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Viewing cable 07PARIS1075, FRANCE?S COMPETITIVENESS CLUSTERS
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Reference ID | Created | Released | Classification | Origin |
---|---|---|---|---|
07PARIS1075 | 2007-03-20 08:59 | 2011-08-24 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Paris |
VZCZCXRO9979
PP RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHFR #1075/01 0790859
ZNR UUUUU ZZH
P 200859Z MAR 07
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC PRIORITY 5772
INFO RUCPDOC/USDOC WASHDC PRIORITY
RHEHAAA/WHITE HOUSE WASHDC PRIORITY
RHMFIUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUEAUSA/DEPT OF HHS WASHDC PRIORITY
RUCNMEM/EU MEMBER STATES PRIORITY
UNCLAS SECTION 01 OF 03 PARIS 001075
SIPDIS
SENSITIVE
SIPDIS
WHITEHOUSE FOR OSTP
HHS FOR INTERNATIONAL AND PAS TO NIH
STATE FOR EUR/WE, EB, OES/PCI, STAS
STATE PASS NSF AND NASA
USDOC FOR ITA AND NIST
USEU FOR SMITHAM
E.O. 12958: N/A
TAGS: EINV ECON ETRD ECPS EAIR ENRG EIND TNGD TRGY
TSPL, PGOV, FR
SIPDIS
SUBJECT: FRANCE?S COMPETITIVENESS CLUSTERS
REF: 06 PARIS 7882
¶1. (SBU) Summary: The GOF is promoting the establishment
of competitiveness clusters ("poles de competitivite" in
French), combining the efforts of enterprises, research
entities, and higher education institutions to develop
technologies into products with practical applications.
The GOF hopes to provide jobs and strengthen regional
economic vitality in the process. While previous regional
development policy focused on redistributing resources to
less prosperous regions, France is shifting its emphasis to
improving competitiveness, promoting innovation, and
fostering public-private partnerships to generate
development. The GOF is providing seed money to clusters
until their own commercial projects can make them self-
sustainable. The GOF has already allocated one third of
the earmarked 2005-2007 budget of 1.5 billion euros (USD 2
billion). Competitiveness clusters exist in technologies
in which the USG and U.S. private sector have key
interests: alternative energy fuels such as biomass and
bio-diesel, information and communications technology
(ICT), biotechnology, and aerospace (see septel). France
has established 66 such clusters. The top ("world class")
poles are in the aerospace, agro food sector, ICT
manufacturing, transportation, biotechnology, and energy.
The OECD initial evaluation of these clusters is positive,
while some analysts caution against too much reliance on
state-led initiatives. End summary.
¶2. (SBU) Econoff recently spoke with Ministry of Economy,
Finance, and Industry (MINEFI) General Directorate for
Enterprise Technological Partnership Department Asia and
Americas Bureau Head Alain Griot. This cable has
information gleaned from that conversation, information
provided by APP Toulouse, and public sources.
What is a Competitiveness Cluster?
==================================
¶3. (U) In December 2002, France launched a wide-ranging
industrial strategy, particularly focused on research and
development (R&D) and aimed at increasing its industrial
competitiveness in the changing global economy. France?s
Interministerial Committee for Planning and Urban
Development (French acronym CIADT) agreed to implement the
policy and defined a series of measures to promote
competitiveness clusters in 2004. Competitiveness clusters
aim to create synergies between businesses, higher
education hubs, and research units to engage in R&D
projects that have international applications. Their aim
is to spark growth of industrial activities, provide jobs,
and strengthen regional economic vitality.
¶3. (U) In September 2004, the CIADT launched a call for
projects that would form the first set of clusters working
on technologies and industrial activities in which France
is specialized or has potential. Based upon public-private
partnerships, eligible proposals may involve businesses,
research centers and higher education hubs, financial
institutions, regional authorities, France?s central
government and Europe. CIAT received 105 applications, and
by July 2005, established and provided seed money to 66
clusters. The response to another call for projects in
early 2006 (more than 200 applications received) showed the
increasing interest of private companies and research
entities for this new mechanism.
GOF Providing Seed Money
========================
¶4. (U) The GOF is providing seed money to clusters until
their own commercial projects can make them self-
sustainable. The GOF has already allocated one third of the
earmarked 2005-2007 budget. Over the three year period, the
state is allotting 230 million euros (USD 302.5 million)
per year directly from various ministries, 170 million
euros (USD 223.6 million) per year through several
independent agencies such as the Agence nationale de la
recherche (National Research Agency), and 100 million euros
PARIS 00001075 002 OF 003
(USD 131.5) per year through fiscal exemptions. The 19
cluster R&D projects funded in 2005 received 27.25 percent
of their funds through state aid, leaving 72.75 percent of
the total to private enterprise. Forty percent of private
sector beneficiaries are small and medium enterprises
(SMEs).
