Helsinki Congress of the International Economic History Association, 21-25 August 2006: Session 93 Equipment goods and mass brands American business spreading modernity into France? Strategies

B. The increase in the penetration during the 1970s
Despite the cyclical and political setbacks (and a major slowing down of the economy in 1979-1983 due to the American recession and the nationalization drive in France), the flow of American direct investments continued throughout the 1970s.

Classement des entreprises américaines en France
	Chiffre d’affaires	Effectifs	Rang
Esso (Exxon)	26 665	4 879	2 (derrière Royal Dutch Shell)
Ibm	13 698	20 506	4
Mobil Oil	8 003	2 480	6
Ford	4 214	4 854	11
Esso Chimie	3 896	1 183	12
Cargill	3 710	233	13
Kodak Pathé	3 547	8 455	14
General Motors	2540	5 535	17
Rank Xerox	2 353	5 113	21
International Harvester France	2 159	4 690	22
Dba (Bifco)	2 132	7 839	23
Colgate Palmolive	1 992	2 688	24
Cgct (Itt)	1 966	10 225	26
Massey-Ferguson	1 920	4 737	27
3M	1 819	4 016	29
Du Pont de Nemours	1 511	543	33
John Deere	1 456	2 454	35
Procter & Gamble	1 381	?	37
Ascinter-Otis	1 219	5 259	43
Union Carbide	1 200	2 200	44
Duquesne-Purina (Ralston-Purina)	1 194	1 150	45
Compagnie des produits du maïs (Cpc)	1 182	2 383	47
Dow Chemical	1 133	220	48

American corporations won for themselves enviable commercial positions and succeeded in extracting massive profits.

Participation des sociétés à capitaux américains au classement des cent premières entreprises françaises selon leur capacité bénéficiaire en 1981
	Profit (en millions de francs)	Classement selon la masse de profits
Ibm France	375 788	n°4
Chrysler France	91 121	16
Honeywell-Bull	80 816	17
Esso-Rep (exploration-production)	76 340	21
Esso Standard (raffinage, distribution)	70 500	24
Kodak-Pathé	66 000	27
Lmt (itt)	34 092	43
Dba	19 218	85
Ideal Standard	17 419	102
Burroughs	17 343	103

8. Anti-American sentiments versus the attraction for American brands
One of the peculiarities of the contemporary economic history of France is the schizophrenic attitude taken by both the government and private sectors. On one hand they are bent on going full steam ahead towards a “free economy” in the name of modernity and progress while at the same time, they seem to be terrified by the possibility of losing their technological and financial independence. While the European multinationals, most notably the Dutch and the Germans, did not escape French fears, it was the American corporations which gave rise to the strongest apprehensions in France, due to the fact that a feeling of “imperialism” pervaded the geopolitical relations with the United States and undermined the other economic considerations.
A. The first anti-American moves?
The negative reactions vis-à-vis the American incursions into the French market was only the next step in the anti-American current which had begun to manifest as a distaste for the American brand of diplomatic and cultural imperialism²⁵⁵. Matters began to come to a head during the 1950s when certain studies were launched by experts close to the Communist Party which denounced “the road towards servitude” which had been followed ever since American capitalism had been allowed to enter by “a French oligarchy [which] has chosen, since 1947, to collaborate with American finance” with the objective of “opening the French and European markets to American capital and goods, to meet all the conditions […] required to increase the profit margin and eliminate French competition. To allow American trusts free access to the raw materials and outlets in French colonies, to gradually disengage France’s overseas territories and to substitute an American protectorate.”²⁵⁶ “Such an imperialism’s appetites are naturally insatiable […]. The attempt to transform a country like France into a colony is well beyond the power of American imperialism.”²⁵⁷ We also find the recurring and confused notion that resisting the penetration of American corporations would help to stop the spread of American “values” and the consequent American lifestyle, way of thinking and economic practices which were too individualistic (opposite of conformism) and a threat to the traditional European values²⁵⁸.
