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

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