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The European defence push is a source of hope for France's struggling auto suppliers

The European defence push is a source of hope for France's struggling auto suppliers

The bid of French munitions manufacturer Europlasma to buy a former Renault Foundry is closely monitored by struggling auto suppliers. They are eager to tap into a surge in defense spending, as the demand for traditional car manufacturing shrinks.

Europlasma, which is a waste treatment company that has diversified into military products says it will retool its foundry in west France to make mortar casings. It plans to scale up the operation in a few short years and become a major European manufacturer.

The court that oversees the insolvent factory is reviewing its plans as Europe rushes to increase production of weapons and tanks in response to President Donald Trump’s demand that Europe take care of their own defences.

According to a letter obtained by the, EU foreign policy chief Kaja Kallas is set to present a proposal in Brussels to European leaders on Thursday for Ukraine to receive two million rounds large calibre artillery ammunition.

Jean-Francois Nanda is a representative of the CFDT. He said that new orders for defence can be a boon to some automotive plants who are struggling with a lack work.

According to the industry association ACEA France's automotive sector is Europe's second largest by number of jobs, after Germany. However, it is experiencing a slowdown in demand due to a shift to electric vehicles, which require fewer components. Official data shows that it has shed nearly 28,000 jobs in the last five-year period, or 10% of its total workforce.

Last year, suppliers like Michelin, Valeo (a driving assistance specialist), and Forvia (a seat and lighting manufacturer) all reduced their staff. Many small businesses have been forced to close.

Foundries that make suspension arms and steering knuckles can easily convert to mortar shells. According to Europlasma CEO Jerome GarnarcheCreuillot the Brittany foundry could produce 300,000 in a few months, or up to 750,000 within three to four year.

UNCERTAINTY

The advantage of defense is that it happens suddenly. The strong demand for munitions compensates instantly for the revenue loss in the automobile industry, said he.

Europlasma operates a factory that makes Caesar cannons shells in southwest France for the Franco-German defense firm KNDS. It is also preparing to expand a train wheel plant it purchased in northern France with government funding to include shell production.

France also hopes to raise an additional 5 billion euro in public and private funds for its defense companies, said Finance Minister Eric Lombard on Thursday.

Many companies are capable of making drones and military vehicles when you have the ability to build cars. Jean-Michel Jacques is a member for the administrative region of Morbihan where the foundry lies.

Rheinmetall and Hensoldt, two German defence companies, are looking at using spare capacity within the automotive sector.

The Ministry of Defence will need to issue a permit to factories that are switching to military equipment. They will also have to increase security.

However, the foundry workers are not happy. Mael le Goff, CGT union representative, said that there is still a great deal of uncertainty regarding the volume of shells to be produced.

He said that defense alone wouldn't be enough to keep this plant running.

Europlasma's offer, which aims to retain 80% of the permanent jobs in the foundry, is also contingent upon Renault's previous commitments. The French automaker, who owned the facility up until 2022, remains its primary customer.

Garnarche Creuillot added that the spending on defence may change if geopolitical conflicts ease.

He said: "I assume we have about five years in front of us and not 15. Reporting by Gilles Guillaume. Leigh Thomas, Elizabeth Pineau and Leigh Thomas contributed to the reporting. (Editing by Mark Potter and Dominique Patton)

(source: Reuters)