IN TOULOUSE, THE AERONAUTICAL SECTOR REDOUTS THE “DETROIT SYNDROME”
by Johanna Decorse
TOULOUSE (Reuters) – European capital of aeronautics and space, Toulouse could be hit hard by the collapse in global air traffic caused by the coronavirus pandemic.
Behind Airbus, which has already reduced its production rate by 30%, an entire sector fears the cascading consequences on employment and a possible “Detroit syndrome” in reference to the former American capital of the automobile in decline since the 1970s.
Driven by market forecasts which counted on more than eight billion passengers per year in 2037 then “stunned” by the abrupt stoppage of air transport and its restart which promises to be slow and difficult, the aeronautical sector in Occitania is suffering the blow since the start of the COVID-19 crisis.
“This sector represents 110,000 jobs in the region, subcontracting alone, 86,000 jobs and Airbus purchases from local companies, 5 billion euros. When Airbus coughs, everyone is sick”, summarizes Alain Di Crescenzo, President of the Occitanie Chamber of Commerce and Industry.
“Our forecasts relate to a decrease in aircraft manufacturer purchases of 50% in 2020, a third in 2021 and 25% the following year. If we reduce activity by 50%, that is as much jobs which are threatened, that is to say 40,000 direct jobs and as many indirect jobs “, worries the president of the regional CCI.
Alerted by the staff cuts at Boeing and Rolls Royce, Alain Di Crescenzo fears a “double reflex” at Airbus which would push the aircraft manufacturer to “re-internalize and restructure”.
“Today the aeronautical sector is on a drip, but when the charges will reappear, it will be necessary to repay the loans guaranteed by the State and stop short-time working, this is where everything will start and that the Detroit syndrome could occur. If we do nothing, we could kill the leading European aeronautics industry, “he explains.
Despite the support plan to be announced by the government on Tuesday, Alain Di Crescenzo fears a “first wave of economic and social consequences between the summer and the end of the year”.
The French government is expected to announce on Tuesday an investment fund with around one billion euros to help the aeronautics sector, in particular its subcontractors.
A deadline that Serge Dumas also sees, at the head of Gillis Aerospace, manufacturer of screws and fasteners for aeronautics and space, based in Tarn-et-Garonne.
FROM EUPHORIA TO SIDERATION
“In February, we were in full euphoria, we were practicing just in time. In a few days, we went from full acceleration to full braking, to bewilderment. It took a while to take the measure of what was happening, “says the manager of this SME of 45 people, with a turnover of 5 million euros.
After having postponed an investment of 800,000 euros for a new building and a new machine, the company that supplies Liebherr, Ratier-Figeac or Latécoère, is worried about having to make “adjustments” to its workforce.
“Beyond July the delivery schedules are unraveling because our customers ask us to postpone our deliveries to 2021. The second half may be difficult (…) The single sector is extremely serious but for the moment the boat sinks and learning swimming techniques in the middle of a shipwreck, it is not possible “, explains Serge Dumas.
In a report at the end of April, the Copernic Foundation, Attac, the Amis du Monde diplomatique and the Université populaire de Toulouse, also hypothesized a “Detroit syndrome” in Toulouse and denounced “collective blindness” which since more than thirty years, due to the mono-industry, resulted in the dependence of the local economy on the aeronautical sector.
Today, aeronautics and space activities represent, according to INSEE data, 70% of the turnover of companies in the supply chain.
“Before the health crisis, the regional aeronautics sector was experiencing a very strong growth phase. 2019 was the year of all records in this sector driven by the success of Airbus. The fall was all the more brutal, the shock all the stronger “, explains Caroline Jamet, regional director of Insee Occitanie.
Three out of ten companies in the sector depend more than 50% on the aeronautics market and on a main customer confirms INSEE which on May 7, estimated at -38% the overall decrease in activity in Haute-Garonne, against -33 % nationally. A more pronounced decline directly linked, according to the statistical institute, to the difficulties of the aeronautical sector and its locomotive, Airbus.
“Worried in the short term”, Jean-Luc Moudenc, LR mayor of Toulouse, nevertheless refutes any disaster scenario “à la Detroit”.
For the elected Toulouse, the “revival of aeronautics” must be done by accelerating certain changes and in particular “the decarbonization of the sector”.
“Our companies have such know-how that they can diversify into other areas: defense, medicine or energy,” says Jean-Luc Moudenc.
(Johanna Decorse, edited by Jean-Michel Bélot)