Industrial Urgency! Gabriel Colletis October 2015

2/22 The presentation plan 1. The place of the industry is better recognised today 2. The reasons of the industrial decline 3. The components of an « Industrial Contract » at the heart of a new Development model

3/22 1. The place of the industry is better recognised today 1/3 Until there is a little, the place of the industry was considered as marginal Now we discover that no country can remain without developed productive base At the same time we observe that countries that develop are based on the expansion of their industrial sector Direct and indirect Industrial jobs (services linked to industry) represent 45% of the total employment in the market sector The industrial sector realises 80% of all exportations and 85% of R&D expenditures

4/22 1. The place of the industry is better recognised today 2/3 But… The part of all european developed countries within european industrial exportations decrease, except those of Germany The industrial job losses and plant closures seem to be accelerating …

5/22 1. The place of the industry is better recognised today 3/3 The competitiveness of the industry in most European countries has deteriorated, generating macroeconomic and social problems… the foreign trade deficit weighs on growth which generates unemployment lower revenue and tax revenue resulting in a worsening of the public deficit

6/22 2. The reasons of the indusrial decline: the reasons frequently given A bad specialisation (price sensible) Too high costs An overestimation of the Euro/Pound The too small place of the SMEs Bad relations between big enterprises and their suppliers Tropism on services and high technologies Too low growth croissance…

7/22 2. The reasons of the industrial decline: three less frequently cited reasons 1. The extraversion, then the financialisation of the big groups 2. An inefficient industrial policy 3. An outdated conception of work =>All these reasons converge and work as a « system » =>There is no simple issue to the industrial and economic crisis

8/22 2. The reasons of the industrial decline: three less frequently cited reasons 1. The extraversion and then the financialisation of big groups The fate of big/global groups appears not to be anymore linked with that of the national industrial basis Their overseas investments are more important in the long run than those made in their home economy The capital structure of these group is very open to global investors

9/22 2. The reasons of the industrial decline: three less frequently cited reasons 2. An inefficient industrial policy The industrial policy is centered on (individual) groups It does not support interactions among the productive system (firm/firm cooperation, firm/public laboratories/universities)

10/22 2. The reasons of the industrial decline: three less frequently cited reasons 3. An outdated conception of work The labor remains considered as a cost And not as a contribution of individual and collective skills What constitutes an obstacle to the implementation of a comprehensive competitiveness strategy centered on innovation This obstacle does not allow the shift towards a new development model

11/22 3. The components of a productive pact European countries must engage in a productive activities development program which must take place as the backbone for economic policy We can identify a set of components of such a “pact”…

12/22 3. The components of a productive pact 1. Another labor design should gradually emerge in correspondence with a different conception of competitiveness Switching to the overall competitiveness is inextricably linked to the recognition of employee skills A new historical compromise is needed between companies that choose to focus on innovation and employees who become "cognitive“ (knowledge) workers

13/22 3. The components of a productive pact 2. Finance must be made to serve more productive activities “Temporal retardants" are necessary to make finance again liquide (instead volatile) playing on taxation and voting rights calculated in proportion to the holding period of the shares

14/22 3. The components of a productive pact 3. Production must be reoriented to address basic needs... to reduce the burden of productive activities on nature The basic needs remain considerable, including in developed countries These needs will be covered by production methods significantly reducing levies on nature

15/22 3. The components of a productive pact 4. The firm (large) should be recognized as a separate institution (separate from the company/corporate) There are now a wide variety of legal forms for companies/corporate but also a legal vacuum in most countries for the firm The (large) firm should be "established“ with a separate governing body of the corporate and stakeholders including long term equity holders + employees for the skills they bring

16/22 3. The components of a productive pact 5. Anchoring activities has to go beyond "simple" location Location concerns: land, buildings, infrastructure, grant equivalents Anchoring activities means a triple proximity: spatial, based on competencies, trust/confidence

17/22 3. The components of a productive pact 6. Social norms but also financial and environmental should be part of more balanced trade, more respectful of man and nature Protectionism is not an end in itself However, without protective standards, a new development of productive activities can not be undertaken

18/22 3. The components of a productive pact 7. Developed countries should strive for a new development model considering the industry as a "common good" The industry can not be considered as a private good like any other It also can not be nationalized …/…

19/22 3. The components of a productive pact The industry must be considered a common good in which stakeholders of the firm are beyond the scope of providers of capital and labor, to embrace other stakeholders as other companies (suppliers or clients), training and research institutions, public bodies, associations...

20/22 3. The components of a productive pact 8. Economic policies must be based on this model and focusing on the long-time They must find ways and means of a new development rather than simply to stimulate or not to break growth

21/22 9. Industrial policies should aim to increase the density of interactions within the productive system rather than supporting individual firms Ensuring the promotion of networks involving SMEs / SMIs considered as partners and not just suppliers or subcontractors By entering these networks in territories when possible 3. The components of a productive pact

22/22 3. The components of a productive pact 10. The firm must be at the heart of the city, which implies a widening of the labor democracy The labor democracy, rather than technological advance, is the main competitive advantage of developed countries The labor democracy is the sine qua non of a strategy focused on innovation It involves employees who are better trained, having technically and economic culture, participating in strategic decisions