Record Number of French Corporate Bankruptcies; Socialist Theory vs. Practice; What Went Wrong?

The number of French business bankruptcies hit a record in the third quarter of 2013 and the yearly total is on a pace that will come close to the total reached in the dark days of the great financial collapse in 2009.

Via translation here are a few articles from Le Monde.

Corporate Liquidations Reaching New Heights in France

The newspaper L'Autre Journal has filed for bankruptcy.

Michel Butel, the former boss of the newspaper does not admit defeat so far, and promises new adventures. But under another name ...

In the last twelve months, 43,981 companies were liquidated after having filed for bankruptcy, according to the records of the credit insurer Coface. This is a record number of third quarter bankruptcies.

Mory Ducros, Largest Bankruptcy in France for a Year

With 5,200 jobs at stake, the bankruptcy of transport company Mory Ducros is in social terms the heaviest recorded bankruptcy this year. The previous failure of this magnitude was Neo Security, the second largest French security firm, which was declared insolvent in April 2012. At the time, it employed him as more than 5,000 people.

Some 62,500 company s should file for bankruptcy this year, almost as much as during the dark year of 2009, according to credit insurer Coface. The number of bankruptcies may be slightly lower in 2014.

Ayrault Wants to "Save as Many Transport Jobs" as Possible

Transport company Mory Ducros, which employs 5,200 people in France, announced during a special Works Council (EWC) on Friday its request for receivership with the Commercial Court of Pontoise and the appointment of a temporary administrator.

Unions of the company are very pessimistic. "It is feared between 2,000 and 3,000 job cuts," said Fabian Tosolini, national secretary of the Federation of Transport of the French Democratic Confederation of Labour (CFDT). This is one of the biggest bankruptcy filings since the start of François Hollande term, and one of the largest ever happened to France since the collapse of Moulinex in 2001.

Following the bankruptcy announcement, Prime Minister Jean-Marc Ayrault commented "We are looking for all solutions, site by site, with the social partners, of course. Where we can find the buyers, everything will be done to save the maximum number of jobs. This is a very difficult job."

Arnaud Montebourg, the Minister of Industrial Renewal, is "mobilized" on this issue. Potential buyers have expressed interest but no proposal has been expressed.

Frédéric Cuvillier, Minister of State Transport added "Everything will be studied: first how to consolidate the rescue at least 2,000 jobs, and then look at how we can ensure the recovery or offer jobs to those who are victims of this plan." The Minister announced that he wanted "to meet as soon as possible" with management and the unions.

The prime minister, the minister of industrial renewal, and the minister of state transport are all mobilized. How comforting.

Understanding Montebourg

To understand Montebourg, take a look at some "Made in France" images.

Montebourg "advertises Made in France" while holding Moulinex blenders and wearing classical "marinière" shirts.
He is literally the object of tons of sarcastic comments and gags.

When telecom operator Free was awarded the fourth mobile license in France and launched its very low cost service, Montebourg said that Free had done more for purchasing power of French people than all the actions of then president Nicolas Sarkozy.

But when Montebourg became Minister he started a very aggressive campaign against Free and its pricing, accusing them of destroying French jobs.

The above Montebourg clip courtesy of reader "AC" who lives in France (see Made in France: Montebourg Ridiculed in Text and Pictures; France Goes After "Red Bull" Energy Drinks to Finance Social Security).

Hopefully "AC" will not be arrested for "insulting the president". That's not precisely a joke. (See Founder of French Website "Hollande Resignation" Arrested, Car Impounded for "Insulting the President")

More on Montebourg

If you are interested in other absurdities by the Minister of Industrial Renewal, simply search my blog for Arnaud Montebourg.

What Went Wrong?

The answer to this question should be obvious: The socialist policies of president Francois Hollande went deeply wrong.

In particular, I would like to point out my June 8, 2012 post Hollande About to Wreck France With Economically Insane Proposal: "Make Layoffs So Expensive For Companies That It's Not Worth It".

Hollande's layoff clampdown solution according to Labour Minister Michel Sapin is to "make layoffs so expensive for companies that it's not worth it." ....

To which I commented:  Ongoing, if it's difficult to fire people, companies will not hire them in the first place.

Couple that preposterous idea with a set of tax hikes so huge that even the socialists complained:

See Hollande's Tax Everything Plan Blows Sky High With Riots by Farmers

Socialist Theory vs. Practice

In theory, Hollande proposed "Make Layoffs So Expensive For Companies That It's Not Worth It". In practice, his policies harmed many companies so badly they could not possibly stay in business!

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com