French mega-suppliers’ trajectories during the modular era: some evidences on Faurecia, Valeo and Plastic Omnium

The purpose of this paper is to present factual elements concerning the rise (decline) of French mega-suppliers. The study will focus on France’s three main mega-suppliers, all actors that have had a stake in carmakers’ modularisation strategies: Faurecia, Plastic Omnium and Valeo. Section 1 returns to the late 1980s and shows that the emergence of today’s mega-suppliers is rooted in this era and was piloted by French carmakers. Section 2 positions French mega-suppliers in a global hierarchy and distinguishes between two varieties: suppliers of simple parts; and module suppliers, with the latter constituting the focus for the rest of this text. Section 3 shows how module suppliers’ rise is rooted in their aggressive mergers and acquisitions (M&A) strategies. It also demonstrates differences between suppliers in terms of the two leading acquisition strategies that were observed. Section 4 explains why these companies’ profitability continues to disappoint, developing the idea that modular strategies imply a big rise in fixed costs, something that suppliers cannot knock onto sales prices. Finally, section 5 returns to companies’ internationalisation strategies and offers a typology for the different entities that mega-suppliers consolidatemodularity, supply chain, industrial architecture, automobile.

Between Internationalisation and Proximity: the internationalisation process of automotive first tier suppliers

The paper analyses the strategies of internationalization pursued by first tier automotive suppliers (FTS). The advent of modular production in this sector implies many changes in vertical relationships, which can in turn be used to explain the causes and forms of suppliers’ internationalization. The paper tries to explain internationalization patterns via an analytical grid wherein proximity needs are portrayed as a function of the complexity and exclusivity of inter-firm interactions. The argument applied in this article is broken down into three sections: the first reconsiders the transformations induced by modularization; the second presents some stylized facts about the internationalization of FTS; and the third part both presents an analytical grid and derives its implications in terms of location of suppliers.Internationalisation; Modularity; Industrial Geography; Vertical Relationships; First Tier Suppliers; Automotive

Ten years of modularity: empirical evidences on the restructuring of the auto part industry (In French)

This article reviews the carmaker-driven industrial restructurings that positioned First Tier Suppliers (henceforth FTS) at the heart of the world’s automobile system. It also draws necessarily temporary conclusions about their performance. The article is organised into three main sections. The first recaps the major transformations induced by modularity that affected inter-firm vertical relationships and highlights the challenges facing FTS. The second uses a ranking of the 30 leading automobile suppliers to analyse the instability of their global hierarchy. The final section focuses on three questions that became key for suppliers: profitability; R&D spending; and internationalisation. Most analysis involves a statistical study of a sample of 20 companies. The three sections converge to reveal a diversity of automobile supplier trajectories, in terms of both their intrinsic performance and the new kinds of operational modes they have operated within their vertical relationships.Modular production; auto industry; First tier suppliers; industrial restructuring; profitability; internationalisation

Toward a regionalisation of industrial policy: the case of French aerospace industry in Aquitaine (In French)

NAIn this paper, we examine the hypothesis of the increasing role of regional level for designing and driving industrial politics in France. We consider the case of aerospace industry and Aquitaine region. We adopt a historical approach, and consider three key periods. The first corresponds to the initial localizations of aerospace plants in Aquitaine: between WWI and sixties. Then we consider the nineties when the Aquitaine industry –essentially defence oriented- enters into crisis. The third period concerns the current years. This historical approach shows that the region is now a key actor for the local aerospace plants. It’s a new phenomenon. In the two first periods, the State oriented closely the development of this strategic industry; now the Aquitaine institutions are major sources for supporting the local enterprises. In conclusion, we stress some limits of the regionalisation process.Aerospace industry ; Aquitaine ; Industrial policy ; Regional development

Is the automotive supply chain compatible with Corporate Social Responsible practices? (In French)

This paper tries to examine what are the conditions of the diffusion of Corporate Social Responsibility in the first tier suppliers. These types of firms are specific because, if they are subcontractors, they are also big firms with a real capability to develop their own strategies. We discuss critically the Business Case approach and the other approaches which are looking for efficiency of CSR in terms of production cost or productivity. We propose to consider how the vertical relationships are really built, and by studying the principles of buyer-suppliers coordination, we show that these relationships are creating a lot of contradictions with CSR objectives.Corporate social responsibility, CSR, Coordination, Automotive, First tier suppliers

