Gillette Plant Issue : U.S.-French Ties Take on a Hard Edge
When the 400 workers of the Gillette razor blade factory in this picturesque lakeside city heard rumors early this fall that their American parent corporation planned to close the plant, they launched an energetic counterattack.
They dipped into union funds to take out full-page advertisements in Paris newspapers charging that Gillette planned to “shave” France of an important employer. They staged a highly publicized “reverse strike” in which they posed before television cameras toiling “harder, longer and better” than ever before.
Finally, on the eve of a crucial meeting between Gillette management and the French minister for industry in Paris, four plant workers climbed to the summit of nearby 15,771-foot Mt. Blanc, Western Europe’s highest peak, to unfurl a banner protesting any closing of the plant. Television crews filmed the event from hovering helicopters.
A Fantastic Success
As media campaigns go, it was a fantastic success. No wonder Minister of Industry Roger Fauroux entered the meeting with Gillette officials last September charged with patriotic, protectionist zeal. Talking to reporters afterwards, Fauroux said he told Gillette Vice Chairman Derwyn Phillips, president of the company’s European operations, that “if he closes the factory at Annecy, he will not enter into a conflict with the unions from the plant, but with France herself.”
Then, in language that sounded to everyone around very much like the threat of a state-endorsed boycott, Fauroux, a former manager of one of France’s largest industries who until this point had been considered a friend of American business, went on to say:
“The French market is very important to Gillette in Europe; it would be very irresponsible for the company directors to run the risk of losing it. . . .” He told Gillette officials not to come back until they had come up with a proposal to save the Annecy facility, which produces double-edged razor blades and a few other toiletry items.
Strong Talk
According to the American officials and business leaders in Paris, it was some of the strongest talk in years from a French government that has been increasingly open to foreign investment.
“Fauroux brandished the threat of a boycott weapon as though it would be condoned by the government itself,” one American business leader said. “It was like using the atomic bomb to kill a mouse.”
As a result, the relatively small matter of the closing of a medium-sized manufacturing plant in a remote city has escalated into a serious free-trade conflict between France and the United States. Fauroux elevated the issue into an affaire d’etat between the two countries.
At the heart of the conflict is the right of foreign businesses in France or any other country to close plants and operations when they wish. In this regard, the Gillette factory presents a rather intriguing case study of problems faced by American corporations doing business in Europe, where state control is still a lingering factor in the marketplace.
In the long term, it might be seen as a hint of things to come as Europe is scheduled to unify into a single economic entity by 1992. Protectionist forces then may expand to include the whole continent, not just France or other individual countries.
1992 Unified Market
“If France ever took steps that made it difficult to sell products here,” said one source familiar with the American position, “it would be viewed very seriously by the American government. It was pointed out to the French government that if an investment position becomes too highly politicized, then when the unified market comes in 1992, American companies could decide to go somewhere else.” The European Common Market is scheduled to eliminate trade barriers among member states in 1992.
Lost in all the posturing over state responsibility and corporate rights are the original claims involved in the debate over the plant’s possible closing. Boston-based Gillette, which has never formally announced its intention to close the plant, insists that demand for the old-fashioned, double-edged razors made in Annecy is rapidly disappearing.
The workers of Annecy, whose most articulate spokesman is town Mayor Bernard Bosson, a minister in the former conservative government of Jacques Chirac, claim that Gillette, which also has factories in Spain, England and West Germany, owes France an industrial commitment in exchange for selling its products in the country.
U.S. Ambassador Joe M. Rodgers, a millionaire Tennessee building contractor who has spent much of the last three years promoting what he considers a positive investment climate in France, reacted to the Fauroux statements with anger and shock, according to aides. He dashed off a memo to Washington about a crack in U.S.-French relations, they said.
Members of the American Chamber of Commerce in Paris, briefed on the matter by a U.S. Embassy official in October, reacted with equal horror. The members had visions of the French business climate slipping back into the open hostility of the Charles de Gaulle years, when France gained a reputation as a poor place for Americans to do business.
No Response from Company
Except to say that he “has not retreated one millimeter” from his earlier stand, Fauroux has remained mum on the Gillette issue since his controversial statements. Although there have been two other meetings between Gillette and French officials, the company has not yet come back with a response to Fauroux.
