hance the industry’s appeal, featuring a
20 -foot inflatable plastic rooster, a sym-
bol of French pride. The rolling caravan,
called the “French Fab” tour, showcases
factories as hubs for high tech.
Employers say manufacturing has an
image problem after decades of cheap
competition from Asia and Eastern Eu-
rope closing factories across France.
The industry has shrunk to 10 percent of
the economy today from 25 percent in
the 1960s. Recent factory closures at
Ford, Alstom and Whirlpool have added
to an image of woe.
Labor unions say the issue is not a
shortage of workers, but that companies
pay low wages and then complain about
a lack of labor. If companies increased
pay, unions argue, they would find em-
ployees.
Others say France’s predicament is
more complicated.
“The real problem is that French in-
dustry is still not as modernized as else-
where in Europe,” said Patrick Artus,
the chief economist of Natixis Bank,
based in Paris. “That has led to low pro-
ductivity, which prevents companies
from raising salaries,” he said. Manufac-
turers need to ramp up investments, he
added.President Emmanuel Macron is try-
ing to clear roadblocks, in part by mod-
ernizing the national vocational system.
Only around a third of French students
pursue vocational training or appren-
ticeships, which are seen as leading to
unprestigious work in a country that
prizes academics and white-collar ca-
reers.
By contrast, in Germany, Europe’s
manufacturing powerhouse, the indus-
try is seen in a positive light. Around half
its 16- to 24-year-olds enter apprentice-
ships that include hands-on work at
Siemens, Daimler and other name
brands. In France, manufacturers say,
the training is less intensive and no
longer produces enough people with
skills for the current crop of jobs.
Mr. Macron’s change lifts the age limit
for apprenticeships to 30 from 25 and
makes it easier for people to qualify for
and keep them. The government also
plans to reimburse companies for ap-
prentice work contracts. One million
low-skilled job seekers and one million
young people from disadvantaged back-
grounds will be offered training in dig-
ital technologies. France’s generous un-
employment benefits are being tight-
ened to return people to the work force
more quickly.But in Ain, and elsewhere, the efforts
aren’t producing results fast enough.
This area became a hub for plastics
making in the 1920s, when companies
made fashionable combs and hair acces-
sories. Activity expanded after World
War II as demand for plastics, tools and
machinery drove a surge in manufactur-
ing.
But French industry proved no match
for globalization and did not adjust to
competition from countries with lower
labor costs and tax rates. Europe’s fi-
nancial crisis forced companies to mod-
ernize. French factories are now scram-
bling for programmers and coders to
run increasingly automated machinery.
“We’re struggling to convince people
that the work isn’t the same as decades
ago,” said Damien Petitjean, the director
of the Lycée Arbez Carme, the main high
school in Oyonnax.
The plastics industry in particular
faces a hard sell, said Mr. Petitjean, as
concerns mount over the environmental
impact of a throwaway culture.
The Oyonnax school once specialized
in training for industrial jobs. In the
1970s, it shifted to a general curriculum,
mirroring the decline of manufacturing.
Today it has swung back to offering
technical diplomas, working in partner-ship with companies and research insti-
tutes.
Yet only half its 1,100 students pursue
such diplomas, Mr. Petitjean said. And
last year, only 40 entered the plastics in-
dustry.
Pay is one big reason.
Industrial salaries have risen gradu-
ally for the last 20 years and increased
about 2 percent last year. Still, entry-lev-
el workers earn just a couple hundred
euros more than France’s monthly min-
imum wage of €1,521 a month, or about
$1,690. Small and medium-size busi-
nesses, the backbone of French indus-
try, say they can’t offer more because
they must make a hefty contribution to-
ward France’s social safety net, which
provides health care, education and un-
employment insurance.
“In France, employer taxes amount to
40 percent of a worker’s salary,” said
Stéphane Vandenabeele, the managing
director of UNT, which makes precision
tools for eyewear and watches. He re-
cently lost a skilled employee to a com-
petitor in Switzerland that offered
nearly twice the €2,800 after-tax salary
he paid. With Swiss employer taxes of
just 12 percent, he said, he couldn’t
match the price.
