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. Building challengers capable of standing up to the American giants
The second step was more positive, in the sense that it was offensive: it involved the building of “national champions” in each of the branches which the 5th Plan (1965-1970) called the “exposed industries” (intermediates chemicals, heavy engineering industry, aluminum, etc.). Champions who would be capable of resisting the onslaught of the “multinationals”, especially the American conglomerates. In order to keep Ford and Opel from encroaching further into the automobile market, Renault decided, in the mid-1960s, to expand its facilities and also to widen its range to include mid- to high-end cars. Renault-Saviem, Renault’s subsidiary in the utility vehicles segment went on the offensive against the spectacular gains made by Caterpillar by buying out the heavy equipment manufacturer Richard-Continental in 1965. It thus also attempted to set up a competitive French challenger²⁸¹ around what was then the only European manufacturer of crawler tractors. When General Electric took control of Bull in 1964, the government came up with the “Plan Informatique” (“Computer Plan”): several of the smaller French computer companies merged to form the Compagnie internationale pour l’informatique (Cii): “We are almost entirely dependent on the Americans who have 90 per cent of the French market […]. At the moment, our weapons are laughable.”²⁸² We can well imagine that this decision by the French government smacks of a somewhat schizophrenic attitude as, on one hand, it rejoiced in the success attained by Ibm and Ge-Bull in France, while, on the other, it projected them as examples of American technological imperialism. Anyway, the whole idea was to set up a future rival of these groups, and Cii was assured of the entire public sector market²⁸³ and a five-year, government financing plan.
In the same way, the French government, investment banks and industrial corporations came together in an “industrial Yalta” in 1968 to again thwart American giants such as Ge and Westinghouse, which were already dominating the electric power generation sector throughout the capitalist world²⁸⁴. As a result, the majority of French electrical engineering firms merged under the banner of Cge-Alsthom²⁸⁵: “The fear of the Americans was doubtless the principle factor behind this industrial coming together that we see in Europe for some years now. Were it not for Westinghouse, which was prowling around Schneider, Cge and Thomson would never have been so quick to come to an agreement regarding the restructuring of the electrical industry in France.”²⁸⁶ In the same vein, the merger of Rhône-Poulenc and Progil was necessitated by the threat of American groups and the desire to see France in the exclusive “10-billion-franc-turnover-chemical-companies-club”²⁸⁷.
In the consumer goods market, American Motors gave up its Kelvinator brand around May 1967, while Whirlpool relinquished control of Royal Corporation in France (with the brand leader Pontiac) to the French group Claret, which thus increased its capacity to 120,000 refrigerators and outstripped General Motors in 1966. The idea was to build a “French champion” around what became the Thomson-Brandt group (which bought over Claret), just as was done by the manufacturer Seb in July 1969 when it took over the French company Scovill, which had been only four years in the country. At a time when electronics had just begun to enter the office (electronic office equipment), Alcatel’s foray into the office equipment sector in 1979-1980 (by buying out the American Friden and the English Roneo, etc.) opened the way to the creation of a true European giant: “We must transform Alcatel into a world brand at any cost, if we are to fight against such powerful names as Ibm and Xerox.”²⁸⁸.
With the merger of Cit and Alcatel and the Thomson group’s buy-out of Lmt, one of Itt’s subsidiaries in France in 1976, Alcatel and Thomson emerged as the two linchpins of the French telecommunications industry, capable of standing up to the American giant Itt. Then, when these two merged their telecommunication branches and, more importantly, bought over Itt’s second French subsidiary Cgct (which had 16 per cent of the market share) in 1982-1983, it signalled the emergence of a true European leader: “inasmuch as some people began to talk again of a French Telephone.”²⁸⁹ The government made its intentions clear by not renewing its order for the new Itt equipment (System 12) and instead looking to these two French groups to meet its needs. At last, the American giant’s grip was loosened. The most “frenchified” of all American groups had finally to put an end to a six decade long association with France – partly because of the demands of an “economic and technological patriotism”²⁹⁰ and partly because it had embarked upon a strategic restructuring. Finally, the nationalization of dozens of companies in 1982 aimed at creating robust French enterprises which would be strong enough to resist the multinationals, especially the Americans, as was claimed by the presidential candidate François Mitterrand in May 1981.
