Why the war in Ukraine (again) will hurt the economy of Auvergne-Rhone-Alpes

Less than a week after the start of what is now called the “total war” between Russia and Ukraine, nearly 400,000 refugees fleeing to the west have left the country, but they are attacked. I continue to resist. The century has already foreseen health, economic and geopolitical consequences that transcend the borders of these two countries.

It is France’s major industrial region and the second French region in terms of GDP, including up to Auvergne-Rhone-Alpes.

The European Union (EU) is trying to put a big brake on the Kremlin’s ambitions, not keeping the fact that it is primarily in the field of economic sanctions.

The response of the 27 EU member states, which are severely frank but graduated, specifically includes the freeze on Russia’s financial assets and the exclusion of certain banks in the country from the Swift international trading system. Emphasis on economic exchanges with Russia (even if these sanctions currently exclude the necessary gas trade in Europe). And this is the period that remains undecided and is about to be further strengthened by the third package of compulsory measures at the economic level expected in the next 48 hours.

Already on Friday, the first impact was already felt in the tourism scene. There, cancellations began to occur at resorts in the Alps, which are most popular with Russian customers, such as Courchevel and Val d’Isère in the Talentes Valley.

Less than 2% of French exports …

And even though Moscow is not among the top five commerce maintained by France on the world stage, as François Turcas, the current president of CPME du Rhône, Moscow still accounts for 1.3% of France’s exports.

“We buy from them € 6 billion worth of orders and sell nearly 5 billion, which is equivalent to a trade deficit of about 1 billion.”.. Anyone who supports today “ Voluntarily “As he himself recalls, the royal prerogative of the Russian Honorary Consul in Auvergne Rhone Alpes since 2018 is particularly” “Administrative Relay for the People”, “Economic Expertise of the Territory and Relationships with Political, Economic and Cultural Parties”, At the heart of the world conflict today is “I didn’t even imagine.”

And for him, there is no doubt.Faced with the economic sanctions discussed, he soon said that since this Friday, it has already been partially adopted by the European Community, especially on the financial side. “Lack to manage” For 500-700 French companies that trade with Russia and concentrate 200,000 jobs locally. François Turcas estimates that about “10-15%” of this is in the Auvergne-Rhone-Alpes region.

According to Auvergne-Rhone-Alp CCI statistics, the company is headquartered in Auvergne-Rhone-Alp and there are actually 52 companies that have chosen to set up subsidiaries in Russia (72 in total). However, in 2021, it will be more widely exported to Russia, and more generally 880 regional companies will be hit hard by trade with Moscow.

Regions that trade (again) with Russia … and Ukraine

Regionally, Russia is certainly the 21st customer country in 2020, accounting for almost 1.1% of the region’s total exports. The main exports are chemicals, perfumes and cosmetics (22.6%), followed by industrial and agricultural machinery and others (16.6%), followed by electricity and household equipment (12.8%). Equipment (9.5%) and rubber, plastic or mineral products (7.1%) according to the figures provided by customs.

Among these companies are the pharmaceutical and industrial laboratories in the food industry, which supply fertilizers and phytosanitary products for harvesting, as well as the manufacturer of the industrial valve Tecofi, which has a subsidiary in Moscow that produces € 7 million in sales. There are also industrialists in, or even Grenoble’s Araymond and cable car maker Poma, both of which have subsidiaries in Russia.

Health, where Auvergne-Rhone Alps occupies an important position in the domestic scene in the presence of several major laboratories (Sanofi, Merck, Boehringer Ingelheim, BioMérieux, etc.), is also an export sector that usually trades with Russia. As recalled by Ludwig Aubrey, president of Eden Cluster, the regional defense department already had a relationship with Ukraine.

“There are already seven out of 100 companies in the cluster that have declared that they have achieved more than 5% of their exports in this country,” he added. “Three companies have technical bricks, especially sensors in Ukraine. It depends directly on the company of Ukraine, because Ukraine has developed advanced technology in the field of radiation detection since Chernobyl. “

“The rare earth problem should not be forgotten, as Ukraine is one of the major producers entering the battery and electric vehicle composition in an era when the automotive industry is already affected by the shortage of electronic components. . “Add François Turcas.

On the import side, Russia was the 48th supplier of Auvergne-Rhone-Alps in 2020, accounting for 0.2% of the region’s total imports, so at first glance the impact was small. Not surprisingly, metallurgy and metal products (28%) first, followed by industrial and agricultural machinery (18%), wood, paper and corrugated board (17%), rubber, plastic and mineral products (11%), In addition, to a lesser extent, chemicals, perfumes, cosmetics (10%).

First inventory expected this week

But there is no mistake. Nevertheless, these imports prove to be strategic for France’s major industrial areas.

Morane Rey Hute (CCE), the new regional president of Auvergne-Rhone Alps (CCE) President of Lyon startup Meersens, specializing in environmental intelligence) Is already on the bridge, with the goal of creating a summary of businesses and sectors in all regions that could be directly affected by this crisis.

He is trying to gather elements from all parts while waiting for the first results to be delivered to the Auvergne-Rhone-Alpes region and its president Laurent Wauquier, who has economic capacity at the territorial level later this week. Masu: prefectures, economic institutions, CCI, customs, etc.

“The Ukrainian crisis will be an important issue as there are many companies working with Russia and Ukraine. These are essentially industrial companies, and to a large extent devoted to health, but gas plants. We are also dedicated to the industrial machinery used to supply and all of its piping, etc., “continues Morane Rey-Huet.

Luxury goods department in France. There is also a Hermès workshop in the Auvergne-Rhone-Alpes region. Sayat, Puy de Dome) and LVMH (Louis Vuitton brand, which just opened a new workshop in Drome) can also be hit hard by this new crisis. “” Silk sector outlets can be particularly affected “, Morane Rey-Huet says.

With 626 companies and 17,460 jobs, France’s main textile region, the Auvergne-Rhone-Alps region, and more specifically the Lyon region, has a long tradition and chain from design to distribution.

Is the bill going up again?

After rising in the last few months, raw material costs are also on the verge of a new surge in the near future, which has the effect of imposing even greater penalties on local businesses, especially electricity-intensive industrial enterprises.

“” Billing may increase not only for private companies that set rates and quotes, but also for communities that have already budgeted for public purchases. »Warns Morane Rey-Huet.

In this regard, Ludovic Ouvry, president of Eden Cluster and director of Ouvry, a manufacturer of textile and personal protection systems, has already predicted: All suppliers from Germany, Poland, Hungary, or the Czech Republic that produce materials that require a lot of energy will raise their prices in the next two weeks. This penalizes not only the first aluminum, but also carbon and, more broadly, metallurgy. It takes a lot of energy to operate these furnaces. “, He believes.

The supply of certain materials, such as rare earths and steel produced in Eastern Europe, predicts a new growth of the French economy in 2022 at 4%, leaving the question of how much it could delay recovery. .. After a 7% jump in 2021.

“The lack of a single component can be sufficient to deliver a machine worth € 1 million, which can lead to problems within the industry,” recalls CCE, regional president. ..

After the pandemic, a new crisis that could re-emphasize the need to further accelerate the path of industrial relocation desired by public institutions is already partly due to France’s 2030 investment plan or Bpifrance’s French Fab program. It is being promoted. Even if the form of “realism” is pointed out:

“Rather than starting by relocating our steel production plant to the center of Lyon, other countries such as China, Australia and Latin America will also start with a diversified supply that represents alternative solutions. We need to focus on creating added value in the transformation process, “says Moranley Hute.