Re-industrialization of Western economies began
More than 20 years after China’s entry into the World Organization (December 11, 2001), the dependence of Western economies on certain strategic components, including electronic chips, is no longer politically acceptable in either the United States or Europe. This is evidenced by the decision of European and American authorities to stimulate investments by private players in key production capacities in each area through direct subsidies or tax credits.
Several announcements have demonstrated the importance of the phenomenon
In Europe, Intel presented an investment program of 80 billion euros. Located in central Germany, in the former East German state of Saxony-Anhalt, it will also include Belgium, Spain, France, Ireland, Italy and Poland. In France, STMicroelectronics and its partner GlobalFoundries presented a €5.7 billion investment project for the Crolles plant near Grenoble.
At the same time, the United States and the European Union each implemented their own version of the “Chips Act,” with $52.7 billion in loans across the Atlantic and just over €40 billion in Europe. These amounts are significant in terms of the cost of the production car: from 160 million euros to 200 million euros for the current generations; 300 million to 350 million euros for the following.
This phenomenon of state industrial volunteering is not new
In France it is called interventionism, otherwise “industrial Bonapartism”; we owe him nuclear power plants, the TGV, European aeronautics and Gaullist successes in the conquest of space. This request comes at the right time to compensate for the currently punishing financial conditions in the financial markets. Since the beginning of the year, the pace of inflation has accelerated, causing an increase in short-term interest rates organized by central banks.
All economic observers agree that they are “late” to the inflation phenomenon and interest rate hikes are not over. Thus, instability in the credit markets, uncertainty about the evolution of the prices of financial assets, all this does not bode well for the financing of long-term investments. Moreover, the “quantitative easing” policies implemented by central banks during the 2008 financial crisis and later during the Covid pandemic had only a limited impact on economic growth. Admittedly, this abundant liquidity has boosted the prices of companies.
Today, as overvaluations and the party of unicorns come to an end, developed countries are turning their eyes to the Chimen industry. The dynamic is not only about “white elephants” of the “semiconductor factory” type, but also about a flexible SMI network that can be grown by industrial startups. There is much to be said for the will shown, but in the short term two hurdles need to be managed: recruiting young talent and managing innovation development time.
Unfortunately, the industry doesn’t make people dream anymore, and that’s a shame
Again, attractive jobs are possible in the sector, but if they want to hire, manufacturers need to offer their prospects the closest working conditions to their personal experience. Understand that support and administrative functions must be requested or managed simply using an app on a smartphone. While ad hoc technologies exist today, there are many advances to be made.
In France, Nicolas Dufoucq, president of Bpifrance, analyzed France’s 20-year deindustrialization in his landmark work (“La déindustrialisation de la France: 1995-2015”, Odile Jacob edition). He recently explained that increasing the industry’s share of GDP from 10% to 12% within a few years is a reasonable goal. This is a critical point: the development time of the industry is much “longer” than the rapid pace of software startups. Bpifrance has many conveyor belts, many levers to launch this necessary movement of re-industrialization.
Finally, few private initiatives will be able to rely on this will of the state. An example? The Arts & Métiers Business Angels (AMBA) association has been active since 2008 and has funded 130 industrial start-ups. AMBA is not the only one working in this field. However, we know that small streams make big rivers, and that private effort can create a mini-boom of investment, a phenomenon the West has not experienced since China’s devaluation of the yuan in 1994! Reasonable hope is allowed, not dreaming.