c. Building European challengers
The third step taken by the French government in its anti-American multinational drive promised a far more durable future: it began to involve France into a pan-European cooperative effort which would have far reaching consequences on its industrial policies. The Airbus project epitomized this change of perspective and scale. This pan-European effort was conceived of as the only possible answer to the American hegemony, especially as the purely French aircraft had only received some critical (and not popular) success at the international level (for the civilian Caravelle) and benefited mainly from the active support given by the military for exporting: “282 large aircraft, already ordered from Lockheed (1011), McDonnell-Douglas (DC 10). Boeing returns to France. French, English or German, can they come together to face it?”²⁹¹ “Only the rich have wings. It is a question of whether we accept to have an American monopoly in the aeronautic industry.”²⁹²
C. Some honourable Franco-American compromises
Whatever be the steps taken or the strategies implemented to break the North-American hegemony, reality had to be paid its dues, and France could not afford to cut itself off entirely from the vital influx of American money and technology.
a. Opening France up to American investments
The anti-American sentiments were rather ambiguous: on one hand, they stemmed from a real necessity to reign in the burgeoning financial and technological imperialism which was suffocating French innovation. But on the other hand, they seemed more like a stand taken to please a somewhat chauvinist public opinion and to assuage the labor unions or organizations of the small and medium scale enterprises which were afraid of this race towards modernization and productivity but which were generally satisfied with simply making some anti-American noise. This resistance to American investments began to appear more and more stupid in the course of the 1960s, as all the money which was refused by France simply went to some other country within the Common Market. All that the American firms wanted was to make the most of this new European customs union and to establish their commercial and manufacturing plants, not caring which nations’ flag fluttered over the factory or warehouse…. An example was Phillips Petroleum which wanted to build, in 1963, a petrochemical plant at Bordeaux-Ambès, in the South-West, and which, due to the government’s reluctance in giving the necessary authorization, went on to implant it in Anvers ²⁹³. The lesson was still not learnt when Opel too chose to plant its factory at Anvers²⁹⁴ in 1965. It was the same story with Ford, who was blocked from getting into France by a French pressure group which prevailed on the government to nix the project in 1966, just a little after Ford had won the 24 hours Le Mans. Ford simply went to Belgium and Sarre and built a number of factories there. “A us company might, to be sure, have had difficulty entering France, but it could always invest in another nation in the Eec and thereby achieve entry into the French market.”²⁹⁵
And so, the Treasury Department was forced to accept the ground reality and began to allow foreign investments. Though it was still very much on a case by case basis, it was also in a spirit of a more liberal “laissez passer”. There was also the question of choosing between opening up to investment from other European countries and opening the doors to American money. Sometimes, the government seemed as afraid of European groups as it was of an American incursion. The fear of the German renaissance, for example, meant that Siemens and some other groups had to face rebuffs. A beacon for such nationalistic choices was the failure of Project Unidata (between Siemens, Philips and Cii) in 1970 which sought to establish a European consortium of computer firms; the strength of some pressure groups which favored “national solutions” and the fact that till the very end Dassault tried its utmost through its network of influences to tip the balance in favor of its own civil aircraft project Mercure instead of the European Airbus.
At the same time, the Finance and Industrial ministries began to gradually open up to American solutions. In April 1967, they gave the green signal to General Motors-Opel for opening an auto parts factory in Alsace²⁹⁶. Moreover, as soon as Pompidou became the President, he decided to make an end of this French anti-Americanism and

gradually, the tensions which had prevailed during the period 1966-1968 began to fade. In January-February of 1970, the authorities²⁹⁷ set forth the general rules regarding foreign investments, as France had agreed to the Code on Liberalization of Capital Movements fixed by the Organization of Economic Co-operation and Development (Oecd) and had agreed to abide by the Franco-American convention on bilateral relations. The Treasury was now given the role of ensuring that American firms were accorded a fitting welcome in keeping with France’s capacity, especially in view of the fact that the United Kingdom and Ireland were already thought of as ready platforms for American investment ventures in Europe. In March 1970, Pompidou made a trip to the us and insisted on France’s opening wide its doors to American investments. The first signs of this change in the political climate came in the form of some symbolic measures. Despite the protests of French manufacturers, Ford was allowed to implant its first factory at Bordeaux-Blanquefort in 1970, followed by a second in 1973.

