Economy

Bring It Home: A Post-Pandemic Recipe For 'Reshoring' Industry

Workers in face masks at a Toyota factory in Valenciennes, France
Workers in face masks at a Toyota factory in Valenciennes, France
Michaël Valentin

-OpEd-

As the COVID-19 crisis swept its way across France, some of the products people needed the most — masks, respirators and key electronic components — simply weren't available. Even more jarring was the fact that factories here couldn't even respond to the shortages in a timely manner.

Indeed, the pandemic was a wake-up call in that respect, a painful reminder of the French industrial sector's evolution and resulting shortcomings.

The country's "make" rate — i.e. products that are manufactured in France — is currently about 64%. In Germany and Italy, in contrast, this indicator is between 70% and 75%. However modest it may seem, the discrepancy is actually a big deal, and goes a long way to explain the deficit in France's trade balance.

To restore the balance, we would need an additional 30 billion euros of locally produced products introduced into our local value chains. Those additional products would also mean more jobs, especially in France's more peripheral areas, the same regions that gave rise to the gilets jaunes, the yellow-vested protestors who made such a big mark prior to the pandemic.

We're talking here about re-industrializing. It's common sense, at least economically and socially. But it's also easier said than done. Would people really welcome new factories in the landscapes we love so much? What about the accidents that sometimes occur? The massive chemical fire that erupted last year at the Lubrizol factory in Rouen is a case a point.

France relocated portions of its industrial sector for cost reasons. But those same facilities — the heavy industry, textiles, electronics plants and plastics producers — are also often very polluting. There's much more to consider, in other words, than simply reimporting such businesses. We will also have to question the environmental production model, with an emphasis on what raw materials are consumed, the type of energy that is used and how to manage the waste such factories produce.

Building the necessary trust with local populations means ensuring transparency from beginning to end so that all stakeholders are directly informed of the externalities associated with the industrial system.

Workers at the Moteurs Baudouin diesel engine factory in Cassis, France — Photo: Gao Jing/Xinhua/ZUMA

Damien Marc, managing director of JPB Système, a mechanical engineering firm focused in aviation, asked himself precisely these questions. Five years ago, he intensely robotized his French factory rather than investing more in Poland. But becoming as competitive as a Chinese or Vietnamese competitor requires more than an army of robots. It also requires a whole new organizational model.

After the "lean manufacturing" that led to the emergence of controlled globalization in the 1980s, there's a push now to focus on what are known as "hyper-manufacturing" methodologies. The "hyper" model implies a complete overhaul of existing industrial systems, and promises improved environmental footprints. And it isn't just a theory: Larger and smaller companies including Somfy, Velum, Lisi and Diam Bouchage have already started to put in place the foundations of hyper-manufacturing and are reaping the benefits.

The model involves two crucial foundations. The first is complete transparency, allowing total traceability of what is produced. This guarantees the origin of the products, the ethics with which they were manufactured, their carbon footprint and their flawless quality. The second key element is to have work flows capable of handling highly volatile demand thanks to predictive models and a high degree of industrial adaptability.

In the COVID-19 period, these two pillars are all the more important as they are synonymous with local employment, resilience and adaptation to needs. "Reshoring," relocation and re-industrialization are desirable and exciting. They're also possible, but only if we're willing to embrace a radically updated system.

*Michaël Valentin is associate director of OPEO and author of the book Hyper-manufacturing.

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Economy

Air Next: How A Crypto Scam Collapsed On A Single Spelling Mistake

It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money for a blockchain-powered e-commerce app. But the simplest of errors exposed the scam and limited the damage to investors. A cautionary tale for the crypto economy.

Sky is the crypto limit

Laurence Boisseau

PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.

Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.


Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.

Share capital of one billion 

The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).

The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.

Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.

While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.

screenshot of the typo that revealed the Air Next scam

The infamous typo that brought the Air Next scam down

compta online

Raising Initial Coin Offering 

Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.

For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."

What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".

Finding culprits 

Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.

Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.

Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.

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