year diesel tests were being conducted on monkeys.
Part of the reason why both Mayors are taking such a keen interest in the future of a manufacturer specialised in diesel, is the fact the supplier is the largest private employer in the Département de l’Aveyron, having been at the Onet-le-Château factory for more than 50 years,
“Uncertainties threaten the future of this industrial site,” noted comments from Onet-le-Château’s authority. “Diesel-bashing, emphasised by overtaxing of the fuel, has led to vehicle sales plunging. This denigration of diesel, orchestrated more strongly since 2017, is unacceptable.”
So what does France’s former Prime Minister make of the threat to diesel in his country and what alternatives could there be? Will France plough its own furrow or accept moves from the European Commission to address those refuelling from the black pump at the station service?
JA: As a former Prime Minister, do you think France will insist on going alone to protect its diesel industry or will it move more towards a supra-national approach to solve the conundrum?
LS: “I am convinced France will go to European convergence – I can’t see a French policy which would go against the European Commission. I am convinced the future is more electric than hydrogen.
“Both electricity and hydrogen rely on products which do not exist in nature. We need to manufacture hydrogen and batteries [are] a more efficient way to store energy.
JA: Has French industry made the necessary cash injections to address the move away from diesel?
LS: I am very pleased with Renault’s decision to invest EUR1bn (US$1.2bn) in electric vehicles. All manufacturers have had to think about CO2 and petrol consumption. The choice for many years became even more complicated because France had a tax advantage in favour of diesel.
I said to Renault we should try to fight for a better tax system to avoid what happened when we had to go from diesel to petrol.
Dieselgate – I am concerned [it] has had a major impact on our industry. I don’t think we will go back to diesel for cars in general. We don’t think we have found a substitute for heavy duty vehicles, unless it is gas. I think use of diesel will be reduced.
JA: There has been much talk of hydrogen as a fuel for some time. Is this realistic or will battery technology be a more efficient method of clean propulsion?
LS: Unless there will be a revolution, technological progress in batteries will be much more swift than fuel cells. I do not see how in the next five years this renewable energy will be able to compete with gas or nuclear energy.
I believe car production in the world will keep on growing and the electric vehicle will become competitive. There are very high fiscal, tax benefits from buying an electric vehicle; this is a huge State benefit, so it is not currently competitive. It is [currently] a subsidised product, supported by specific policies.
“This leads us to a few reflections. There have been since 2008, two types of consumers; those who have a great passion and those who buy out of reason.”
JA: Despite the undoubted, myriad challenges confronting the diesel sector, French manufacturing is in rude health after a precarious few years following the downturn after 2008 and the ensuring global recession. Are you confident both major French producers, as well as suppliers, are in good shape?
LS: We have two major car companies [which] were on the verge of death. When I was president of Renault we had the idea of making one national champion, to merge Renault and PSA. That is the technique the British chose.
In both those cases [Renault and PSA] the State is a minority shareholder and has around 15% in each company. We [also] have first class OEMs [suppliers] and four of them are Michelin, Valeo, Plastic Omnium and Faurecia.
JA: Do you think French suppliers are able to meet rising demand and is France’s manufacturing cost base where you would like it?
LS: It [supplier strength] is not something we could have imagined 15 years ago, [although] Michelin, yes. These companies need to contribute to our country they need to irrigate the entire country. France produces 2m cars per year, Germany 6m. France imports cars and Germany is a massive exporter. We are wondering why.
“It’s true France has high cost manpower, we are not at the same level as Czech Republic, Slovakia. Since 2014 we had a rational policy in France to manufacture close to where cars were being sold. We need to have more automated factories.
JA: Is there still room in 2018 for French State involvement in major manufacturing industries? Renault used to be 100% State-owned – does limited involvement from Paris work for the automaker?
LS: It think this 15% [State shareholding] in an industry which is very much based on cycles, that gives us stability. If you look at the major carmakers of the world, you see very few of them have shareholders which are completely different.
“It generates stability. In my experience the State is a very good shareholder.”