b. The cooperation with Westinghouse
The Westinghouse group, which had been seen as an “invader” just a few months previously, was now welcomed by Pompidou himself when he decided that the French technology for civilian nuclear reactors was too expensive (as certified by the public sector producer Edf) and chose instead Westinghouse’s pwr technology. Westinghouse gave its license to the French Framatome group²⁹⁸, 51 per cent of which was owned by Schneider and 45 per cent by Westinghouse. Westinghouse’s victory was complete when its competitor, the Cge group admitted, in August 1975, to its inability to implement the pwr technology offered by the American group Ge. Thus, Westinghouse had now a monopoly in a sector which was growing at full steam because of the shock of the first “oil crisis”²⁹⁹. Though it is true that the technology was to be Gallicized over the next dozen years and that gradually, the stamp of licensee would change into the status of a certified association³⁰⁰, the fact remained that in this key sector, France depended on a trans-Atlantic technology transfer. Westinghouse finally got the fruits of its publicity campaigns which aimed at projecting it as a “good” as opposed to the “bad American”, and as a group which was modern, rich in innovation and beneficial.
c. The Ge-Snecma co-operation
At the same time, the government took another historic decision: in January 1971, while Europe was coming together to form the Airbus Industries, it decided to give its consent to the public sector company Snecma (which manufactured military aircraft engines) for tying up with General Electric. Though these two already had a technological agreement in place since October 1969, it was only for designing engines for mid-sized civilian aircraft. This alliance had been necessitated mainly by economic considerations, as two thirds of the market was located in the us. “There was no other way except for Snecma to tie up with one of the big foreign engine manufacturers”³⁰¹ as the cost of developing such an engine was estimated at almost two billion francs. As Snecma had no experience in the domain of civilian aircraft engines, Ge proposed using the technology behind the F101, a military aircraft engine. There was a feeling of “the crushing domination of the Americans”³⁰² because of their long history in the manufacture of aircraft and aircraft engines. The subtle battles within the government’s economic apparatus between the various pressure groups finally resulted in the adoption of this strategy. A strategy which was used most notably by René Ravaud, Snecma’s president (1971-1982) and Gerhard Neumann, the chairman of Ge Aircraft Engines. The two companies shared the development and trial costs while Snecma used its expertise in fans and airflow nozzles to increase the airflow rate within the engines. Yet, a not too equal negotiation stipulated that while the French used their technological know-how for the turbines, their engineers would not have immediate access to the American technology behind the manufacture of the high pressure casing of the engine itself. That had to wait till a thaw in the relationship spread some mutual trust, and a political agreement at the summit (Nixon-Pompidou) had to be inked before any real sharing of technology could take place. The factories at Corbeil and Villaroche (in the Paris region) were to manufacture the CF6-50 and later CFM 56³⁰³ engines for Europe, Africa and Asia. Meanwhile, Cfm International, a common subsidiary (in a 50-50 partnership), was established in September 1974 as their world-wide marketing agent, against the likes of Pratt & Whitney (of the Utc group) and Rolls Royce.
The history of the French aeronautic industry could have also seen a Franco-American alliance building civilian aircraft. Despite having had its Mercure project shot down in favor of Airbus, the Dassault group had plans to negotiate a partnership with MacDonnell-Douglas in 1977 for developing a twin-engine medium range passenger aircraft based on its Mercure 200 as a replacement for the DC9…. It would seem then that these Franco-American agreements followed the existing fault lines between the French pressure groups…. On the other hand, it must also be kept in mind that the Airbus program itself was based, in large part, on Euro-American subcontracting agreements and that 470 American suppliers³⁰⁴ contributed the equivalent of 26 per cent of the value of the A320 – such as Honeywell, which equipped the cockpit with flight program systems.
d. American enterprises as saviors of French companies?
Despite the anxieties caused by Ge’s buyout of Bull in February-April 1964, the authorities let Ge assume entire control of Bull in July of the same year as the French company had no longer the financial resources needed to continue its Research and Development program³⁰⁵. It was in dire need of a technology guru and a financial godfather. While Ge held only 49 per cent of the company which manufactured the Bull brand of computers in France, it acquired a 51 per cent stake in the company which marketed them in France and which controlled Bull’s entire European network: “Ge has got what it had never hoped to get: its hands on Bull’s exceptional commercial network.”³⁰⁶

The French park of mainframes computers^307 in1966
Total Park	2 393
Ibm mainframes	1 300
Ge Bull mainframes	887
Ict-Ferranti (a British group) mainframes	112
Cae mainframes (a small French company)	94

A stream of negotiations at regular intervals tried to maintain a balance of forces within the Franco-American groups. Though the government did allow Ge to completely revamp Bull’s production apparatus (its factory at Lyons was relocated to Belfort in August 1967)³⁰⁸, it was balanced by a substantial injection of funds which doubled the capital from 222 to 444 million francs in January 1967 and helped develop the Bull 600. The research & development efforts were followed closely by the government³⁰⁹ and the Finance minister met with Ge’s vice-president and head of its computer branch in January 1967 to extract some firm engagements. Consequently, the factories at Angers and Belfort began to produce a range of small computers³¹⁰ which were also exported to the us. At the same time, to reiterate its good faith, Ge launched a massive publicity campaign by highlighting Bull-Ge’s role in the French economy and its key supporting status in such or such client enterprise³¹¹. It also talked about its own achievements: “Bull Ge, in five years, this is what we have become.”³¹² It is true that the brand had chosen the right strategy in stressing on its “compatibility”, that is to say, that it was easy for clients to exchange their Ibm for a Ge Bull and to upgrade their system all through the wide Bull range³¹³. It also pioneered the concept of boosting the renting of computing processes by the system of “time sharing”.

