The modernisation of French industry

The modernisation of French industry, already foreshadowed by a fairly strong recovery in industrial investment in 1956 and 1957 in preparation for the introduction of the Common Market, would, once France was fully engaged in the construction of Europe, be the shared achievement of industry and the authorities.

Once competition was restored and the major economic balances under control (budget, treasury, external trade, prices and wages), it as necessary to :

  • provide a framework conducive to the evolution of existing structures and to the essential reforms necessary throughout the industrial sector,
  • guarantee energy independence for France,
  • encourage the development of new industries.

I  - A framework favourable to reforms

Although the state was less directly involved, than in the immediate aftermath of the war, it nonetheless played a key role in the economy of the 1960s, particularly through its Modernisation Plan. The plan was described by the General as a "burning obligation" and by Commissioner General Pierre Massé as a "reducer of uncertainties". 

1960 saw the introduction of an "Interim Plan" which made the corrections to the pre-1958 Third Plan needed to allow for the profound changes that had taken place in the intervening years. In the meantime, work was going on to prepare a Fourth Plan, ambitious in its growth targets, more concerned with social factors, and extremely discreet on the subject of a reduction in working hours.  

This was an issue that would not be raised until 1963, with the extension of a fourth week of paid annual holiday to all workers. In the interim, there had been the national agreement setting up the UNEDIC (unemployment benefits agency) in December 1958, the extension of supplementary pensions to all workers in December 1961, plus the various forms of employee profit-sharing schemes deriving from an order of September 1959.

Legal and fiscal measures were introduced to encourage corporate mobility, in particular the law of 12 July 1965 offering tax incentives for mergers, and the order of 24 September 1967 creating the Economic Interest Group (EIG), a structure which allowed a group of firms to work as associates on a common project (Airbus) while still retaining their independence.

In 1967 measures were introduced to encourage long-term financing, with the opening of a mortgage market, the revitalisation of provincial stock markets, the creation of a stock market watchdog body, the Commission des Opérations de Bourse (COB), to monitor the transparency and legality of financial market operations.

The government had been a stakeholder in a large number of banks and insurance companies since the nationalisations of 1946 and now, in 1967, it carried out a series of major reorganisations, merging  the Banque Nationale pour le Commerce et l’Industrie (BNCI) with the Comptoir National d’Escompte de Paris (CNEP) to form the Banque Nationale de Paris (BNP) and grouping the life and non-life insurance companies into three large companies, Union des Assurances de Paris (UAP), Groupe des Assurances Nationales (GAN) and Assurances Générales de France (AGF).

In 1968, a report drawn up by Mr. Bernard Clappier, Deputy Governor of the Banque de France, laid the foundations for a thorough reorganisation of the chemical industry which would be implemented over several years.

II – Guaranteeing France's energy independence

With the exception of hydro-electric power and the reservoirs of oil and gas discovered in the 1950s (Parentis, Lacq), France had no domestic energy resources other than the extensive collieries that had fuelled its development in the 19th century. These were now close to depletion and increasingly difficult to operate, making closure inevitable. At the same time as pursuing new sources of energy, there would have to be an ordered withdrawal from coal-mining, particularly on the industrial relations front. Yet in the wake of the Second World War, nearly one million miners were still producing 60 million tonnes of coal annually. The task of organising the gradual run-down would be given to the National Coal Board,  Charbonnages de France.

As early as the 1920s France had set up an oil company, Compagnie Française des Pétroles (CFP), one third of which was state owned, to manage the 23.5% share in Iraq's oil that France had inherited from Germany. A law dating from 1928 also established the principle of national preference in refining.

The system was rounded out in 1960 with the creation of the company Union Générale des Pétroles (UGP) which merged with a state-owned oil research institute, Établissement Public de Recherches Pétrolières (ERAP), to give birth to the ELF Aquitaine Group. ELF and CFP together discovered major reserves of oil and gas in the Sahara, near the Tunisian border. Even after the independence of Tunisia and then Algeria, these resources enabled the two companies to continue growing before going on to discover new sources (Gabon, North Sea, etc.).

In parallel with the research programme under way since 1945 to develop the military applications of nuclear power, the atomic energy commission, the Commissariat à l’Énergie Atomique, was gradually developing the techniques of non-military applications based on reactors using enriched (but not weapons-grade) uranium. The civilian programme started out with "graphite-gas" reactors, but these proved too costly and were abandoned in 1968-1969. They had nonetheless paved the way for  the next generation of pressurised water reactors, and from 1973 onwards fifty nuclear plants were built, generating 80% of France's electricity  consumption.    

III – Aid for the development of new industries

1 – Aeronautics industry

Since the nationalisations of 1936 and 1946, the main aircraft construction firms were state-owned: initially they were divided into regional companies (SNCASE, SNCASO, etc.) then later concentrated into two main groups: Sud Aviation and Nord Aviation. Only the state had the resources to take on the risks and research costs of ambitious programmes such as Concorde which, for lack of orders, was never to break even, or Airbus which only became profitable after decades in service.

General de Gaulle threw all his weight behind the necessary decisions. It was because France was so firmly committed to carrying out the two programmes that she was able to convince the other partners to come on board: Great Britain in the case of Concorde, a European consortium for Airbus.

2 – Space

Similar considerations governed the first steps in space research. At a time when the USSR shocked the world with the launch of  Sputnik and sent the first man into space, when the USA was planning manned moon landings, France and, with her, Europe could not be left out. The creation of the National Space Research Centre, the Centre National d’Études Spatiales (CNES), laid the groundwork for the Ariane flights of the 1970s and 1980s. 

3 – Computers and the "Plan Calcul"  

From 1965 on, General de Gaulle and the government devoted their attention to developing a national computer and communication technology industry. After blocking the acquisition by a giant US firm, General Electric, of what was at the time France's only computer company, Compagnie des Machines BULL, the government decided to create the Compagnie Internationale pour l’Informatique (CII) as part of its computer development plan or "Plan Calcul" (13 April 1967). In its early years, the company would enjoy "national preference" from users in the public and semi-public sectors.

The lightning pace of development in the field of computer science, however, doomed these efforts to failure.