International markets

France: Mechanical Engineering Industry has a Reason for Optimism

| Author: Stéphane Itasse

Major mechanical engineering companies are the exception in France. A company of the sector employs on an average 20 employees.
Major mechanical engineering companies are the exception in France. A company of the sector employs on an average 20 employees. (Photo: FIM/Forest Liné)

The prospects for French mechanical engineering industry have improved: The economy in the home market and primarily the corporate investments are rising again. Moreover, the politicians are focussing more on the industry again and have started an ambitious support program.

Even if the French economic growth appeared to be rather weak in the previous years, the prospects have improved. Most of the forecasts anticipate a GDP-increase of approximately 1.1 % in the current year and 1.5 to 1.8 % in the following year. In the previous years, the economic growth was only 0.2% according to the reports of the statistics authority Insee (Institut National de la Statistique et des Études Économiques).

The corporate investments in France increase

Thus, the attractive corporate investments are positive for mechanical engineers: As reported by Insee, there is an increase by 3 % in the previous years. On the contrary, the gross capital investments have declined by in all 1.2 % to 462.5 billion Euros in 2014 and thus even more than in the year 2013, which was only by 0.6 %. Primarily, the public investments were reduced, which were lower by considerable 6.9% than in the previous year; even the investments of private households were declined by 5.3 %.

However, the French company managers again appeared to me more cautious in the latest quarterly survey of statisticians. They wanted to invest on an average 7% more in April 2015; however, this increment is amalgamated in July to 2 %. Only the food industry is an exception to this trend: Here, the corporate leaders expect an average increase by 9 % in their investments; in April, the expectation was still 5 %.

French mechanical engineering industry reported increasing turnover

Even French mechanical engineering industry could profit from the willingness of the companies to invest in 2014. As reported by the association FIM (Fédération des Industries Mécaniques), the turnover of the sector increased by 1.7 % to 114.8 billion Euros. Thus, even the increase in the home market achieved 2 %. The sectors aviation, automobile and railway vehicles particularly reported a major increase. On the contrary, agricultural mechanical engineering, metal engineering and construction machinery industry experienced a decline. For the current year, the association appeared to be optimistic and expects a revenue increase of approxiamtely 2 %.

Germany important international customer for French mechanical engineering industry

With a share of 15.4 %, Germany remains the most important customer for the French mechanical engineering industry in export. With a share of almost 55 %, the customer dominated in the year 2014 from the European Union; 2.5 % more than the previous year. For the markets outside EU, the exports in Turkey, Russia and Ukraine particularly suffered according to FIM. Even the export to South America would have developed less favourably due to the economic weakness in Brazil and Argentina.

Hence, the French mechanical engineering industry had reduced the number of its employees in the previous year. The number of employees was reduced by 1.4% from 617,000 to 608,000 according to the reports of FIM, which corresponds to approximately 21 % of the industrial workers. The association justified this decline as a result of worsening of the incoming orders forecase. If required, the companies would prefer temporary employees or fixed-term employment contracts. FIM expects a rise in employment only for 2015 or 2016. The association estimates the number of companies in the sector to 30,192.

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