Gallezot – Deputy Director General, Directorate General for Enterprise (DGE)
Benjamin Gallezot from the Directorate General for Enterprise (DGE), part of the French Ministry of the Economy, Industry and Digital Affairs, discusses the competitiveness of French companies, particularly in the energy field.
The Direction Génerale des Enterprises (DGE) – in its current shape – was created in September 2014, and follows on from La Direction Générale de la Compétitivité, de l’Industrie et des Services, the DGCIS. Why was there a need to change the existing body of the time and how different are those two organisations today?
The Directorate General for Enterprise (DGE) is a part of the French Ministry of the Economy, Industry and Digital Affairs. Our director general, Pascal Faure, decided two years ago to reorganize the DGCIS following a few different lines. First, DGE has a renewed organigram, which allocates more importance to territorial and international scales. There are now six different divisions including the division in charge of relationships with our local (mainly the regions) and international partners. The second change deals with the way we are running our business in the DGE, namely towards a much deeper cooperation between our different divisions and an increased focus on selected strategic matters, notably energy.
We indeed consider having significant stakes in the energy transition and generally speaking, in the industrial policy of the energy sector, with a rapidly evolving political and economic environment. Energy markets evolve fast as shown recently with the fluctuations in oil prices for example. This is a big step for us as traditionally, the DGCIS does not prioritize energy matters. Even though we are not directly in charge of energy policy, we are responsible for economic policy on the development of the energy industry, whether it is oil and gas, nuclear power or renewable energies. For all these subjects, we are in direct contact with the Ministry for Ecology, Sustainable Development and Energy and more particularly, with the Directorate General for Energy and Climate.
What are the specific mandates given to the DGE?
Our motto is “the sense of enterprises for the general interest.” We are devoted to help companies develop, grow and become more competitive. We create the favourable environment to do so and implement policies in different fields such as industry, digital affairs, tourism, trade or services in general. Another important issue for us is cooperation between different divisions, especially the industry division and the division for digital affairs. Digitalization is an increasingly important subject for the industry (big data, connected objects, automation, robotics…) and oil and gas is a good example in that matter with for instance the simulation of reservoirs. The sector is highly using the high speed computing and so forth. We try to integrate all these elements, as innovation is a key factor for success.
What is the main role of the Strategic Committees of Industries, the so-called Filières in French?
The first point is that we need to define a general policy and a favourable environment for all companies and sectors, with a competitive tax and labour system, and a competitive innovation system. But this is not sufficient. The general policies we intend to create need to be complemented with sector policies, which we refer to as the Strategic Committees of Industries, and which encompass the unique qualities of each sector.
We are pleased to see that other countries like the UK, Japan and Korea share the same views. At the EU level, they created some high level working groups in different sectors ranging from the steel or car industry to aerospace.
However, it is not the sole role of the government to decide everything independently and there has to be a dialogue between the government and companies. We therefore created an area to discuss with companies through their representatives and unions, which is the most communication process suitable for them. At this stage, 14 strategic committees have been created in relation to 14 different sectors. They all are significant. For each of them, we have a road map approved by the government and the industry regarding all measures that must be taken (regulation, R&D, professional training etc.) It is working quite well. In the aerospace sector for instance, where Airbus has many subcontractors, we helped those small- to medium-sized companies in specific issues such as raw material or synergies. When needed, we develop specific financial tools to support the growth of companies including start-up companies.
Could you tell us more about the recently adopted “Pacte de Responsabilité et de Solidarité,” a package of liberalising and deregulatory measures, and how this will impact the competitiveness of French companies?
The pact is very new and has been decided by President François Hollande and implemented by the government of Manuel Valls. The diagnosis was that France had lost its competitiveness in the last 10/15 years because due to high tax levels on labour. The question was to lower taxes in order to foster a much more competitive environment for companies, and an envelope of EUR 40 billion (approximately USD 44 billion) over three years has been allocated, which is quite a huge amount knowing that we also have to reduce our deficit at the same time. It represents more than 2 percent of our GDP and is accompanied with administrative simplification measures.
At the same time, discussions were held with the employer’s federation MEDEF and the Unions regarding the nature of future investments and workforce evolution, per sector. It is a compromise: on one hand, the government has opened a dialogue and on the other hand, companies and workers are seeing how this effort can be dedicated to their future developments.
All in all, this has been a huge effort and what we see is that French companies are from now on gaining competitiveness vis-à-vis our competitors. With these measures taken, it will work. We also stay very focused on the innovation agenda too, as illustrated by the “crédit impôt recherche” initiated by the government. It is one of the best tax regimes in the world for innovation and a great incentive for foreign companies to invest in France
The oil and gas services sector in France is one of the country’s leading industries, growing at 12 percent in 2013 to reach a turnover of € 39 billion (approximately USD 42.8 billion). that year What is the importance of this sector for the DGE?
Even though we don’t have large natural resources, we have a good industry linked to it. During the First World War, we realized we had to secure our energy supply. During the 1920s, in a very French manner, we opted to reorganize the sector. Following the Second World War, this policy persevered in Africa with companies like Compagnies Française des Pétroles and Elf Aquitaine (which would later become Total). In order to develop these resources, we invested heavily in technologies. The French Institute of Petroleum (IFP) developed R&D in order to get the best technologies in off-shore, exploration and so forth. This was in response to a political partnership between the government and the companies and the importance of maintaining a high level of innovation because it is for us a strategic sector.
This sector remains essential for DGE. All support tools for innovation are open to the sector, from fundamental research to demonstration projects, and several competitiveness cluster (such as Avenia and Pole Mer Méditerranée) bring together large and small firms, research bodies and educational establishments to develop synergies and cooperative efforts around innovation for geosciences and offshore technologies. DGE also contributes to develop international cooperation to help SMEs access new markets. For example, we participated in a discussion with the Brazilian national Ministry of Industry on opportunities of collaboration in the offshore oil and gas field. A specific financial tool to promote Franco-Brazilian collaboration should be launched in 2015 and, with the support of Total, French SMEs had a more direct access to local players (such as Petrobras).
The French often complain about the lack of support of the government regarding the oil & gas industry. What is your assessment?
I don’t think this is a fair statement. We are completely open to all kinds of projects on oil & gas technology development, and support the industry at large. I think the lack of support has little to do with innovation but more with the issue of shale oil & gas which has been banned in France. If DGE can support innovation to develop cleaner technologies, it is not responsible for risk control and regulation.
The oil & gas industry is an important consumer of energy for its process of extraction, and to reduce costs, the players of the industry need to better optimize and reduce their consumption level of energy. Oil & gas companies are very aware of this situation. There is, in my view, no contradiction between the oil & gas industry and the ongoing energy transition process. Companies like Total or Technip are deeply involved in energy transition with the development of energy efficiency and renewable energy technologies powered by wind or solar sources. There are no good guys and bad guys! This diversification is a real strength because these companies are much more resilient than pure oil and gas players, and their oil and gas technologies largely benefit from this diversification.