Through a second stage of the story, the government allowed Honeywell to take over from Ge as Bull’s new owner in June 1970 and “Bull General Electric became Honeywell-Bull”³¹⁴. Honeywell-Bull thus turned into the American group’s major foothold in Europe. In fact, Ge could not consolidate its computer business either in Europe or on the world stage and stagnated at the sixth place world-wide. In spite of its efforts to streamline Bull’s production facilities and to develop the Gamma 600, profits from its French investments remained meager. Even the transfer of a score of American managers into the French company did not succeed. Finally, it relinquished its computer arm to Honeywell which attempted to establish itself as “the other computer company”³¹⁵. Rising to the second spot worldwide (with 12 per cent), Honeywell-Bull turned into Ibm’s major competitor in Europe and France. “It is not tomorrow that we shall see the French and the Americans come together and succeed!” began one its ads, “No, it’s today”³¹⁶. It wanted to make it known that Bull’s acquisition by Honeywell was sanctioned by the minister of Industries himself in May 1975. No doubt it was “the American way”³¹⁷ and the communist journal L’Humanité did not fail to cry out: “Giscard has handed over the French computer industry to the Americans.” And yet, this trans-Atlantic accord did not result in any technological or commercial “pillage”. On the contrary, the American directors of Ge Bull returned to the us while a French managerial team took over under the leadership of Jean-Pierre Brûlé, the former ceo of Ibm France’s military division. They began a process of turning the enterprise into a truly pan-European company, a company which would be able to adequately represent the American group on the entire European continent – with, in 1970, 11 per cent of all installations³¹⁸. It also entered Latin America, Africa and Japan, a total of 43 countries! And Bull turned into Honeywell’s international passport, eliciting this advertisement: “Why Honeywell Bull have become a world power in computers.”³¹⁹ The range of computers and peripherals were homogenized, American models such as the Ge Bull 6000 (the former Ge 600) were sold in France and bagged its first order from the Paris public transporter Ratp in February 1971. Honeywell Bull kept Ibm at bay at the second spot in France and maintained its workforce (14,300 employees in 1968, 15,700 in 1974) which accounted for two fifths of the Honeywell group’s entire workforce. As early as 1971 the Honeywell Bull factory at Belfort became the centre of the group’s European peripheral operations (printers, perforators, card readers) which necessitated the closure of the factory in Amsterdam which had been established in 1940. France also boasted an important research centre with 1,300 scientists and technicians.
Thanks to its deep roots in the French industrial landscape³²⁰, Honeywell was recognized by the French government as the “godfather” of the French computer industry in 1975-1976. With only 14 per cent of the market share as against Ibm’s 54.5 per cent, Cii had failed to penetrate deep enough and though Honeywell-Bull held only 14.8 per cent, it was only a part of the company’s pan-European network, and moreover, it reaped rich harvests from the joint research and development efforts carried out in the us. Cii was much too weak to survive without a constant transfusion of public money…. And so, in 1975, the government decided to insert it within the Honeywell group³²¹. Though Honeywell thus had to reduce its share of Honeywell-Bull from 66 to 47 per cent, it ensured the merger of Honeywell-Bull with the Cii to form a “Euro-Franco-American giant” in the computer industry, strong enough to challenge the might of Ibm.
Honeywell’s strategy was to consolidate its computer arm, which was struggling to keep up with Ibm – which had a 55 per cent market share, as opposed to Honeywell’s paltry 9 per cent. Both the partners were equally interested in the merger: Honeywell stood to not only gain many new outlets, but that would also allow it to play a major role in the restructuring process which was bound to take place in the early 1980s within the “bunch”³²². The alternatives were clear: either to leave a few “dwarves” to nibble at the French market, sustained principally from assured public sector orders, or to push the French computer industry into the European or even the international market by injecting fresh capital and technology and profiting by the economies of scale accruing from the research carried out mainly in the us and partly in the French laboratories engaged in this effort of research and development. In that respect, Honeywell’s technological capacity seemed greatly ahead of other European corporations such as Philips and Siemens, whose computer arms were weak to begin with. Within the time frame of our study, this strategy seemed to work because, the merger of the Franco-American Honeywell-Bull with the French Cii created a promising new enterprise, the Cii-Honeywell-Bull. In 1981, it ranked eighteenth among French investors³²³, weighing in at 1,451 million francs – which could not but profit the French economy as a whole³²⁴. Still, Ibm’s competitors (the “bunch”) faced such major difficulties that all of a sudden Honeywell changed its strategy: it began to withdraw from the computer industry and started backing out of Cii-Honeywell-Bull, leaving the strategic control in the hands of French investors, namely Saint Gobain, reducing its stake from 47 to 19.9 per cent.
