Paris spurs European high-tech to take on US, Japan
Watch out, America and Japan. Building on the past pan-European efforts on Airbus airplanes and Ariane satellites, Francois Mitterrand's Socialist government now hopes to forge powerful European companies in many other high-technology fields.
The French believe these alliances will be able to compete more effectively against the United States and Japan. And, to make sure, they want to construct trade barriers around the European Community.
The key test venture for the plan is the proposed takeover, announced last month, of Grundig, the German electronics company, by Thomson, the French nationalized giant. Along with this consolidation of the European electronics industry, the French are talking about joint European efforts in telecommunications, computers, and high-speed trains.
''We cannot just stay French and remain competitive,'' Thomson's Francois Leverve explained. ''We need Europe.''
''Name almost any sector and this is the case,'' Philippe Lorino, an Industry Ministry official, added. ''Community cooperation is necessary to provide the needed amount of investment.''
Mr. Leverve and Mr. Lorino say that by taking over Grundig, Thomson's ailing consumer electronics division (with losses this year of about 1.1 billion francs - $7.31 billion) will be able to take on the dominant Japanese.
Separate brand names would be kept, Mr. Leverve said, but joint operation would pool research-and-development costs and give better production economies of scale in such products as television sets, audio turntables, and perhaps most important, video recorders.
Thomson would also like Philips, the Dutch electronics giant, to join in this video venture. Since Philips owns 24.5 percent of Grundig, Thomson feels it might be enticed. But both companies say any such deal depends on the Thomson-Grundig merger going through.
That merger is far from assured, however. The West German cartel office may block it, arguing the new joint company would control too much of the German consumer electronics market. Mr. Leverve admitted, for example, that the combined Thomson and Grundig would control 46 percent of the color television market.
If the cartel office rules against the merger, the government can still override its decision. Mr. Mitterrand reportedly lobbied for the French case personally at a recent meeting with Chancellor Helmut Kohl.
Whether Mr. Kohl would go along, though, is an open question. The proposed merger has raised a furor in Bavaria, where Grundig is based, because Thomson's German subsidiaries have angered the trade unions. Mr. Kohl might thus favor the alternative of having Thomson's German rivals, Siemens and Bosch, buy Grundig.
Still, French Industry Ministry officials are optimistic that the extended world recession makes the pan-European alternative look more promising. As proof , they point to the plan boosting European industry at the recent EC summit meeting in Copenhagen.
In addition to calling for greater European cooperation, though, the program hints at imposing Europe-wide protectionism. The French are the main backers of this approach. They have already acted unilaterally in the video recorder field, for instance, by rerouting Japanese video imports through an out-of-the-way provincial customs post in Poitiers.
''The European market is too open,'' Mr. Lorino said. ''Just as the Americans are putting quotas on Japanese goods, we have to take measures to give our industry a fair chance.''
Following this thinking, the French prefer intra-European partnership to European-American or European-Japanese alliances. Take telecommunications, for example. AT&T recently announced talks on cooperation with Philips aimed at giving the American giant a bridgehead in Europe. The French responded by calling Philips ''traitors.''
The hope here is that instead Philips will join with the French state-owned Cit-Alcatel. The two companies have been talking cooperation sporadically for years.
''AT&T is ahead,'' Cit-Alcatel's Croce Stinelle said. ''But everything's far from over, and the French government is solidly behind our efforts to work with Philips.''
As for cooperation on high-speed trains, the French company Alsthom-Atlantique has produced locomotives with the German companies of Siemens and Brown Boveri for about 25 years, and now wants to turn this relationship into a marriage to produce rapid trains based on the French TGV system.
''We're working diligently on the deal,'' Alsthom's Dominique de Cousins said. ''To compete with the Japanese bullet train we must work together.''
The story is the same in computers - except that this time the threat is America's IBM. The ailing French computer manufacturer, CII-Honeywell Bull, is flirting with Germany's Siemens and Italy's Olivetti.
''Only small, technical agreements have so far been signed,'' says Michel Nico. ''In the long run, though, we hope we will have greater cooperation.''
But if this cooperation isn't forthcoming, what will the French do? They say they have a secret ace up their sleeve: the Japanese. ''If you can't beat them, join them,'' is the slogan being bandied about.
For example, before Thomson went after Grundig, it was close to signing a joint production agreement on video recorders with the Japanese JVC. The deal was vetoed only at the final moment by the Socialists, who said that a European link had not been adequately explored.
''If the Grundig merger falls through, we will have no choice but to go to the Japanese,'' Mr. Lorino said. ''But let's hope we don't have to do that. Europe would lose. Her market would be fragmented and her industry weakened.''