ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(79)501
Vol.1979/0171

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COMMISSION
OFTHE
EUROPEAN COMMUNITIES
GeneralSecretariatCOM(79)501final
Brussels,25thSeptember1979
FOROFFICIALUSEONLY
REQUESTFORARECONVERSION LOANN°267,
PURSUANT TOARTICLE56OFTHEECSCTREATY,
ONBEHALFOF"FRANÇAISE DEMECANIQUE"(FRANCE)
(Communication fromtheCommission totheCouncil)
COM(79)501final

COMMISSION
OFTHE
EUROPEAN COMMUNITIES
INTERNAL DOCUMENT
COMMUNICATION TOTHECOUNCIL
Subject:Requestforareconversion LoanN°267,pursuanttoArticle56ofthe
ECSCTreaty,onbehalfofFrançaise deMécanique (France).
I.BASICINFORMATION
Applicant
Finalbeneficiary
Project
Situation
Amountofinvestment
Loanrequested
Interestrebate
Jobscreated:FRANÇAISE DEMECANIQUE
:Française deMécanique
:Extensionofafoundry,creatingafactory
andassemblyplantfordieselmotors,
extending onthespotcapacitytoproduce
atwolitremotor
:Douvrin(Pas-de-Calais)-Nord/Pas-de-Calais)
:FF600million(+102,600,000 EUA)
:FF150million(+25,650,000 EUA)
:769,200EUAayearforthefirst5years
:1,400jobsintendedbywayofpriorityfor
formerECSCworkers.
II.CONFORMITY WITHARTICLE56OFTHEECSCTREATY
Nord/Pas-de-Calaisisaregionwithanoldindustrialtradition andhigh
populationdensity,3,920,000population occupying2.2%ofFrenchterritory;
forseveralyearsithasrecordedacontinuingfallinemployment .Thistrend
istheresultofadaptation problemsexperienced byitsleading .industries on
theonehandandthegeneraleconomicsituation ontheother.
On31March1979,theproportion ofunsatisfied jobapplications inrelation
tototalworkingpopulation was8.6%inthedepartment ofPas-de-Calaisand
7.7%intheNorddepartment,comparedwiththenationalFrenchaverageof6X.
mmmtmmm
l<ucdo!aLoi200,B-1040Brussels-Telephone350040-358040-Tclcgraphi <*odd»ess .-COMhURRossis--
Telex;-COMEIJRBRU 218/7.

Thefallinjobswashaltedbrieflyin1975inthecoalminesofNord/
Pas-de-CaLaisandresumedanannualdropof4/000jobsayearthereafter
asthefollowingfiguresshow:
By1985-1986essentialcoalminingshouldhaveceasedinNord/Pas-de-Calais.
Regionaljobsinthesteelindustryreachedtheirpeakwith39,400atthestart
of1975.Sincethenjobshavefallen.Theywere33,500on31March1979
withafallof6,000jobsinrathermorethan4years.
Theseredundancies mainlyconcernedtheSambreandValenciennes .Moreover
decisions,whichhaverecentlybeenadopted,willcreate5,850redundancies
in3USIN0RfactoriesintheValenciennes areabetweencurrentdateandthe
endof1980:
-5,000intheOenainfactory(3,500in1979and1,500in1980)
550in1979attheValenciennes factory
300attheAnzinfactory.
InthelastyeartheBoulogne-sur-Merregionhasexperienced 1,000redundancies
attheferro-manganese factoryoftheAcieriesdeParis-Outreau (A.P.O.)
(steelworks).
Inall,coalminingandsteelconversion concerns alargepartoftheregion
directly,andindirectly,almostallNord/Pas-de-Calaisespeciallyinview
ofrepercussions onsub-contractors andsuppliers.
Allterritorial sectorsdirectlyconcernedi.e.intheNord:Douaiarea,
SambreandtheValenciennes area;inthePas-de-Calais:theBethunearrondisse-
ments(districts),LensandtheBoulonnais (Boulognearea)havebeen
classified-mostofthemfor.severalyearsnow-aspriorityaidareasfor
regionaldevelopment bytheFrenchGovernment;thismeasurebythepublic
authorities hasalreadyassistedsubstantial industrial investment .Overthe
lastdecade,projectsaidedbythepublicauthorities haverepresented :
-intheBoulogne-sur-Merarrondissement 19,000jobs
-inthearrondissement ofBéthuneandLens 7,400jobs
ofwhichFrançaise deMécaniqueatDouvrin
SociétédeTransmissions Automatiques atRuiz
FirestoneatBéthuneTotaljobsat31December1965 107,679
44,297
40,757
36,505
32,389at31December1975
at31December1976
at31December1977
at31December1978