Employers in Plastics Valley try, in-creasingly, to poach workers from other
companies or devise creative work-
arounds.
Mr. Pernoud, the producer of plastics
injection molds, hired a technician from
Portugal to fill one of a dozen openings
at his 110-person operation. Although he
pays up to €3,000 a month for engineers,
there are few takers. But that’s good
money in Portugal, where the average
monthly wage is around €1,900, Mr.
Pernoud said. He hopes to hire four
more — quickly.
“I have no choice but to look abroad,”
he said. “I can’t develop my business
otherwise.”
Ten minutes away, PRP Creation,
which makes plastic cosmetics contain-
ers for luxury groups including Dior,
Chanel and Estée Lauder, has found a
partial solution by placing job ads on
Facebook, Twitter and LinkedIn.
The chief executive, Joël Viry, said
many of the 175 jobs on his floor are on a
classic production line. He attracted
workers by establishing good manageri-
al relations.
The son of a boilermaker, he regularly
walks the floor to converse with employ-
ees, who include older workers and over
30 nationalities. At any given time, at
least 40 young people on interim con-tracts work in the factory to gain experi-
ence. Other companies, worried that
government reforms will take time, are
pooling resources to create their own
training programs.
At LMT Belin, a producer of tools for
the plastics, auto and aerospace indus-
tries, the chief executive, Bertrand
Lefevre, teamed up with five companies
to provide hands-on work experience
for the unemployed. On a recent after-
noon, eight young men trained on how to
program robotic equipment, hovering
over a machine churning out high-per-
formance drill bits.
Mohamed El Hmidi, 23, had worked
mostly in construction and at odd jobs.
He landed in Oyonnax’s unemployment
office a few months ago and heard about
training at LMT Belin. He jumped at the
opportunity.
“This is our future,” said Mr. El Hmidi,
nodding at the factory floor. “Here,
we’re getting exposure to new technolo-
gies,” he said.
For Mr. Lefevre, it was a small victory
in a larger battle for economic survival.
“We can’t just keep complaining
there’s no one to hire,” he said. “We have
to make it happen ourselves.”Constant Meheut contributed reporting.Companies in Ain, France’s “Plastics Valley,” have slowed production because they cannot find enough workers with computer and digital expertise. In addition, the plastics industry faces a hard sell, given concerns over the environmental impact of a throwaway culture.PHOTOGRAPHS BY ANDREA MANTOVANI FOR THE NEW YORK TIMES18,000 jobs, but few takers, in Plastics Valley
F RANCE, FROM PAGE 1..
8 | TUESDAY, JULY 30, 2019 THE NEW YORK TIMES INTERNATIONAL EDITIONbusiness
they get nervous, they’re willing to ac-
cept lower rates in return for the unri-
valed safety bonds offer.
The Federal Reserve Bank of New
York has developed a handy metric that
translates fluctuations in the yield curve
into recession probabilities. Right now,
it puts the chance of a recession starting
in the next year at about one in three —
up sharply from a year ago, and not far
from where it was on the eve of the Great
Recession.
Don’t panic yet, though. Many econo-
mists argue that the yield curve means
less than it used to, partly because the
Fed was until recently raising short-
term interest rates, even as the huge
holdings of bonds that it accumulated
during the recession were putting down-
ward pressure on long-term rates. Tak-
en together, those actions could be
skewing the shape of the yield curve.
And, in any case, it has taken as long as
two years for a recession to follow a
yield-curve inversion in the past.
RELATED INDICATORS: The Financial Con-
ditions Index (from the Chicago Fed);
the stock market.INDICATOR 3: ISM INDEXWHAT TO WATCH FOR: The index falling be-
low about 45 for an extended period.
