Story ID: 
Paris 2011: French industry continues shaky recovery
By: Jeff Apter
Caption: The French aerospace industry is still feeling the effects of the economic crisis but its results last year point to a recovery.
Word Count: 633
The French aerospace industry is still feeling the effects of the economic crisis but its results last year point to a recovery. Announcing combined 2010 results for members of French industry association Gifas in April, association chairman Jean-Paul Herteman said the recovery for equipment manufacturers started to take shape in 2010.
Overall unconsolidated revenues for Gifas member companies climbed gently by 3.5 percent to €36.8 billion ($51 billion) in 2010. More encouragingly, over the same period, the value of new orders booked by French aerospace firms rose 27 percent to €42.9 billion ($60 billion) compared with a 23-percent decrease in 2009.
The recovery has by no means been even. Gifas equipment manufacturers–generally small- and medium-sized enterprises (SMEs) that make components and sub-systems–actually saw a 4.8-percent drop in revenues last year to €9.2 billion ($12.9 billion). But the same group also pushed up their combined new orders by 34 percent to €10.6 billion ($14.8 billion). According to Gifas, most of the bounceback has been driven by a strong recovery in the air transport industry.
According to Herteman, while the present euro/dollar exchange rate is more favorable to the French industry than that between 2007 and 2009, its level continues to undermine its competitiveness. But, in fact, the first five months of 2011 has seen the value of the dollar fall below $1.40 to €1–making the main income currency of eurozone aerospace industries like that of France even weaker against their main cost currency.
Nonetheless, Herteman, who is also head of engine and electronics group Safran, stands by his prediction last year that 2011 will prove to be “a year of recovery for Gifas members.” He praised France’s tier-one aerospace groups for showing a great spirit of cooperation and solidarity with their suppliers and subcontractors. Another factor in restoring the French industry’s strength, he claimed, has been French government support and encouragement for SMEs to merge in order to become more efficient.
Gifas companies continue to devote 15 percent of their annual revenues to research and development. They are currently investing around €1 billion ($1.4 billion) in manufacturing facilities each year.
Exports account for the lion’s share of France’s aerospace business, including 73 percent of revenues. Orders booked exceeded revenues for the 17th year running and the total order book continues to represent the equivalent of four years’ activity for the profession.
On the employment front, despite the economic crisis, the French aerospace sector has recruited 27,000 people since 2008, with around 8,000 of them hired last year. In 2010, aerospace companies in France together directly employed 157,000 people, 52 percent of them highly skilled engineers and executives. In fact, this figure has remained static, while much of the additional employment relates to temporary jobs. The industry expects to take on another 8,000 workers this year.
According to the Gifas chairman, the industry faces three major challenges for the future: First, to master technologies of the future to meet the far-reaching changes expected to sweep through the entire industry in 2030-2040–especially in aerodynamics, propulsion, flight systems and air traffic management–and to take on board the impact of environmental regulations and rising oil prices.
Second, with technological superiority recognized as a strategic issue, the French aerospace industry has to recruit highly skilled personnel and develop new capabilities and engineering expertise that in turn will provide attractive opportunities for young engineers and technicians. Herteman said the industry is mobilized to create new training schemes geared to the supply chain’s requirements.
Last, but not least, Herteman said many countries now are developing their own aerospace industry, which provides French manufacturers with opportunities for growth worldwide with locally based facilities becoming a commercial necessity, particularly in emerging countries. He claimed that French equipment manufacturers are ramping up their international activities in major international programs, which increases their competitiveness.