Enterprise

Reindustrialization, the new playground of consultants?

26 May 2021
By Pauline LAUNAY et Antoine BOUBLIL, Grande Ecole programme students

On March 31, 2020 in the middle of the Coronavirus pandemic, Emmanuel Macron said: “Our priority is to produce more in France and in Europe”. France and other European countries were indeed facing huge shortages in the production of masks and protective suits. 

 

In recent years, we have heard a lot about reindustrialization, appearing as a solution to unemployment or environmental concerns. But it is definitely with the Covid-19 crisis that it has become a fundamental issue and that the government really seems to be changing its industrial strategy. 

 

With the fast-growing affiliation between states and consulting companies (according to La Cour des Comptes in 2014(1), the French government spends around €150 million per year on consultancy missions), how can consulting firms meet the challenge of relocation and reindustrialization? Can they be a solution in the face of these tremendous issues? Jean-Baptiste Louis, Project Director at LHH and consultant in the field of reindustrialization, brings keys to answer this problem. 

 

The myth of reindustrialization

 

Relocation and reindustrialization are often considered synonymous. However, Jean-Baptiste demonstrates this is not necessarily the case. According to him, the reindustrialization we hear about in the media is a fundamental trend, when countries want to regain control of their industry. But as a consultant, it is concretely about supporting large groups in their restructuring projects, more specifically in the reconversion of industrial sites and the search for buyers for sites in a process of closing. 

 

Moreover, according to Jean-Baptiste, the phenomenon of relocation that we hear so much about does not seem to be that important these last few years. It is going to be a long-term process and we will have to be patient. “We are still waiting for the great groundswell of major industrial groups to repatriate their production”. Same observation for Anais Voy-Gillis (Ph.D. in geography and consultant on industrial topics), who considers that relocation as we understand it today (to bring back production that was previously off-shored) is a myth(2).

 

The industry is not back yet, which raises questions of national sovereignty and creates several concerns about self-sufficiency. Despite the government’s use of financial policy levers (France is one of the champions in maintaining significant shareholdings in the capital of industrial companies according to France Stratégie(3)), there is no real long-term strategy at the moment. Does it represent a niche then for consulting firms? What might be their role? Take precedence over the state, or collaborate with it?

 

The impact of consulting firms on relocation and reindustrialization 

 

Against all expectations, Jean-Baptiste saw the number of his successful missions increase during the health crisis. According to him, in this particular context and with unaffordable land, players will favor the purchase of existing sites, making conversion of industrial sites a great lever to succeed in this challenge.

 

Consultants offer much more than simply selling a building, they intervene as soon as possible to be an integral part of the restructuring project, “It’s not just communication”. Jean-Baptiste is convinced that industrial sites are destined for a new future, “sooner or later this site will be used by a new company”. And this is his whole mission, to accelerate the process of site conversion. The faster it is, the less the territory suffers from it, the more employment opportunities there will be and the brand image of the company valued. 

 

One of Jean-Baptiste's proudest achievements was a project with Friesland Campana, a dairy cooperative that was closing its production facilities. LHH's consultants convinced the company to sell the site at a lower price to Lactips, a manufacturer of biodegradable plastic made from milk casein. In terms of revitalization of the territory, 50 jobs were created. This is a good example of what a consulting firm can bring.

 

Consulting firms, the future saviors of the domestic industry?

 

If consulting firms like LHH can play a role by themselves, they can also be linked to governments. For instance, Jean-Baptiste tells us about the recent public contract award launched by Bercy(4) (the French Ministry of Economy) concerning the search for a buyer of several industrial sites. The state did mobilize resources to help companies, and for consulting firms to help companies in the short term. Moreover, as consulting firms own internal tools and methodologies, “why not allow national and public actors to benefit from them?” Jean-Baptiste wonders.  

 

But the strong link between consulting firms and the state might sometimes be problematic. The recent example of McKinsey & Co helping the French government to define its vaccination strategy has been very controversial, even though it was useful in order to get “quick and efficient results, which the state services sometimes lack structurally”. But quick and efficient results are a short-term crisis response policy, while Jean-Baptiste claims that a reindustrialization desire requires a long-term strategy. 

 

Consulting firms definitely have an important role to play regarding relocation and reindustrialization. However, it seems that the most powerful instrument to act on these issues remains a strong political will. Perhaps it is time to think about reversing a fundamental trend whose effects have been detrimental to our states. But these challenges are not country-specific. “Next Generation EU”, the recent recovery plan that was set up last July, has shown that decisions could be taken at a European level. It is partly intended to promote the ecological transition and therefore to boost the ecological industry. So, is it not time to anticipate and implement sustainable measures through greener factories on a European scale?

 

References

  1. Cour des comptes, “Le recours par l'État aux conseils extérieurs”, March 2015
  2. Webinar on the topic: “Reindustrializing France: hopes or setbacks?”, February 15, 2021
  3. France Stratégie, “Les politiques industrielles en France: Évolutions et comparaisons internationales”, December 2020
  4. See also “Accord cadre relatif à des prestations d’appui à l’administration dans le cas de restructurations et/ou de transformation d’entreprises”

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