In his monthly press statement, the French prime minister, Dominique Villepin, today announced government funding valued at 400m euros over three years for research and development in the automotive industry and for retraining of automotive workers.
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The first measure is specific funding of 250m euros for automotive research & development programmes.The funding will come from the government Agency for Industrial Innovation (AII), which funded automotive R&D to the tune of 120m euros in 2006. According to Associated Press projects such as Peugeot’s diesel hybrid engine project and Valeo’s ‘stop and go’ system have benefited from this type of funding in the past.
Secondly tax credits on research and development conducted by companies will be doubled to 16m euros, making an additional 120m euros available, according to the prime minister. These tax credits will be made available to all companies but will benefit the automotive and aerospace industries in particular.
Thirdly, Villepin announced a plan to spend 150m euros over three years to retrain 20,000 automotive employees hit by restructuring in the sector, to enable them to find jobs elsewhere.
La Tribune reports that French suppliers in particular need the government support. Supplier industry turnover was down 7.6% in the first half of the year and the French trade association representing suppliers, FIEV (Fédération des Industries des Equipements pour Véhicules), is not expecting the situation to improve next year. 5,000 jobs are expected to be lost between now and the end of the year. The decline in supplier performance is linked directly to a sharp fall in output by French vehicle manufactuers (-13.7% in the first nine months of the year). In addition suppliers have had to reduce prices to help vehicle manufacturers meet their cost targets at a time when raw material prices have been increasing.
Prime minister Villepin met with suppliers last Thursday and vehicle manufacturers last Friday to help prepare a plan to supplier the sector, similar to one announced earlier this month to support the French aerospace industry.
According to the Tribune newspaper an announcement on payment terms by the 15th January, 2007. Large companies often take more than 90 days to pay invoices, where 30 days is the norm in some key competitor countries, including Germany, UK, USA and some emerging markets.
Six French regions are particularly dependent on the automotive industry. They are Ile-de-France, Franche-Comté, Nord-Pas-de-Calais, Lorraine, Alsace et Haute-Normandie.