The anti-American “French Way” was finally abandoned³²⁵, to be replaced by the way of cooperation and integration. In retrospect, this might seem to be in contradiction to the policy of European cooperation pushed by the experts who were in the midst of constructing the Eec with, for example, the strategy behind Airbus. Similarly, such an integrated partnership, which allowed a French company to become the cornerstone of a Euro-American group had been rejected when Westinghouse had proposed it for the electrical engineering firm of Jeumont-Schneider. But this same exact policy was adopted in the case of jet engines (Snecma-Ge) and subsequently in the computer industry. The government’s “industrial policy” did not seem to have any great coherence. Things were decided on a case to case basis, depending on the pressure groups, the state of such and such branch of activity within what was judged as being in the “national interest”, etc. Be it as it may, the “primary anti-Americanism” had given way to a more supple and hands-on policy.
And so, when the deplorable state of the French electronic components industry was brought home by the entry of Motorola and Texas Instruments (the French Thomson-Csf-Sescosem came in only at the 18th spot worldwide in 1975³²⁶), it was in the form of a Franco-American cooperation, deliberately chosen by the government and defined by the “Components Plan” in May 1977. Three main points were to be kept in mind for the development of a national industry which would nevertheless depend upon agreements signed with American companies. First, there was to be a transfer of technology, second, that research and development centers were to be installed in the country, which would, as the third point, ensure that the factories would not just be “screwdriver plants” as the Americans had earlier established in Europe to assemble their components. Motorola came together with Efcis-Cea in a license agreement, Nsc joined hands with Saint Gobain in a common subsidiary for the manufacture of mos circuits (51 per cent held by the American) and Harris allied itself with Matra (same type of subsidiary). But doubts still lingered regarding this strategy: “Will we truly gain in technology by these joint ventures with Nsc and Harris? These two firms were looking for an opening into Europe, and now they have it!”³²⁷ Here too there was a hesitation between a Franco-American alliance and a European cooperation. But in those days, the European solution did not seem too attractive as the joint ventures between Plessey-Thomson and ? and between Philips and Thomson-Sescosem had both been failures….
Consequently, in all these sectors (nuclear reactors, aircraft jet engines, computers, etc.), the American technological superiority, the worries regarding economies of scale and the pressures of development deadlines were all as much the causes for a transatlantic cooperation as the making of economic sense and a positive perception of the American partners who now accepted the role of French executives in the management of joint subsidiaries and the need to gradually Frenchify the concerned technologies. The Americans’ tactical skill in entering the French political game by making just the right number of concessions provided the springboard required for surmounting the “chauvinistic” obstacles which were often raised by pressure groups within the Paris industrial circles. The main thing for the French was to “save face” and not to be seen as succumbing to an American monopoly. A good example of such a balancing act was the attitude taken by Thomson-Brandt which, though it held 60 per cent of France Couleur, which manufactured the French Secam color television tubes, also chose to manufacture American television picture tubes by buying an Rca license in 1971: It would thus be able to increase its exports in Europe and especially, to the other Rca licensees.
Moreover, even when the Left came to power, the new government too, despite its nationalization drive, continued to be realistic in its approach and actively pursued a policy to seduce American investments. The unemployment crisis had reached such proportions that American money was thought indispensable, especially after the anti-foreigner wave³²⁸ which had surged out during the nationalist policies expounded by the Left in 1981-1983. And so it came to be that Datar, a public sector undertaking charged with the National Economic Planning, set up four offices in the us to prospect for industrial opportunities. Trans-Atlantic soliciting missions were dispatched every year and in January 1985, one was sent to explore the possibilities of a European Disneyland…. In 1984, American firms were the second highest creators of employment in France with the help of government subsidies and took the top spot as regards the total number of jobs created in France by foreign investments³²⁹. Far from being an anti-imperialist stronghold under the aegis of a “Sovietized” Left, France remained hospitable, maintaining an “open economy” towards both a European integration and the “drift towards trans-Atlantic alliances”³³⁰.