Monday, April 8, 2013

Heuliez Goes Under for the Third Time

Heuliez, an auto body manufacturer that has been trying to diversify into other lines, filed for bankruptcy for the third time. You will recall that back in 2010, when we were all still Keynesians, Ségolène Royal boasted of having saved the firm, which is located in her region (Poitou-Charente) by investing state funds. This latest failure is an object lesson in what can go wrong with such industrial policies.

Of course, it might have worked out. A large pending order from Volkswagen might have saved the firm, but it didn't come through in time. Still, in a time of general overcapacity in European automobile manufacturing, the decision to prop up a failing firm must be weighed very carefully. One of my steady criticisms of French policy is that too much state money has gone to failing firms and too little to promising startups, R&D, and infrastructure. Given the constraints on state budgets, every grant requires close scrutiny. To be sure, Obama saved the US auto industry, but the US market is very different from the European market, as French policymakers should know.

1 comment:

Anonymous said...

it seems (still) a sound investment: electric cars for townships that have vast fleets running but little ground covered (mostly in-town or in-county), small electric trucks for a town's gardeners, for example, plus autoshare rentals, etc. There's an established client base since Heuliez makes buses for public transportation in towns and cities.The models are rather cute, not overpriced compared to the competition, and are produced in France. It's a mystery to me as to why the Heuliez cars aren't more popular and don't sell.