WHAT IT'S SAYING: Mostly cloudy.DISCUSSION: Every month, the Institute
for Supply Management surveys pur-
chasing managers at major manufactur-
ers about their companies’ orders, in-
ventories, hiring and other activity. It
then aggregates those responses into an
index: Readings above 50 indicate that
the manufacturing sector is growing;below 50, it is contracting. (The institute
also releases a measure of activity in the
service sector, but that index doesn’t go
back as far.)
The manufacturing index has some
significant advantages. It is released
early, often on the first day of the subse-
quent month, and unlike lots of eco-
nomic data, it doesn’t get revised. Most
important, the index is a true leading in-
dicator: It has historically shown signs
of trouble before the broader economy
hit the skids.
On the other hand, manufacturing no
longer drives the American economy,
which means a contraction in the sector
doesn’t guarantee a recession. The ISM
index fell below 50 for several months in
2015 and 2016, for example, signaling an
“industrial recession” that never turned
into the real thing. But steep downturns
in manufacturing tend to be signs of
trouble — it is rare for the index to fall
much below 45 or so without a recession
hitting.
Right now, American manufacturers
are being battered by a global slowdown
and by trade tensions. As of June, the in-
dex is still in expansion territory, but
barely. Many economists think it will fall
below 50 in the coming months but don’t
expect a steeper drop.
RELATED INDICATORS: New orders for capi-
tal goods; regional manufacturing sur-
veys from Federal Reserve banks; the
employment and compensation compo-
nents of the National Federation of Inde-
pendent Business’s monthly survey.INDICATOR 4: CONSUMER SENTIMENTWHAT TO WATCH FOR:Declines of 15 percent
or more over a year.
WHAT ITS SAYING:Partly cloudy.DISCUSSION:Consumers drive the econ-
omy, now more than ever. It is pretty
much impossible for the economy to
keep growing if Americans decide to
keep their wallets closed.
The trouble is, by the time spending
slows, a recession is probably already
underway.
Measures of consumer confidence,
such as the long-running indexes from
the Conference Board and the Univer-
sity of Michigan, provide insight into
how consumers will spend in the future.
Confidence indexes are volatile from
month to month, and they sometimes
drop sharply as consumers react (and
overreact) to the stock market, political
developments and other events. Those
declines often don’t translate into real
changes in spending.
But sustained declines are another
matter. Economists at Morgan Stanley
recently found that a 15 percent year-
over-year drop in the Conference
Board’s index is a reliable predictor of a
recession. By that metric, the economy
isn’t in trouble. Consumer confidence is
basically flat, compared with a year ago,
but it has fallen since late last year.
RELATED INDICATORS: Retail sales; average
hourly earnings; real personal income.INDICATOR 5: PICK YOUR FAVORITEO.K., this is cheating. But no single indi-
cator can tell the whole story of the $
trillion United States economy, and the
measures that performed well in the
past might not do so in the future. So it
pays to keep an eye on a variety of data
sources.
The indicators above are among the
most common inputs into the formal
models that economists use to forecastrecessions. But many economists have a
favorite indicator (or maybe a couple)
that they also watch as a gut check.- TEMPORARY STAFFING LEVELS: Temp
workers are, by definition, flexible —
companies hire them when they need
help quickly and get rid of them when
demand dries up. That makes them a
good measure of business sentiment. As
of June, temp staffing is near a record
high, but it has pretty much stopped
growing. - THE QUITS RATE:When workers are con-
fident in the economy, they are more
likely to quit voluntarily. The quits rate,
a favorite indicator of Janet Yellen, the
former Fed chief, bottomed out shortly
after the Great Recession ended and
rose steadily until leveling off in the mid-
dle of last year. - RESIDENTIAL BUILDING PERMITS: The
housing market has frequently led the
economy both into and out of recessions.
That has made building permits —
which are generally issued several
weeks before construction begins — one
of the best historical indicators of eco-
nomic activity. But construction has
lagged since the last recession, and
housing makes up a smaller share of the
economy than in the past, so permits
may not be as meaningful now. - AUTO SALES:After houses, cars are the
most expensive thing most families buy.