-3-
-intheDouaisis(Douaiarea) 8,500jobsofwhichLaRégieNationaledesUsinesRenault
theImprimerieNationaleatOouai
(nationalprintingworks)
"inth®Sambre 6/200jobs
ofwhichChaussonandFruehaufatMaubeuge
-intheValenciennois (Valenciennesarea) 5,200jobsofwhichChrysler
RecentlyPSA(Peugeot)hasannouncedthebuildingofafactorytoproduce
automaticgearboxeswhichshouldprovidejobsfor2,500by1985.
However,takingaccountofforecastredundancies,themeansmustbestill
furtherreinforcedmoreespeciallytoassistdevelopmentorsettlementofsmall
andmediumsizeconcernscapableofdiversifyingthelocalindustrialfabricand
ofmakingtheregionaleconomylessvulnerabletoeconomicchanges.
III.THEUNDERTAKING
-Style :Automobiles PEUGEOTetRégienationaledes
usinesRENAULT
-Tradename :FrançaisedeMécanique
-Registeredheadquarters :DOUVRIN-industrialarea62(Pas-de-Calais)
-Legalstatus :privatecompany
-Registeredcapitalandsharedistribution :
Theprivatecompanyhasacapitalof150,000,000 Frenchfrancs,half
subscribedbythePeugeotautomobile CompanyandhalfbytheRegie
nationaledesusinesRenault;thecapitalisentirelypaidup.
TheFranpaisedeMecaniqueCompanywasformedbytwopartners:theSoci£t6
automobiles PEUGEOTandtheR£gienationaledesusinesRENAULTwitharticles
ofassociation underprivatesealdated19December1968.
Thecommercial aimistoconstructmotorvehicleengines,tomanufacture
smeltedpartsand,generally,theconstruction,purchaseandsaleofall
typesofengineeredarticles.
1.Thefoundry:thisproductionplanthasadevelopedsurfaceareaof
40,000squaremetresandstartedtoproduceinthesecondhalfyearof
1971;ithasthemeansofsmelting,moulding,finishingandchecking
andproducecurrently8,500bracesandbitsayear.
Afoundryforenginesleeveswasstartedinthefirsthalfof1976;
todateoutputcapacityissome25,000sleevesadayfortwomanufac­
turingplantscurrentlyoperating.
>■·/··■

-4-
2.Engineering works:thefirstinvestmentprogrammeofFranpaisede
Mecaniqueprovidedfortheinstallation ofinfrastructure ,general
construction andthemeansofproductionfortheproductionand
assemblyof3typesofengine.
2.1.-TheseriesoutputofthefirstenginetypestartedinApril1972;
theoutputcapacityis1,800enginesaday.Thesurfaceareainuse
forworkshopsforthisoutputis86,000squaremetres(production
andassembly).
2.2.-ThesecondfactoryconcernstheoutputoftheV.6,forwhichFrangaise
deMecaniqueisresponsible forproduction;specialised investments
inmeansofproductionarethepropertyof"Franco-su6doi sede
moteurs-P.R.V.";ajointcompanyformedbyPEUGEOT-RENAULT andVOLVO.
Thefactorycanproduce750enginesadayandhasasurfaceareain
useofsome54,000squaremetres.
2.3.-Thethirdtypeofengineisthetwolitrescylinder;thiswasthe
subjectofapreviousapplicationforregionaldevelopmentaid;it
hasbeenproducedinseriessincethefirsthalfyearof1976.
Outputcapacityiscurrentlysome700enginesaday.
IV.THEPROJECT
Thedevelopment programmecontemplated for1979-1981includes:
ontheonehand,toextendthefoundrybyinstalling aproductionline
forsmeltingsuspensionarmsandexhaustpipes.
Threeadditionalblastfurnaceshavebeeninstalledtomeetcurrent
needs;
ontheotherhand,tocreateanewindustrialplanttoproduceand
assembledieselenginesandtoextendonthespottheoutputcapacity
forthetwolitrestypeengine.
TheoutputbyFrançaisedeMécaniqueisintendedmainly:
-ontheonehandforthetwoparentCompanies:Automobiles PEUGEOT
andR£gienationaledesusinesRENAULT;andforcompanies,whichare
subsidiaries ofthePEUGEOTgroup:PEUGE0T-CITR0EN-CHRYSLER;
-ontheotherhandfortheFranco-suedoise motorvehicleengine
company:PRVwithwhichFrangaisedeMecaniquehasasub-contract
dated28December1971.
1.Foundry
Thisnewfoundryextensionwillneednewbuildingscoveringa.surface
areaofsome10,000squaremetres(productionandstorage).

