Why France can be attractive?
A good example…
Laurence LAMOUREUX
Anne SERVANTIE
Louis BIZOUARD DE MONTILLE
Julien PARIS
Introduction
• France’s attractiveness : a current issue…
– France occupied only the 30th position of the
last ranking issued by the WEF in November
2002.
– This fall seems to be due principally to such a
heavy tax burden and also to high employers’
contributions. (i.e. high costs)
Introduction
Introduction
• However, some firms did settle successfully
in France during the past few years.
• How did they manage to cope with the
apparent economic drawbacks of France as
a settlement place?
• Toyota has remained a case in point since it
settled one of its factories near Valenciennes
in 1998…
Plan
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•
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•
The reasons why Toyota chose France
The role of the French administration
The obstacles the Japanese firm faced
The results and the prospects of this
settlement in France
Toyota’s position on the
international market
• Third producer (after Ford and General
Motors).
• Over 50 million vehicles produced per year
in 25 countries.
• A 41 % market share in Japan, 8% in the US
and 2.7% in Europe.
Toyota’s position on the
international market
• Till recently, Japan has undergone harsh
limiting quotas regarding automobile,
especially in Europe and in France.
 Since the 1980’s, Toyota has decided to
settle in foreign countries in order to
increase its sales limited so far by the
quotas. It began with the US.
Why settling in Europe ?
• 8 years after the US, Toyota set shop in
Great-Britain.
• Toyota decided to open factories in Europe
in order to conquer this market that was
under exploited so far due to the quotas.
• Toyota tries to be a both international and
local player and to be as close to the
markets as possible.
Why settling in Europe ?
• Toyota wants to be seen as a local producer and
not as a foreigner, bound to import.
• Toyota’s market share in Europe is only worth
2.7% while Europe is the « continent of
automobile ».
• The European market is unified and benefits from
the single currency.
 Toyota opted for a second factory in Europe.
Why opening the second factory
in France ?
• 52 potential sites including Spain and Eastern
Europe.
• Geographically, the heart of Europe.
• The costs (spare parts and their transport as well
as that of Yaris cars which do not need to be
imported from Japan).
• The cultural argument : the French automobile
culture captivates Japanese managers.
Why choosing Valenciennes, then
?
• Geographically, the closeness to the British factory
and to Brussels, where Toyota Europe Marketing
and Manufacture is settled.
• Lower costs (parts manufacturers, infrastructures).
• Life conditions of the Japanese expatriates.
• Qualification and adaptability of the workforce.
 But also the cooperation of the French
government and the administration of the NordPas-de-Calais region.
The French plant in Onaing (near Valenciennnes)
What did the French government do ?
• Historically, before the 90’s, France was not
perceived as a welcoming country for the
foreign direct investments :
– a complex and hostile administration
– a heavy tax system
– a tendency to protectionism by setting up
quotas preventing importation
What did the French government do ?
• But, since the 90’s, that French attitude
towards foreign investments has changed :
– Communication campaign : « Japan, it’s
possible ! »
– Nomination of a French ambassador specially
in charge of foreign investments
– Action of various public organisations : the
DATAR, the local boards of trade…
Toyota decided to include France in its
study of the possible new European sites for
the plant.
What did the French government do ?
• A state financial support of 5 180 000 €
• An intense collaboration before and after
the choice of Onaing :
– The local organisations, such as the boards of
trade, allowed a very good circulation of the
information during the study.
– Very good coordination between all the
ministers when the Japanese leaders came to
France to facilitate their choice.
– Nomination of two sub-prefects specially in
charge of the plant building project after the
decision was taken.
What did the French government do ?
• France managed to give the evidence that the old
prejudices about French administration could be
wrong !
• In exchange, Toyota made some concessions.
i.e.: In 1997, when he came to
visit Mrs.Chirac and Jospin,
Mr. Okuda, Toyota’s chairman
and CEO, promised to adapt to
the « local characteristics »…
The Minuses Toyota had to Face
• The new system of 35 hours a week:
– Given Toyota ’s policy to adapt the
number of hours per worker to the market
demand : a real need of flexibility.
– Given the fact that Japanese workers
work 40 hours per week : a necessity to
adapt the system to this new constraint.
The Minuses Toyota had to Face
• The problems linked to the labour force:
– A training problem:
• given the level of commitment of Japanese workers.
• given Toyota ’s willingness to have polyvalent
workers.
– The problems of trade unions:
• given the number of trade unions ( if there is only one
trade union, like in Japan, it is easier for firms to use it
as a medium in negotiations with workers)
• given French trade unions’ virulence
How did Toyota managed to
soften those minuses?
• About the « 35 hours »:
– through an agreement with the new
government: more flexibility allowed to adapt
to the market demand in exchange of the
engagement not to fire any worker.
– this constraint has been taken into account since
the beginning in Toyota ’s strategic plan, as
« the 35 hours » where in Jospin ’s platform
yet in 1997.
How did Toyota managed to soften
those minuses?
• About training:
– workers hire on their willingness to work in
team and not on their specific skills.
– 6 months of intensive training in factories in
Canada, UK and of course Japan.
– 130 team members who were trainers coming
from Japan.
 A policy based on « on the job training »
How did Toyota managed to soften
those minuses?
• To agree with trade
unions: during negotiations
with trade unions, Toyota
highlighted its two pledges:
–Mutual respect, and thus the respect of the
workers
–Kaisen system, which implies that workers and
managers work jointly to reach this continuous
improvement
Last year’s good figures are
encouraging
•
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Sales in Europe 866,351 units (+25%)
Net sales in Europe 1 152 million euros
Sales in France 68 018 units (+21%)
Market share in France (3%)
Future in France
• Will to develop French site of Valenciennes (up to
130 ha depending on the market evolution)
• A new Yaris is about to come out
• Partnership with Eléctricité de France to protect
the environment
• Will to be respected and to have a good image in
Europe for a long term and a solid set up on the
continent
Future in Europe
• Project of joint-venture with PSA in Check
Republic
• 300 000 units production is planned in this
country
• 100 000 units for each company
Conclusion
• « We really wanted to become a recognized
actor of the European car industry instead of
a simple marginalized importer. »
Mr. Hiromi SUZUMURA, vice-president of Toyota Motor
Europe
• The French collaboration with Toyota’s
managers allowed to make this possible.
This compromise is a way to offset the everlasting
argument of too high costs against the settlement
of a foreign firm in France.
Our sources…
• A documentary from Arte : Gamble on the
car industry-Toyota : Analysis of a decision.
• 2 interviews :
– Mr. Hiromi SUZUMURA, vice-president of
Toyota Motor Europe
– Sophie GLEMET, in charge of communication
for Toyota Motor Europe
• Lots of articles from press books (Le Monde,
Le Figaro, Ouest-France, Libération,
L’Humanité…)