The Covid-19 health crisis has led to a worldwide slump in the industrial sector. While the end of the lockdown is gradually being announced in many countries, two major questions arise today: what has been the impact of this crisis on the industry, both at national and European levels? More importantly, what lessons can be drawn from this crisis, so as to resume industrial activity and improve productivity? The post-Covid-19 period could shuffle the cards and it is important, starting today, to think about French and European industries and enable them to seize opportunities. Three questions to Olivier Scalabre, Managing Director and Senior Partner at BCG, rapporteur for the Institut Montaigne working group Industrie du futur, prêts, partez !
How has the European industry differed from American or Chinese industries since the start of the health crisis? Can we talk about a European industrial policy?
The pandemic spread in a gradual and differentiated manner across the globe. The asynchronous nature of this crisis poses a major challenge to the recovery of international companies, which are heavily reliant on global supply chains.
After having initially halted all activities, China was relatively quick to reopen its factories. Reconfiguring production lines to meet safety requirements, renting hotels to avoid transport risks for workers, systematically taking temperatures, QR codes, WeChat... China intensified its efforts to restart as quickly as possible. By March 15, when the West entered the lockdown, 90% of China's factories had reopened, and energy consumption was already at 80% of what it had been in 2019 during the same period. By mid-March, China was in a position to take market shares from its American and European competitors.
The American context is different. Factories have not completely stopped producing. The industry has been maintained for the most part, with the exception of the car industry: 90% of the plants have closed, as is the case in Europe, but mainly to stop clogging up the stocks that were accumulating in the dealerships, rather than for health reasons. 22 million Americans recently filed for unemployment in the United States, significantly spiking unemployment rates, especially in the service and leisure industries. However, American factory workers are at work and ready to step up the pace of economic relaunch.
Since Covid-19 did not affect all European countries at the same time nor in the same way, no concerted plan emerged at the European level. Each government tried to respond to the emergency by focusing on its own national territory and companies.
- The solution proposed by the French government, partial unemployment, has been widely adopted by industrial players: at the height of the lockdown, in early April, construction materials factories were running at 15%, metallurgical plants at 30% and aeronautics factories at 40%…The shutdown was abrupt, widespread and long. Resuming activity has been difficult.
- In Germany, where the pandemic was better managed and the partial unemployment scheme was less generous than in France, the interruption was much less significant and widespread. For example, factories in the rail sector did not stop, which was the case in France. This is a positive point for our German neighbours, who entered the crisis in better economic health than France.
Could the French industry be the great loser as we emerge from the crisis? Why is that?