Ever since he was elected to the presidency
of France in May 2017, Emmanuel Macron has been done his best to portray France
as an outgoing nation, keen to engage with the rest of the word and
particularly with France’s European neighbours. He has not been unsuccessful in
improving the country’s image beyond its borders with many captains of industry
reporting that their foreign counterparts have noticed the difference. It is
true of course that many of France’s most dynamic industries went global years or even decades before Macron appeared on the scene. Companies like
LVMH, Total or Schneider Electric, to name just three, garner more than 50% of
their profit from international markets. Large holdings of companies in the CAC
40 index are owned by non-resident investors, as is a considerable portion of
France’s public debt. But Macron has definitely given this established trend a
further push, consolidating it with more business friendly policies, like the
loosening of employment regulations and the neutering of the wealth tax in the
hope that wealthy French people will invest in businesses in their home country
rather than hide themselves, and their fortunes, in more tax averse
jurisdictions. Macron’s France has also been keen to style itself as a start-up
nation and encourages its numerous start-ups to go global as soon as they are
up and running.
Against this background, it comes as
a considerable surprise to hear the unions representing the staff of France’s
flag carrier, Air France, reacting so violently to the appointment of Ben
Smith, ex Air Canada, as the airline’s CEO starting at the end of September. A
press release issued by all of Air France’s union said: “it is inconceivable that Air France, that has been French since 1933,
should fall into the hands of a foreign manager at the probable instigation of
one of its major competitors”. The
major competitor referred to is apparently Delta Airlines that holds 8.8% of
Air France’s stock and with which the airline has a code sharing arrangement,
as it does with many other European and international carriers.
Once the initial shock of such a statement
has passed, it is worthwhile recalling the state of Air France in 2018. Despite
participating in the wave of consolidation of European airlines since the turn
of the century by merging with the Dutch carrier KLM in 2004, in what is a
textbook example of a globalised industry, Air France has been bleeding market
share for years: to airlines based in the Gulf at the premium end of its
business and to the likes of Easy Jet and Ryanair at the cheap end. Meanwhile,
its pilots and cabin staff have been embroiled in endless negotiations over pay
and working conditions with a series of bosses, all from the senior echelons of
France’s civil service, ending more often than not in damaging strikes. The
latest strike this summer is reported to have cost the company well over €300
million. Its most recent boss resigned in June after losing an ill-judged
referendum that he called over the heads of the unions. After what must have
been frantic behind the scenes consultations within the French government, that
still holds 14.4% of the airline’s shares, the company’s Board has only just
got around to appointing his successor. Meanwhile, passengers flying out of
France are busily comparing prices on the Internet and voting with their
wallets. Even those, like myself, who have always had a soft sport for the
national flag carrier and make it their first choice as a matter of principle,
are increasingly fed up with its frequent delays, often surly and off-hand
cabin staff and regular strikes.
The reaction reported above would perhaps
be more comprehensible if Air France was the one and only French company to be
managed by “a foreigner”. But it is not. The good old French tradition of
having its leading companies managed by graduates from Polytéchnque and ENA has been slowly breaking down, for better or
for worse, for over ten years. Its number 1 drugs company, Sanofi, was managed
for some years by a Germano-Canadian, Christopher Viehbacher. Its number 1
retailer, Carrefour, had a Swedish boss, Lars Olofsson, for three years and Carlos
Ghosn, who has a stellar record of turning around and expanding the country’s
number 1 carmaker, Renault, does indeed hold a French passport (and did graduate from Polytéchnique!) but is also Lebanese and Brazilian, definitely
global in his outlook and is known to eschew hobnobbing with home-grown power
brokers and influencers. Not to speak of French managers who have made their
mark abroad, like Jean-Pierre Garnier who ran Glaxo for seven years and
engineered a major merger to form GlaxoSmithKline, or Xavier Rolet the boss of
that ultimate den of capitalism, the London Stock Exchange, for eight years
until 2014. As more and more global companies, including French ones, find it
perfectly normal to scour the world for top management talent, regardless of nationality,
why is it that the appointment of a Canadian manager with a proven track record
in his industry raises so many hackles in France?
One can only hope that Air France’s unions
and the employees they represent will finally wake up to the dire straits in
which their company finds itself, realise that the French government’s patience
is no longer endless and engage with their new CEO, who, despite his very
Anglo-Saxon sounding name, does actually speak French! He also comes with a
reputation for dialogue and a track record of turning around Air Canada by,
among other things, launching a low-cost subsidiary. In his first press
release, he has said that he is looking forward to working with all the
airline’s staff and their representatives. He will certainly have his work cut
out to avoid further turbulence and yet another strike that has been threatened
unless substantial salary increases are awarded.
It is often said, somewhat complacently
perhaps, that so many things have changed in France since Macron became
President. In some ways they have, as this blog has attempted to chronicle. The
events surrounding the appointment of Air France’s new CEO however are just one
illustration of how far it still has to go.
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