And while owning a car is effectively re-
quired in large parts of the country, buy-
ing a new one almost never is. So when
new car sales are strong, it’s a sign con-
sumers are feeling good. Retail car sales
have typically peaked before reces-
sions, then dropped sharply once one
began. So it isn’t a great sign that sales
are falling.
Signs a recession will come. Sometime.
R ECESSION, FROM PAGE 7THE NEW YORK TIMESTHE NEW YORK TIMESholder but the company.
Adding a set of ethical principles to a
company’s bylaws would mean that
“the people charged with acting for the
corporation will have to discuss how
the corporation should act and will
have to account in that discussion for
how the corporation’s actions affect
others,” Mr. Gamble writes. “They will
have to make a conscience.”
His idea is not that different from
one proposed by Senator Elizabeth
Warren, the Massachusetts Democrat
and presidential contender, who typi-
cally sends shudders through the
business community. Last year, Ms.
Warren proposed that companies with
more than $1 billion in annual revenue
be required to obtain a federal charter
to be a United States corporation that
obligates “company directors to con-
sider the interests of all corporate
stakeholders.”
All of this may sound reasonable, but
in fairness, I suggested to Mr. Gamble
that his proposal could lead to a host of
unintended consequences.
Given that there are already a grow-
ing number of do-gooder proxy con-
tests and lawsuits grounded in little
more than platitudes, I told him his
idea was likely to mire companies in
endless litigation (which might be good
for lawyers).
He acknowledged the possibility, but
he also insisted that “the ethics rules
will work within an existing system
that is highly deferential to manage-
ment.” He also argued that “to over-
come the business judgment rule in the
context of an ethics case, a plaintiff
would need to show ‘bad faith’ in legal
terms.”
“That’s hard,” he added. “It will
deter frivolous lawsuits.”
When I noted that companies could
just enact ambiguous ethics polices to
deter lawsuits, he dismissed the notion
that shareholders, and even board
members, would create rules just for
show.
“It’s a mistake to see the benefits as
one-sided,” he said. “Directors will not
want to engage in a required process of
ethics formation that is transparently a
sham.”
Mr. Gamble believes that enshrining
ethics in a company’s bylaws would
actually reduce the number of proxy
contests and lawsuits because, as he
writes, “there would be a defined form
of protest (an ethics derivative suit)
and because the prior consideration of
social concerns by the company would
make it harder to portray the companyas unfeeling and unreasonable.”
He said that so far he had received
mostly positive feedback, with some
people, including law students at Har-
vard and Stanford, telling him the
ethics rule did not go far enough.
“All recognized that the politics of
getting such a rule passed would be
hard,” he said.
And how did he think his former
clients would react? He has sent his
essay to only a few.
“Most of my clients were smart and
thoughtful people who see the failings
of the economic system as well as its
benefits,” he said. “I expect many will
disagree with the idea. I don’t expect
any will be offended.”
When I called Simpson Thacher’s
current chairman, William R. Dougher-
ty, he declined to comment directly on
Mr. Gamble’s essay, saying only that
“Jamie was a well-regarded, well-liked
partner.”
Ultimately, Mr. Gamble’s proposal is
a call to action, to persuade companies
to behave not as sociopaths and to
have a bit more empathy.
“The fix I propose leaves the private
islands of power private,” he said. “The
only interference by government
would be to require that the sharehold-
ers explicitly state what kind of person
they want their corporation to be.”Former corporate lawyer
wants to rein in ‘sociopaths’
S ORKIN, FROM PAGE 7Jamie Gamble, a retired corporate lawyer,
has said that the executives who hired
him were “legally obligated to act like
sociopaths.”HIROKO MASUIKE/THE NEW YORK TIMESSOURCE: FACTSETSOURCE: FACTSETРЕЕ
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