The place and structuring role of defence industries in the reorganisation of France's military map
Josselin Droff
Julien Malizard
Researchers at the Defence Economics Chair
Introduction
Since the end of the 2000s, France has undergone a major reform of its territorial mape de la Défense by calling into question a geographical organisation inherited from the cold war. Against a backdrop of budgetary constraints for the Ministry of the Armed Forces, this reform is driven by the imperatives of rationalisation guided by new missions of defence and the evolution of threats within the more general framework of Modernisation de l'action publique (MAP).
In its initial version, the 2008 reform provides for 54,000 jobs cut with a target for the size of the armed forces of 225,000 nationals of the Ministry (civilian and military). But this reduction is not uniform across all regions. Droff and Malizard (2018) quantify these reductions and show that the regions most affected are those in the north-east quarter of the country.
More generally, the reorganisation of military jobs is also aimed at achieving improved efficiency by increasing the concentration of men around nodal points. This concentration is validated empirically by various statistical tests (Droff and Malizard, 2019).
In this reform, some areas are losing staff, while others are gaining., even if there are fewer of them. Potentially, the economic consequences for the most vulnerable areas are high (Droff and Malizard, 2014) and support is provided by the Délégation à l'Accompagnement Régional (DAR) of the Ministry of the Armed Forces, in partnership with a number of players (mainly local authorities, but also the European Union and sometimes companies). This is all the more true as the regions most affected by the decline in military jobs are also those that are still very specialiseds in the defence sector, reflecting very strong inertia effects in the economic structure of the regions (Droff and Malizard, 2018)
The DAR systems make it possible to finance projects designed to offset the loss of induced activity. Among the wide variety of projects, However, an overall trend is emerging: the very strong incentive for private sector activities to take over «lost jobs».». These «growth drivers» include, in certain regions, defence industries are investing and expanding. The manufacturing industry accounted for 23 % of total employment in 1970 (and 22 % of France's GDP), compared with 11 % of employment in 2016 (and 11 % of GDP) (Renier, 2016).
1. The reorganisation of France's military map: an unprecedented reform
For almost a decade now, the Ministry of the Armed Forces has been rationalising its geographical locations. Since 2008, this has led to a large number of units being disbanded, transferred from one site to another and resources (skills, infrastructure, etc.) being pooled. Restructuring involves closure of more than 80 sites or units between 2009 and 2016. In addition, more than thirty sites have been affected by a move from one town to another.
The DAR has set up support systems for a total of more than €260 million (between 2009 and 2015), plus funds provided by other partners (local authorities and the European Union), representing a total of more than €1.1 billion. 1. In total, over the period 2009-2015, more than sixty sites have been the subject of a Defence Site Revitalisation Contract (CRDS) or a Local Revitalisation Plan (PLR). These schemes aim to « eventually recreate a number of jobs per site equivalent to the departures attributable to the Ministry of Defence »(circular dated 25 July 2008). The general idea is therefore to compensate for the economic losses suffered by local areas (loss of direct, indirect and induced jobs, reduction in tax revenue, decline in the property market, etc.), in particular the most fragiles, given their dependence on military personnel and their economic dynamism.
The public compensation« measures» are varied and include, for example, the relocation of public services (Insee in Metz), the creation of training centres and educational services (military training centres in Bitche or Bordeaux, or boarding schools of excellence in Sourdun, Barcelonnette or Noyon), or the rehabilitation of historic military sites with the aim of promoting tourism (Dieuze or Verdun). In a report published in 2014, the Cour des Comptes highlighted the uncertain effects in terms of jobs and dynamism of many of these projects.
On the other hand, there is a very strong incentive in these projects for the private sector activities take over from «lost jobs» via These include business start-ups around business incubators, business parks for companies offering access to transport or telecommunications infrastructure, and measures to help companies set up in the area (tax incentives in particular). These can be referred to as «private compensation». Looking at the various projects and the expectations of the regions in terms of job creation and economic dynamism, it is even possible to see public compensation as short-term aid, whereas private compensation would be more in line with a long-term regional dynamic.
