Energy, transport costs weigh on French competitiveness: Arkema

04 March 2014 12:55  [Source: ICIS news]

PARIS (ICIS)--The French economy is suffering from a lack of competitiveness due to high energy and transportation costs, as well as social charges, the head of local chemicals producer Arkema said on Tuesday.

“[Arkema's French] results [are] still out of step in a major way compared to other regions, due to [a] lack of competitiveness in France, which is not due to a lack of investment [by Arkema],” company CEO Thierry Le Henaff said, speaking in Paris.

Arkema derives 11% of its sales from France, and the country receives 50% of its capital expenditure and 75% of its research and development spending, but the country is uncompetitive compared to its neighbours in Europe as well as in other regions, according to Henaff.

“Seven or eight years ago, electricity in Germany was more expensive than here, now it is 25% lower. For power-intensive companies, this is very important,” he said.

“Transport costs in Germany are special. Some companies pay virtually nothing for their transport, but in France they pay the full price. This makes a huge difference,” he added.

The complexity of France’s energy landscape is such that there are different pricing levels for the north and south of the country, exacerbated by less organised supply and logistics infrastructure in the south, according to Henaff.

Social charges – levied on most forms of income and distinct from social security charges – can also represent two and a half times the value of the minimum wage at present, he added.

Despite his criticisms of the cost of operating in France, Henaff noted advantages to having a strong presence in the country, and in Europe as a whole.

The company currently derives 41% of its sales from the continent, and is looking to reduce that level of exposure as part of its target to derive around a third of its sales from each of the Europe, North America and Asia regions, but maintaining its position in its home market is also a priority, according to Henaff.

“It is important that we remain in Europe because there will be a recovery in Europe. It may take a long time but there will be a recovery,” he said.

By: Tom Brown
+44 208 652 3214

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