Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Emmanuel Macron must keep his nerve

Posted by hkarner - 5. August 2017

Date: 03-08-2017
Source: The Economist

By promising to nationalise France’s biggest shipyard, France’s president is entering dangerous waters

THINK of it as a Macron micro test: the first industrial intervention by the man French voters put into the Elysée Palace, although he had never held elected office. It involves France’s biggest shipyard, at Saint-Nazaire, on the Atlantic. At the end of last month, rather than see the yard sold into Italian hands, the government of Emmanuel Macron pledged to nationalise it instead. A fervent supporter of the European Union and globalisation, Mr Macron is being accused of nationalism, protectionism and of trying to shore up his declining popularity. It is not that bad—yet. But Mr Macron should be wary of being sucked into an industrial policy that sets back his central aim of making France and the EU more competitive.

Shipbuilding in Saint-Nazaire has a troubled past. François Hollande, Mr Macron’s predecessor, oversaw a sale of a two-thirds share of the yard from a South Korean firm to an Italian pairing of Fincantieri, a shipbuilder, and an Italian investor. Together, they would have had a 54.6% stake; the rest would have been owned by the French government and a French investor. Mr Macron could have let the sale go ahead as planned. Instead, after a review, he has ripped the agreement up. He demanded a 50/50 split and, when the Italians refused, said he would exercise the state’s right to buy the lot.
The government insists that the nationalisation will be temporary—it simply wanted to shore up its negotiating position before its pre-emption rights lapsed. France would still like the deal with Fincantieri to go ahead, but it argues that the Saint-Nazaire yard is strategic, because it supplies the French navy and it employs several thousand workers. In addition, the government worries that trade secrets could leak to Fincantieri’s industrial partner, a Chinese cruise-ship builder.

The Chinese argument sounds specious: it did not bother the defence establishment when Mr Hollande was in power. More convincing is the assertion that the French government should have a greater say over whether Fincantieri moves work from Saint-Nazaire in a downturn. But that, too, sits awkwardly with Mr Macron’s belief in an integrated EU—which includes Europe’s armed forces and the companies that supply them. His intervention has already soured relations with Italy, which smarts at the implication that it is not trustworthy.

This week the two sides set a deadline of September 27th to reach an agreement. The real danger is that talks fail and that, for want of a satisfactory buyer, a “temporary” nationalisation becomes permanent. That risk is all the greater because nationalising the Saint-Nazaire yard is popular. A recent poll suggested that 70% of French backed it, even as Mr Macron’s own support has fallen, from 62% in May to 54% now, faster than any other newly elected leader except Jacques Chirac.

Mr Macron is not one to court popularity. But long-term state ownership would be as bad for Saint-Nazaire as it has been for French industry as a whole. The state’s role in business is greater in France than anywhere in Europe, apart from oil-rich Norway. The state owns stakes worth €100bn ($118bn) in companies that employ roughly 800,000 people. However, the Cour des Comptes, the national auditor, noted in a critical report in January that state-run firms add value more slowly than do private French ones (see article). The long-term nationalisation of Saint-Nazaire would also invite resistance to Mr Macron’s plan to sell €10bn ($11.85bn) of state-owned assets, and to use the funds this raises to help mid-size firms become more innovative.

All at sea
If Saint-Nazaire is a micro-test, the macro-test is approaching fast. Mr Macron has given himself a deadline—also in September—to unveil reforms to France’s labour market. These will make the jobs market less inflexible, by limiting courts’ freedom to order compensation for dismissed workers, and by putting the onus on unions to negotiate inside companies, where moderate outcomes are likelier than at the national level. This week parliament gave the government the power to change the law by ordinance. The reform promises to be France’s most important in decades. The more centrist unions, which are increasingly powerful, accept it. But hardline ones and leftist politicians will object noisily—and after the Saint-Nazaire saga may think they have found a weakness to exploit. Mr Macron must not let them.

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