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Despite obstacles, business relocations soar in France

Published on September 25, 2023 by Pierre Belhache - 3 mins reading time
SMALL BUSINESSES Companies CONSTRUCTION Loans

As of mid-September, France was home to almost 36 relocation projects, demonstrating the willingness of companies to repatriate production that they had either done themselves or subcontracted abroad. Despite this sustained pace, SMEs and SMBs that take the plunge still face a number of obstacles, including the need to manage expenses, particularly those relating to land and labor costs.

Some fifty relocation projects expected by the end of 2023

The number of relocations in France remains high. According to a study carried out by Trendeo for Les Echos, 36 relocation projects were recorded in September, creating almost 500 jobs. Most of these were in the central-eastern part of the country, notably in Auvergne-Rhône-Alpes and Hauts-de-France. Food processing, healthcare and electrical equipment are the main sectors concerned.

Whereas only a dozen projects a year were recorded between 2009 and 2019, 2023 should see a sustained pace.

According to David Cousquer, founder and managing director of Trendeo, even if the trend has slowed after a sharp post-Covid rise, " we should reach around 50 projects by December 31, compared with 51 in 2022 and 91 in 2021 ".

This increase in the number of relocation projects is essentially linked to the multiplication of aid schemes and the implementation of the France Relance and France 2030 plans. Risks to supply chains aggravated by the war in Ukraine may also explain it.

Numerous obstacles

There is no shortage of examples of relocation projects in France in 2023. These include the 13 million euro investment by the Benta laboratory in its Saint-Genis-Laval plant in the Rhône region, which specializes in drugs for bipolar sufferers. Another example: Electrolux Professionnel, based on the Mont business park in Aubusson, plans to develop a new salad spinner to relocate what was produced in Asia to the Creuse region. As for Dim Brands International, last July it announced its intention to relocate 90% of its pantyhose production to its historic factory in Antun, Saône-et-Loire, France.

While relocation is a well-established phenomenon in France, there are a number of obstacles in the way of would-be "made in France" companies, starting with land. "For every euro spent on machinery, there's another euro spent on real estate ," reports David Cousquer in Les Echos. What's more, the arrival of an industrial activity is generally not well received by the local population. These difficulties are compounded by the fact that labor costs remain particularly high.

The French government aims to encourage companies to relocate their activities by offering "turnkey" sites, including investments, engineering credits and support.