Integration versus subcontracting: The case of the French automotive industry (1945-1970).

Abstract

Today’s car manufacturers resort widely to subcontracting, but the origins of this practice are not recent. From the beginning of the twentieth century, the car manufacturer Louis Renault committed the production of some components to external suppliers, although the company is often presented as a comprehensive model of vertical integration. This article aims to describe the evolution of subcontracting within the Renault firm from 1945 to the 1970s. This family business company constitutes a relevant case study because of its history. During the interwar period, Renault became the leading French car manufacturer. The company then undertook a broad diversification of its business activities (towards the production of tractors, airplanes, buses, tanks…), but finally chose to focus on its core activity: the automotive business. In addition, this firm’s history is particularly interesting due to its close links with the history of France in the 20th century (Fridenson, 1998; Sardais, 2005). During this century, the political, economic and social events affecting France strongly influenced the company’s activity and constituted crucial turning points in its history (war production, nationalisation, privatisation …). The study of Renault’s archives, such as activity reports and internal memoranda, allow us to distinguish four stages in the evolution of the company’s externalisation policy. The nationalisation of the firm, at the end of World War II, constituted an interlude in its history. Under state control, the firm’s managers started to reflect on the possibility of a subcontracting policy. However, this debate was interrupted by strikes in the Billancourt factories. A real subcontracting strategy was implemented from the 1950s, after being hotly debated by the firm’s stakeholders. A great number of memoranda on the subject reveal a passionate debate on the advantages and disadvantages of subcontracting. The premises of this policy were not clearly affirmed, but they constituted the beginning of an irreversible process.Subcontracting; Renault;