Supporting (re)localization: between environmental commitment and economic strategy

For Sophie Flak, Member of the Executive Board and Managing Partner in charge of ESG and Digital at asset management firm Eurazeo, reshoring primarily responds to decarbonization requirements. One of the first levers to activate is the supply chain. “It’s when you conduct your carbon footprint assessment that you realize the weight of the supply chain,” she explained. “So when looking for ways to reduce carbon emissions, you have to modify the supply chain. Forget about airplanes!”

Glocalization: A Balanced Model

However, she emphasized, it is not necessary to bring everything back to France or Europe. “We believe in glocalization — reshoring at each geographic hub,” she continued, citing the example of a biocontrol company in which Eurazeo has invested. With operations in France, Kenya, and California, this company produces insects to naturally combat crop pests. In other words, fresh products that cannot be shipped over long distances. “We have no choice but to produce locally,” summarized Sophie Flak. “That’s why we believe in the glocalization model. You have to go into each geography, of course with clear-headedness.”

While reshoring can help reduce the carbon footprint of industries, it remains costly, and smaller investors may face challenges supporting it. This point was highlighted by Valérie Geiger, Regional Director East at Arkéa Capital. This private equity subsidiary of Crédit Mutuel Arkéa invests only as a minority shareholder, but always directly. “We want to be involved in governance and give our opinion, even if it is not always taken into account. And we make sure to always align with the strategy the majority fund wants to implement,” she explained.

“For us, reshoring is a major issue, one we are very sensitive to. But we will need public authorities and resources that go far beyond what Arkéa Capital can deploy,” she added.

The Essential Role of Public Actors

Resources such as those provided by Bpifrance, the French public investment bank, play a key role, as explained by Raphaël Didier, Director of Transformation and Strategy at Bpifrance’s Innovation Department. “Between the SPI fund — for Industrial Project Companies — subsidies, and loans, many resources have been deployed to support reindustrialization and reshoring in France,” he said. “With early signs of success, even if the path remains challenging.”

Especially as, due to the precarious state of public finances, the post-Covid enthusiasm and ambitious investment plans, such as the “France 2030” plan, are losing momentum. But for Raphaël Didier, there is no fatalism; a long-term vision is necessary. “This won’t happen overnight, it may take 15 years, but it is a major underlying movement that we must believe in and support.”

Beyond environmental and sovereignty issues, and despite its potentially high cost, reshoring also presents important economic advantages, for example by shortening processes. “Since the end of Covid, companies no longer stockpile in the same way,” explained Valérie Geiger. “When you stock less, you need much faster availability, and having your supplier in France or Europe is a real advantage. In my opinion, it’s primarily these economic factors that motivate reshoring.”

Doing “Differently”

On the consumer side, reshoring must also find its audience. If consumers are willing to pay more for a product made in France or Europe, this premium should not exceed 15 to 20%. According to Julien Chaverou, President of Camif, a historic home furnishing company, many French consumers turned to foreign brands because these companies offered a rewarding customer experience at a lower cost, in a context where the middle class faced a sense of decline. “The desire for overconsumption is a lifeline, a feeling of existence,” he analyzed.

Faced with this observation, often accompanied by anxiety-inducing climate discourse, Julien Chaverou wanted to demonstrate that the transition is not about “less,” but about “different.” Above all, he believes it is necessary to return to the notion of pleasure. “Those who buy decor and furniture are obviously looking to equip themselves, but also to enjoy themselves. Starting this fall, we will develop new products with a stronger focus on design, without changing our core commitments like affordable prices and Made in France.”

Producing locally and affordably, however, brings several challenges. “For 50 years, manufacturers have been told that France is for luxury,” Julien Chaverou explained. “If I look for a faience or porcelain plate at an average price of 6 or 7 euros, I will have to source it abroad, in Poland for example. French manufacturers won’t be interested because they can sell their products ten times more expensive by working with luxury brands.”

“Our Scale Is Europe”

Several levers can be activated to promote French production, such as reducing margins and, above all, increasing volumes. “Volume must be recreated because reindustrialization will only happen on that basis,” said Julien Chaverou. He also advocates collaboration between brands, manufacturers, and public authorities to rebuild supply chains with a balanced sharing of margins.

However, for the participants, reshoring cannot be thought of solely at the national level. To compete with American and Asian markets, Europe must be able to attract capital. “30% of European savings go to finance the American economy,” lamented Sophie Flak. To stem this outflow, she believes public authorities must implement incentives for investment, such as differentiated taxation.

“Our scale is Europe. We won’t make it otherwise,” she concluded.