2. The defence industry: a pivotal role in the resilience of certain regions?
The defence industry is spread across the whole of France, with the emergence of clearly identified regional centres. A closer look at restructuring support measures, and in particular their geographical distribution, suggests that in some areas affected by the reform, the industry is still in a state of decline, the defence industry plays a structuring role in the regional economic fabric by investing - sometimes very substantially - in projects to develop production capacity or diversify the business.
It would then seem that certain territories are following a «path constraint» 2, In addition to the defence of economic activities, there is also a substitution of private industrial jobs for public military jobs.
The table below presents a selection of territories for which the Ministry of the Armed Forces has decided to provide «public financial compensation» and for which it is also possible to identify investment initiatives by Defence Technological and Industrial Base (DTIB) companies (with defence-related and/or potentially dual-use activities) over the restructuring implementation period. These PLR / CRSD are often conceived within a geographical framework that goes beyond the sole perimeter of the commune of reference for the scheme (employment area, department or even region).
These industrial dynamics that we are identifying withinocal defence industry ecosystems concern more than a dozen of the sixty or so areas covered by the Ministry's support scheme. They often result in local investment, These investments can have a significant impact on the quality of our products and services. These investments can have a a highly structuring role in terms of supply and demand, This contributes to the economic development of the areas concerned.
In particular, there are multiplier effects linked to the salaries of the staff employed and likely to be partly reinjected into the local economy. However, these effects depend on the propensity to import and the savings rate of local households. There are also effects on supply. First on the’private offer (possible establishment of suppliers around the industrial activities, development of subcontracting and service activities, sometimes creation of a new business). ex nihilo related activities, as in the case of the resource centre to support start-ups in Bourges).’public offer with the maintenance or even development of certain public services (training and transport in particular).
Conclusion
Public support for the regions via the DAR plays an important role in their resilience following the departure of military units, some of which had been established for decades. In conversion schemes, the initiatives to support private supply play an important role. We would also like to emphasise the significant, and sometimes even central, role that defence industries, This is particularly the case in certain areas that have been severely affected by the reform and are experiencing structural economic difficulties. We therefore suggest the existence of a private/public substitution which, in some areas, has its origins in the defence industry.
However, taking a long-term view, it is important to avoid replacing one addiction with another. Defence activities are linked to weapons programmes and the export of weapons systems. They are therefore very often cyclical in nature. One way of avoiding mono-activity, territorial dependence and the associated economic consequences in the event of a drop in activity could be to diversify production and move towards alternative technologies and products.
The case of the’aeronautics industry Belge is a successful example of diversification from military activities (production of the F16 in the 1980s) to what is now a predominantly civilian activity, but one that enables it to maintain skills that are useful for the production of defence systems. Examples of successful diversification include Sabca - Belgium's oldest aerospace group - which has diversified into the MCO market, and Sonaca, which was set up in 1978 to help assemble the aerostructure for the Belgian F-16s and is now mainly positioned in the civil market.
Bibliography
Droff J., Malizard J., 2014, «Rationalisation versus History in the geographical organisation of defence in France», Journal of Regional and Urban Economics, 1, p. 63-85.
Droff J., Malizard J., 2018, «Réformes de la carte militaire: Quelle ampleur régionale?», National Defence Review, Tribune 1048 [online].
Droff J., Malizard J., 2019, Quand l'armée s'en va! An empirical analysis of the coherence of the Ministry of the Armed Forces' support for territories, Revue d'Economie Régionale et Urbaine, 1/2019, p. 97-123.
Renier R., 2016, «Industry is still losing ground», Alternatives Economiques, HS n°109, p. 36-37.
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↑1 Source: Restructuring Delegation. Data including schemes financed outside mainland France. ↑2 The concept of path constraint (or path dependency) is frequently used by evolutionary economists. It reflects social behaviour that has been repeated throughout history, even though the situations faced by the players have changed in nature.