February 29, 2008


Not so exceptional: French industry is taking on more Anglo-Saxon characteristics (The Economist, 2/28/08)

Some French firms now want to curtail production at home and switch to cheaper manufacturing abroad. Michelin (profits up 35%) and ArcelorMittal (up 30%) both plan to close French factories to improve their international competitive positions. Lakshmi Mittal, boss of ArcelorMittal, has refused government aid to keep a factory in the Moselle region open: he wants to close a plant that is no longer economic, aid or no aid. Similarly, Michelin, a global brand as well as a French star, is consolidating the smallest of its 32 factories in Western Europe (16 of them in France) for economies of scale. But it plans to expand production in Mexico, Brazil, India and China by 60% in the next few years. [...]

As le Meccano industriel has gone out of fashion, activist investors, led by firms such as Wendel (a listed, family-controlled investment firm) and AXA, an insurance group, have been championing a more Anglo-Saxon style of French capitalism. Both are involved in a simmering row at Saint-Gobain, a building-materials firm. Wendel has taken an 18% stake, thinks the firm's assets could be sweated harder, and is demanding seats on the board.

But Jean-Louis Beffa, the veteran chairman of Saint-Gobain, wants to cancel the double-voting rights of long-term shareholders to stop Wendel taking control. Saint-Gobain's employee shareholders support him because they fear tougher management. For the first time, French managers are under pressure from stable shareholders who want them to improve returns—not just shelter from hostile bids.

Might have been helpful if it hadn't taken them two centuries to figure it out....

Posted by Orrin Judd at February 29, 2008 8:41 PM
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