Toward a regionalisation of industrial politics: the case of French aerospace industry in Aquitaine (In French)

In this paper, we examine the hypothesis of the increasing role of regional level for designing and driving industrial politics in France. We consider the case of aerospace industry and Aquitaine region. We adopt a historical approach, and consider three key periods. The first corresponds to the initial localizations of aerospace plants in Aquitaine: between WWI and sixties. Then we consider the nineties when the Aquitaine industry –essentially defence oriented- enters into crisis. The third period concerns the current years. This historical approach shows that the region is now a key actor for the local aerospace plants. It’s a new phenomenon. In the two first periods, the State oriented closely the development of this strategic industry; now the Aquitaine institutions are major sources for supporting the local enterprises. In conclusion, we stress some limits of the regionalisation process.Aerospace industry, Aquitaine, Industrial policy, Regional development

Egyptian pyramid or Aztec pyramid: How should we describe the industrial architecture of automotive supply chains in Europe?

This article questions a terminology that is frequently used to describe automotive supply chains’ industrial architecture. Since vertical disintegration became a trend in the 1980s, this architecture has been represented using the image of the pyramid. Implicitly, authors have had the image of an Egyptian pyramid in mind, one that is pointed at the top and broad at the base. We will demonstrate that even if pyramids are an appropriate image, in the auto industry the Aztec variant, with its shortened peak and room for SMEs, is more accurate. The paper’s first section – with its more historical focus – explains the birth of the Egyptian pyramid. The section 2 puts forward the idea that the Egyptian metaphor is more misleading than informative. We start by demonstrating that overusing this metaphor will ultimately exclude a number of very strategic companies from analysis. This is followed by a presentation of the findings from a study of 750 French SMEs*, in which it is demonstrated both that some continue to maintain direct access to carmakers and also that the hierarchy of tiers comprising this supply chain features greater porosity than is commonly recognized.modularity, supply chain, industrial architecture, SME, automobile.

Three uncertainties looming over the European auto industry

The European automotive industry has once again entered a period of uproar. The crisis of 2008/2009 is far from over but probably marks the start of a new era that some observers are starting to refer to as the second automobile revolution. In this article, we will be trying to emphasize three major uncertainties that weigh upon the European automotive industry. The first relates to the future products that the sector is looking to manufacture and sell. This will involve questions about electric vehicles but also how internal combustion vehicles might be sold to more tone-deaf European consumers. The second section will revisit the outsourcing strategies that have arisen over the past 30 years, together with their increasingly obvious limitations. The final section will highlight the profound geographic recomposition that has taken place under our eyes over the past decade or so, and which speaks directly to the issue of Old Europe’s productive capacities in the future.Automobile industry, electric vehicles, industrial architecture, carmakers, industrial geography, first tier suppliers

Ten years of modularity: empirical evidences on the restructuring of the auto part industry (In French)

This article reviews the carmaker-driven industrial restructurings that positioned First Tier Suppliers (henceforth FTS) at the heart of the world’s automobile system. It also draws necessarily temporary conclusions about their performance. The article is organised into three main sections. The first recaps the major transformations induced by modularity that affected inter-firm vertical relationships and highlights the challenges facing FTS. The second uses a ranking of the 30 leading automobile suppliers to analyse the instability of their global hierarchy. The final section focuses on three questions that became key for suppliers: profitability; R&D spending; and internationalisation. Most analysis involves a statistical study of a sample of 20 companies. The three sections converge to reveal a diversity of automobile supplier trajectories, in terms of both their intrinsic performance and the new kinds of operational modes they have operated within their vertical relationships.Modular production; auto part industry; First tier suppliers; industrial restructuring; profitability; internationalisation

Is the automotive supply chain compatible with Corporate Social Responsible practices? (In French)

This paper tries to examine what are the conditions of the diffusion of Corporate Social Responsibility in the first tier suppliers. These types of firms are specific because, if they are subcontractors, they are also big firms with a real capability to develop their own strategies. We discuss critically the Business Case approach and the other approaches which are looking for efficiency of CSR in terms of production cost or productivity. We propose to consider how the vertical relationships are really built, and by studying the principles of buyer-suppliers coordination, we show that these relationships are creating a lot of contradictions with CSR objectives.Corporate social responsibility, CSR, Coordination, Automotive, First tier suppliers