Even apart from these specific circles, which had always been anti-American, the beginning of the 1960s saw a general sense of uneasiness sweep across the nation, especially regarding the power of American capitalism and the risks of coming under its hegemony. Established in 1967, the magazine L’Expansion targeted the elite of the business world and was always at the forefront in keeping a vigil against the American advance and issuing warnings: “Europe’s lag is increasing”²⁵⁹ in “the Europe/usa match”. It pointed out that only three French companies (Renault, Rhône-Poulenc, Compagnie française des pétroles) were part of the group of twenty European corporations to have posted a turnover of more than 5 billion Francs in 1966, as against the sixty American companies which had done so. L’Expansion lamented “Corporate Europe has a puncture” and asked “Why can’t the bigger European companies merge?”²⁶⁰ On the other hand, we must also see the degree to which the French companies had managed to internationalize themselves as compared to their American multinational competitors: while Michelin succeeded in keeping its French turf with 60 per cent of the market share (85 per cent if we include its subsidiary Kleber-Colombes), it came only in the fourth position worldwide²⁶¹, far behind the three American giants, and only 4 per cent of the American market. Then, things took on a more urgent note as a new generation of American firms (Dupont de Nemours, Monsanto, Philip Morris, Rca, Litton, Seagram, Levi’s, Genesco, etc.) took over from where the older ones (Esso, Singer, etc.) had left off, with a clear and methodical deployment strategies aimed at creating world-wide groups. The urgency was more keenly felt in the emerging computer industry: “Otherwise it would lead to a division of the world as it has already begun. On one side the United States would have the latest discoveries of science and technology at their disposal, and on the other, the rest of the world, trailing behind the Americans and dependent on their goodwill.”²⁶² This dark vision of the market economy can help explain the reticence, of not outright hostility, vis-à-vis the strategic deployment of American firms in France.
Jean-Jacques Servan-Schreiber, the owner and guiding spirit behind the media group which published both L’Express and L’Expansion, came out with a thundering book²⁶³ and initiated a series of conferences around the country to “awaken” it and make it realize the necessity of speeding up the modernization process. The French Planning Office also insisted in its Fifth and Sixth Plans (for the years 1965-1974) on the necessity of accelerating the processes of “modernization” and “expansion” by simultaneously having a clear Governmental “industrial policy” and a more dynamic and assertive entrepreneurship. Training of the business elite was also taken into account with the participation of “business schools” ²⁶⁴. Ultimately, the American financial firepower proved decisive, thanks to the large loans on the Euromarket to finance the American expansion and prompted L’Expansion to say, “how Uncle Sam bought over Europe.”²⁶⁵
B. Some anti-American action?
As a result of these anxieties regarding what was thought to be, rightly or wrongly, the overwhelming power of American enterprises, the anti-American reaction within the government expressed itself in three clear stages.
a. The temptation to resist American investments
The first of these anti-American measures was a purely defensive action – alongside the “circle of chariots” syndrome. The government formed a committee (the Bureau d’accueil des investissements étrangers) which, as part of the Treasury division of the Finance ministry and the ministry of Economic and Financial Affairs, was required to authorize all foreign investments coming into France. This was during the “governed economy” period, marked by a strong governmental interventionism which not only regulated and controlled the economy, but also to gave it an orientation and if possible, attempted to master it. And so, while the us was the very first country to invest directly in France in 1964 (as we have already seen), the next couple of years (1965-1966) saw France take a clear step backwards, a regression which continued till 1969. The government, pressurized by the Gaullists who were already up in arms because of Nato, the Palestinian crisis and the Vietnam debacle, raised all kinds of barriers against any investments coming from the us; the “Bull Affair” could have been decisive: the buy out of the first French electronic data processing company by General Electric shocked de Gaulle, and he asked the Finance ministry to block all American investments. The fate of the French biscuit industry also hung in the balance when General Mills made a bid for the Biscuiterie nantaise in 1967, as it was one of those sectors which were not as yet consolidated: “For 18 months Mr. Debré played a subtle game with foreign investments. Sometimes he would use them to threaten the French into modernizing and strengthening themselves, then again he would use them to bring in some American technology in a bid to inspire French industries; at other times he would raise issues which either used legal loopholes or created such legalities that allowed the adoption of American technology without having to bear the burden of the ‘Yankee’ capitalist yoke.”²⁶⁶
