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French mega-suppliers’ trajectories during the modular era: some evidences on Faurecia, Valeo and Plastic Omnium

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  • Vincent FRIGANT (GREThA)

Abstract

The purpose of this paper is to present factual elements concerning the rise (decline) of French mega-suppliers. The study will focus on France’s three main mega-suppliers, all actors that have had a stake in carmakers’ modularisation strategies: Faurecia, Plastic Omnium and Valeo. Section 1 returns to the late 1980s and shows that the emergence of today’s mega-suppliers is rooted in this era and was piloted by French carmakers. Section 2 positions French mega-suppliers in a global hierarchy and distinguishes between two varieties: suppliers of simple parts; and module suppliers, with the latter constituting the focus for the rest of this text. Section 3 shows how module suppliers’ rise is rooted in their aggressive mergers and acquisitions (M&A) strategies. It also demonstrates differences between suppliers in terms of the two leading acquisition strategies that were observed. Section 4 explains why these companies’ profitability continues to disappoint, developing the idea that modular strategies imply a big rise in fixed costs, something that suppliers cannot knock onto sales prices. Finally, section 5 returns to companies’ internationalisation strategies and offers a typology for the different entities that mega-suppliers consolidate

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Bibliographic Info

Paper provided by Groupe de Recherche en Economie Théorique et Appliquée in its series Cahiers du GREThA with number 2011-20.

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Date of creation: 2011
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Handle: RePEc:grt:wpegrt:2011-20

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Keywords: modularity; supply chain; industrial architecture; automobile.;

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References

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  1. Thomas Klier & James Rubenstein, 2008. "Who Really Made Your Car? Restructuring and Geographic change in the Auto Industry," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wrmyc, December.
  2. Helper, Susan & MacDuffie, John Paul & Sabel, Charles, 2000. "Pragmatic Collaborations: Advancing Knowledge While Controlling Opportunism," Industrial and Corporate Change, Oxford University Press, vol. 9(3), pages 443-87, September.
  3. Vincent FRIGANT (GREThA, CNRS, UMR 5113), 2011. "Egyptian pyramid or Aztec pyramid: How should we describe the industrial architecture of automotive supply chains in Europe?," Cahiers du GREThA 2011-27, Groupe de Recherche en Economie Théorique et Appliquée.
  4. BOLESŁAW DOMAŃSKI & KRZYSZTOF GWOSDZ, 2009. "Toward a More Embedded Production System? Automotive Supply Networks and Localized Capabilities in Poland," Growth and Change, Gatton College of Business and Economics, University of Kentucky, vol. 40(3), pages 452-482.
  5. Vincent FRIGANT (GREThA), 2007. "Between Internationalisation and Proximity: the internationalisation process of automotive first tier suppliers," Cahiers du GREThA 2007-13, Groupe de Recherche en Economie Théorique et Appliquée.
  6. François Fourcade & Christophe Midler, 2005. "The role of 1st tier suppliers in automobile product modularisation: the search for a coherent strategy," Post-Print hal-00262872, HAL.
  7. Anders Larsson, 2002. "The development and regional significance of the automotive industry: supplier parks in western Europe," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 26(4), pages 767-784, December.
  8. Timothy Sturgeon & Johannes Van Biesebroeck & Gary Gereffi, 2008. "Value chains, networks and clusters: reframing the global automotive industry," Journal of Economic Geography, Oxford University Press, vol. 8(3), pages 297-321, May.
  9. Petr Pavlínek & Jan Ženka, 2010. "The 2008--2009 automotive industry crisis and regional unemployment in Central Europe," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 3(3), pages 349-365.
  10. Vincent Frigant, 2002. "Geographical proximity and supplying relationships in modular production," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 26(4), pages 742-755, December.
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Cited by:
  1. Vincent FRIGANT (GREThA, CNRS, UMR 5113), 2011. "Egyptian pyramid or Aztec pyramid: How should we describe the industrial architecture of automotive supply chains in Europe?," Cahiers du GREThA 2011-27, Groupe de Recherche en Economie Théorique et Appliquée.

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