-5-
ThesebuildingsaretobeusedforacastingLine(productionline)
knownas"greensandcasting"toincludesand-blasting,sand(gravel)
restoration,acastingworkshopwiththerequiredtools,coring,finishingandheattreatment.
Paralleltothiswillbe3electricalsmeltingovenswitha25tonnes
capacity;thisistoensureafutureincreaseinproductionofliquid
metalofsome250tonnesaday.
Theinvestmentsforthisextensionarecalculatedatsome170,000,000
Frenchfrancsandwillcreate400newjobs.
2.Engineering
TheR£gienationaledesusinesRenaultwishestodevelopitsrangeof
dieselmotors;ithascommissionedFranpaisedeMecaniquetoproduce
thistypeofengine.Inaddition,arisingdemandfor"2litresfuel"
engineshasledtoextensionofexistinginstallation .
Tomeettheserequirements,theinvestmentstobecarriedoutare:
-Buildingsandgeneralinstallation
Buildingfactoryworkshops,assemblyshops
comprisingsome 55,000squarem.
-Materialtobeinstalled
Machinetoolsofaveryspecialisedtypeforproductionlines
ofblockcylinders,breechesandbolts,bracesandbits,tie-rods.
Simplemachinetools;lathes-millingtools-drills.
Meansforhandlinghighlyautomaticconveyerbelts(motordriven
rockers)ormotordrawn:tractortrolleys,liftetc.
Agrinding(sharpening)workshopfortools.
Assemblylinessubdividedbytaskgroupssuppliedbymotordriventravellertrucks.
Lastly,twotestingstandsinstalledaboveatechnicallevelsupplyingfuel,oilandwater.
Theseinvestmentsinengineeringshouldcreate1,000additionaljobs.
V.THEMARKET
Fran^aisedeMecaniquewascreatedtogiveprioritysatisfactiontoorders
receivedfromitsassociates:Automobiles PEUGEOT,R6gienationaledesusines
RENAULTandthereaftertoP.R.V.(Peugeot-Renault-Volvo).Thereistherefore
nodistributionchainsincetotalproductionissoldtothethreecustomers
above-mentioned .

-6-
Recentreorganisation whichhastakenplaceinthePEUGEOT-CITROEN -
CHRYSLERGroupsuggeststhatfoundrygoodsandengineswillbesupplied
tothesenewcustomers .
VI.SOCIALASPECTS
TheDouvrinfactorycurrentlyemploys4,054people.Theworkabove-mentioned
shouldcreate1,400additional jobsinaregioncurrentlyexperiencing
veryseriousproblemsincreatingnewjobstoabsorbredundancies ,which
haveeithertakenplaceorwhichareimminent.
VII.FINANCING PROGRAMME
Thesummaryfinancing programme (1979-1981)is:
Requirements Resources
FFmillion '
Investments 600 Ownresources 560
Others 260 Grants 40
ECSCloan 150
Otherloans 110
Total 860 Total 860
VIII.CONCLUSIONS
(a)TheCommissions considersthattherequestcomplieswithArticle56(2a)
oftheECSCTreatyandthattheinvestmentiseconomically sound.
Inconsequence,ithasauthorised thegranttoFrangaise deMecanique,
fortheprojectwhichitisundertaking atDouvrin,ofaloanof
FF150millionmaximum(some25,650,000 EUA)orequivalent value.
Interestrebateof769,200EUAayearwillbegrantedforthefirst
fiveyearsfollowing payment/paymentsoftheloan.
(b)TheCommission askstheCounciltogiveitsassenttotheforegoing
decision.