The electronic industry became the main focus of these geopolitical and strategic considerations as the government was acutely conscious of the fact that this would be the epicenter of the next industrial revolution. When Ge began to eye Bull, the leader of the French computer industry which was then in a financial crisis, it proceeded with caution: claiming to want only 20 per cent of Bull’s capital while opening wide its own technological doors. Immediately there was a furious opposition: Finance minister Valéry Giscard d’Estaing blocked the project on 4^th February 1964 in favor of the takeover by a consortium of banks. Then, when the new management began to toy with the idea of some sort of cooperation with Ge, the Prime Minister himself stepped in and one is left to imagine the subtle arrangements which finally weighed in favor of French interests in a subsidiary which would ensure the production of computers in the name of employment and a national production facility (see below). Later, in 1977, when it was rumored that the French company Cii was hesitating between an American alliance and a European agreement, the anti-American sentiments overflowed into the press: “Will France give up to the Americans the building of large computers?” and “It would be Cii’s second death.”²⁶⁷ Barriers were also set up in the software sector to protect French companies: in 1968, attempts by the Auerbach Corporation to take over Cegos, the second ranked software company in France, were comprehensively quashed. In February 1969, when Leasco Data Processing Equipment bought 20 per cent of Sema²⁶⁸ and wanted to use that as a lever to penetrate the information services, a network of governmental and financial institutions took up arms and forced Leasco to abandon its project at the end of ten weeks, while some French financial investors (Paribas) entered Sema to consolidate its position.
Meanwhile, the government was jealously guarding the French automobile industry, as it had now become one of the pillars of French economic growth. When Ford went on a symbolic offensive by entering the Le Mans 24 Hour Race, which coincided with the launch of its Taunus range in France, the imminent entry of American multinationals in this sector sent a chill down French spines: “Ford scares Europe”²⁶⁹, whimpered a newspaper headline after Ford won its second victory at Le Mans in 1967. “At the moment, Citroën and Peugeot are the only French automobile manufacturers who are coming together to fight off the American assault […]. But even together, Citroën, Panhard and Peugeot cannot be compared to the American giants […]. They need to be assured by the government that they would be protected from foreign investments.”²⁷⁰ “Renault in on the lookout for a modus vivendi with the Americans who pose the greatest threat via their English and German subsidiaries. M. Dreyfus [Renault’s President] met Henry Ford who told him: ‘We will win because we are stronger.’” ²⁷¹ Pompidou’s Presidency also saw the continuation of this vigilance, which practically came down to an informal but firm policy which protected key sectors, areas which were thought to have a strategic importance, especially those concerning the production of industrial goods. In these domains, foreign investments were to be restricted below 50 per cent. Thus, in January 1970, the government refused to give the green signal for the proposed buyout of Pompes Guinard by Itt²⁷² and in February of the same year, it did not allow Westignhouse to buy a 60 per cent stake in Jeumont-Schneider. Some part of industrial equipment sector had to be preserved.
In the meantime, Westinghouse had begun to build a pan-European electro-engineering conglomerate with the idea of entering the power generation sector, especially the lucrative nuclear reactor segment. It began by buying out Acec, a subsidiary of the Belgian group Empain, and adding it to its own growing list of European subsidiaries. Earlier, in France, it had made a bid for Jeumont-Schneider, for which Empain had asked for a sales authorization on 4 December 1968 and again on 17 January 1969. The whole affaire turned political as the government was loath to let such a “strategic” industry pass into American hands. Westinghouse tried to play on patriotic sentiments by pleading the cause of a Franco-Americano-European juggernaut, capable of standing up to the German giant, Siemens – hoping that anti-German feelings would prove stronger than the anti-American stance²⁷³. It contended that such a federation of European companies under Westinghouse would have a turnover of 5.5 billion Francs²⁷⁴, while the Westinghouse group itself would weigh in at 18 billion, with Siemens at 12 billion. Westinghouse then went a step further by nominating one of the stalwarts of the French government, the former president of the French railroad company Sncf and one of the most celebrated engineers of France, Louis Armand, as head of Westinghouse Europe in July 1969. The group also did not hide the fact that the head of Westinghouse Electric International, the American José de Cubas, was a graduate of the École supérieure d’électricité de Paris (Supelec). On 16 October 1969, Armand and Cubas were received by the minister of Industry, François-Xavier Ortoli himself and, on 22 October, by Finance minister Valéry Giscard d’Estaing. On 24 November 1969, Ortoli met the president of Westinghouse, Donald Burnham, in Washington. Westinghouse also suggested that the European research center of the proposed subsidiary be established in France.
