Recommendations for new initiatives in industrial economic cooperation between Germany and France

The industrial recovery is on its way. The economic recovery in our two countries has spread to industrial production in the course of the last year much more strongly than before. The pick-up in industrial activity and in European and global trade in manufacturing is a welcome development. The strengthening of our industrial companies is important, as many must invest heavily in new technologies and new business models to stay competitive. Manufacturing firms are enjoying new opportunities and must meet new challenges, too. The French and German manufacturing sectors, however, face a number of structural challenges that are affecting most companies in most branches today. Intense international competition in open goods markets, the emergence of new competitors from emerging markets, the digitalisation of production, new business models affecting not only business-to-consumer but also business-to-business relationships, platform economics, investment patterns increasingly shaped by software, patents and intangible assets and concomitant shifts in the needs of corporate finance are common challenges. Economic links between Germany and France should be strengthened further. In several industrial branches and sectors, close links between Germany and France have developed over more than sixty years of economic integration and trade. We do have a strong trading relationship and a considerable amount of mutual foreign direct investment. In some fields, cross border mergers and acquisitions have led to the emergence of stronger players able to compete internationally more recently. The merger of two rail companies is a case in point. In aerospace, an integrated production system has emerged. In automotive, a recent take-over has strengthened German-French integration, too. Automotive and electronics branches benefit from an intense relationship and highly integrated production networks. In IT services to businesses, strong market players have emerged from joint German-French corporate efforts.