For a short time last month, relations became even more strained. French officials from another ministry attempted to hold up government approval of a proposal by Chicago-based Sara Lee to buy a troubled French hosiery firm, Dim, until Gillette pledged to keep the Annecy plant open. But that link to the Gillette case was quickly severed, according to some sources, by the direct intervention of Socialist Premier Michel Rocard.
Today, most observers agree that the French industry minister was strident and probably wishes he could recall his warlike words. Practically all parties involved--Gillette executives, U.S. officials, the mayor of Annecy, U.S. businessmen in France and even some of the workers here at the Annecy plant--wish Fauroux had tempered his remarks.
But the tough talk has made it difficult to negotiate a settlement satisfying to workers, management and the two governments without the appearance of someone giving up or setting an undesirable precedent. Certainly, other American businesses operating in France have encouraged Gillette to hold fast.
“If Annecy gets away with blocking this closing,” warned one American business leader here, “who’s to say that Hong Kong or Dubuque won’t be able to do the same thing?”
In their strong protests to the French government over the Gillette case, Ambassador Rodgers and other American officials have come close to responding with threats of their own to the French government.
Rodgers, 54, a former campaign fund-raiser for President Reagan with strong links to the Administration, has struggled in his time here with the French language and some of the cultural intricacies of French life. But he has won the affection of the Socialist French government for his business expertise and his enthusiasm for the French market as a good place to invest.
Under Rodgers, the U.S. Embassy produced and distributed an impressive booklet outlining positive aspects of French foreign investment policies.
In a direct dig at Fauroux, U.S. Embassy aides have told their French counterparts that Washington would never treat large French firms operating in the United States, such as Michelin, the tire company, or Saint-Gobain, the big French glass manufacturer, in the same way. Fauroux is the former president and director general of Saint-Gobain.
In fact, Americans have been puzzled by the hard-line positions taken by both Fauroux and Bosson, who is also a member of the National Assembly.
Profitable Company
Fauroux, 62, led Saint-Gobain out of nationalization into a highly profitable $12-billion-a-year company with plants all over the world. Before he joined the Rocard Cabinet, he was director of the elite Ecole Nationale d’Administration (ENA), which produces nearly all of France’s top political leaders.
Bosson, 40, a junior minister in charge of European affairs in the Chirac government, is a conservative, self-described pro-American politician with a sparkling future in French politics. In his impassioned argument to tempt Gillette to stay in Annecy, he offered to rezone the Gillette plant property so that the company could sell it for a substantial profit as residential land. He offered to sell at a low price some of his own land on the outskirts of town for Gillette to build a new plant.
Annecy and the surrounding Haute Savoie, Bosson said, has always been “pro-American both politically and philosophically.” He said that when the Gillette plant’s main labor union, the Confederation Francaise Democratique du Travail, seized control of the plant in 1984 and occupied the offices for 12 days, he condemned the action and ordered the police to evict the strikers.
In fact, the leader of that strike, Jean-Pierre Toubhans, 44, has been the main strategist for the union in its current campaign, including the idea of the “reverse strike” and the climbing of Mt. Blanc. Toubhans is a former senior member of management, a graduate of the Sorbonne and of Gillette’s management training program in Boston who joined the union after feuding with a former plant manager.
$50,000 Salary
He still draws an executive’s $50,000 annual salary, although he devotes full time to union activities. There are some here who claim that resentment against Toubhans and his role in the bitter 1984 strike is the hidden factor behind Gillette’s reluctance to compromise on the Annecy plant.
Toubhans has been credited for focusing attention on the fate of the Annecy workers. Even Gillette executives speak admiringly of his skillful manipulation of the French media.
But over lunch in the Gillette plant cafeteria on a recent afternoon, some of the workers were beginning to wonder if they are the victims of their own success. They had seen their modest movement to save the plant turn into a bitter issue between the United States and France.
“We never wanted the thing to become an affair of state,” said Pierre Dussolliet, 41, another union leader and one of the men who climbed the mountain to save the plant. “We just wanted to keep our jobs.”