How Clusters Work
=================
¶5. (U) Even though the French government approves and
monitors every cluster, each one is run autonomously. It
is responsible for its own management, development, and
decision-making. A financing committee, comprised of
regional as well as central government representatives, and
a scientific committee, made up of central government
representatives and experts in each cluster?s particular
field, oversee and evaluate performance and efficiency. In
July of 2008, the government will evaluate the success of
the cluster policy. A scoreboard will be published,
displaying the number of large companies, SMEs, and jobs
that make up each cluster, the number of patent
applications, scientific publications, new public and
private R&D collaborations, added value for cluster
companies, market share, and finally the number of jobs
created.
Classification of Clusters
==========================
¶6. (U) Three cluster subcategories exist: world class,
internationally-oriented, and regional. These clusters are
classified based on their international visibility, foreign
participation, and potential for profitable international
applications. The "world class" clusters span the
aerospace, biotechnology, communication, ICT, and
transportation sectors. Among the 66 clusters, 16 have a
global orientation. Competitiveness clusters, however, are
not only intended for emerging technologies but also for
more conventional fields as well as more mature sectors
(such as automotive and aviation industries and health).
U.S. Interest and Involvement
=============================
¶7. (U) Competitiveness clusters exist in technologies in
which the USG and U.S. private sector has key interests:
alternative energy fuels such as biomass and bio-diesel,
information and communications technology (ICT), and
biotechnology. The secure communications cluster in Sophia
Antipolis boasts participation from Cisco, Hewlett-Packard,
Honeywell, Intel, and Oracle. Telecommunications equipment
manufacturers such as Motorola and Qualcomm have also made
significant investments. Xerox participates in the Image,
multimedia and digital life (IMVN) cluster of the Ile de
France region, which conducts research on knowledge
management and engineering, image and sound, video games,
digital access to cultural heritage and digital life, and
in the microtechnologies, nanotechnologies and software
cluster (Minalogic) in Grenoble, which aims to develop new-
generation miniaturized chips and embedded software.
¶8. (U) Energy is the focus of several clusters. Dijon and
Pont-Saint-Esprit are focusing on nuclear technology, such
as how to recycle nuclear waste. Grenoble is developing
renewable energy technology, such as biomass, solar cells,
and wind energy. The cluster has announced 115 projects
and has initiated work on 53, which have been financed at
54 million euros (USD 70 million.) The cluster includes
105 actors including 27 industrial groups and 31 small and
medium sized enterprises (SMEs). The cluster cooperates
with firms in Japan, the United States, Germany, and China,
but has plans to increase international collaboration.
Cadarache is also developing technologies that do not emit
carbon dioxide, including hydraulic, nuclear, wind and
solar power. Perpignan is trying to apply these
technologies to architecture to develop low energy
consumption buildings.
OECD and KPMG Studies of the Competitiveness Clusters
============================================= ========
PARIS 00001075 003 OF 003
¶9. (U) The territorial review of France published by the
OECD in April 2006 provides the first international
appraisal of the French competitiveness clusters measure.
The OECD generally welcomes the new regional policy but has
detected a number of potential threats. The OECD warned
that institutional actors should be transparent and well
coordinated. At present a multitude of actors with ill-
defined roles, including the central government, the
regions, and other public administrations, creates the
potential for confusion. The OECD cites that there is a
risk of inefficiency as funds are spread over a large
number of clusters. Furthermore, the governance structures
of clusters should provide for an appropriate involvement
of SMEs. Universities should better promote their research
results and increase their autonomy in order to be on par
with enterprises when cooperating in clusters.
¶10. (U) A December 2006 KPMG study noted that the clusters
needed a more strategic vision regarding the international
marketability of their projects, improved cooperation among
the various participants, and improved knowledge of
potential markets. According to KPMG, clusters that
focused on projects with international applications had
more visibility and more interest, although too many of the
clusters lacked such an international dimension. The
success of projects originating from the clusters would
depend on knowledge of the potential markets, including
their size. The addition of business schools, absent in
all the clusters, would help add such expertise.
¶11. (U) The KPMG study showed that participants in the
clusters thought they had not developed as many concrete
applications (FOR FUNDING R&D? CLARIFY) as they expected.
Development of practical applications was also hampered by
the reluctance of participating firms to share innovations
with other firms participating in the same clusters. On
the upside, most involved in the clusters anticipated that
they would maintain the same level of participation over
the next five years. Nonetheless, KPMG predicted that
several clusters would likely fail over the next several
years, and about fifteen had serious problems.
¶12. (SBU) Comment: The French focus on building public-
private partnerships and breaking down the barriers that
prevent the commercialization of research appears well-
founded. As indicated above, the clusters program presents
opportunities for U.S. firms, including potential funding
for R&D conducted in France. What is less clear is whether
the kick-start provided by the program will be sufficient
to foster development of the kind of informal
entrepreneurial networks (in regions where they do not
already exist) that are common to truly effective clusters.
¶13. (U) Main Reference Website:
For more information on clusters in English or French,
including locating specific clusters and industries and
finding financial support, visit:
www.competitivite.gouv.fr.
STAPLETON