The argument regarding the future of an independent industry reached fever pitch: “with investments pouring in from the United States and hemmed on all sides by the new German and English giants, the French electrical engineering industry finds itself today in a delicate though not hopeless position.” “We see that French production units are no more in the same league as the major European producers after the mergers which have taken place in Europe.”²⁷⁵ Did that mean that there was no other solution except to choose between Westinghouse and Ge? “But then these major European reshufflings can only lead to an American victory. It is precisely such an eventuality that we would like to avoid in Europe.”²⁷⁶ The government came to the conclusion that the strategy proposed by Westinghouse was just a Franco-European cover hiding the fact that it would only help the American multinational. “The Westinghouse project has proposed this restructuring under a American hegemony, which has been kept more or less hidden for the moment under the guise of circumstance.”²⁷⁷  “I am convinced that the Westinghouse solution, under its momentary European guise, would end all French aspirations in a domain in which she can still embark upon a mutually fruitful dialogue with the English and the Germans, etc. I am in receipt of a note from Glasser [Alsthom’s director] which shows that this so-called ‘national’ solution has actually a solid industrial base […]. Westinghouse’s proposal condemns Alsthom – even after its purchase of Rateau – as no longer capable of playing in the international arena.”²⁷⁸ “The most unacceptable part of the Westinghouse plan is that it would further alienate a part of the national potential in a domain in which the French industry is already rather weak, and that it does not provide any real solution to the Schneider problem. Moreover, from the public’s point of view, a pure and simple acceptance coming after the Schneider affair [group bought by the Belgian Empain] would be seen as another capitulation by the government vis-à-vis foreign interests.”²⁷⁹ To avoid risking such a “capitulation” and as this report had come to symbolize the economic battle being waged within the Common Market, Jeumont-Schneider was kept under French control. This “Westinghouse affair”, which concerned the electrical parts of the industrial equipment manufactured by Schneider in its factory at Creusot (electric locomotives, alternating current turbo generators for power plants), was perhaps the apogee in the anti-American sentiments which swept through the government and a large fraction of the major business leaders. The American corporation was clearly perceived as a dangerous invader who had to be kept well away from the growing French economy: “The government feels that the electrical engineering firm is a Trojan Horse. Once inside, Westinghouse would begin to flex its industrial and financial muscle to enlarge its bridgehead and conquer other sectors.”²⁸⁰
Several other sectors too were placed under a protecting umbrella to maintain a balance between the French capital, the European capital and the American capital. While no clear “doctrine” had been spelt out by the authorities, it was well understood and internally quite coherent. The “articles de Paris” or luxury items were among the top priority: In June 1970, a veto quashed a bid by the American cosmetics giant Helena Rubinstein to buy out Rochas, the no.1 among French perfumeries. It was felt that in this sector too, the Americans were weighing in a little too heavily: Revlon had already bought over Balmain and Raphaël, Pfizer owned Coty and Robins controlled Caron. The agri-food sector too, so close to the heart of a nation so proud of its rural riches and the interests of its farmers, felt the protecting umbrella open over it. While American capital had already obtained a solid foothold, in December 1970, the government vetoed Heinz’s bid for Grey-Poupon-Parizot (which held 25 per cent of the mustard and condiments market) and also General Food’s grab for Orangina, the maker of non-alcoholic drinks. It was as though one wanted to slow down the march of the American marketing juggernaut….