French corporations Sanofi and CMA CGM are aggressively investing in the American market, disregarding the ongoing geopolitical strains.
Hitting the Jackpot Across the Pond: Why French Companies Are Piling Up Investments in the United States
(By Xavier Martinage)
Is Donald Trump walking away as a big winner? By slapping import taxes on foreign goods (temporarily suspended), the American president is bullying global businesses into manufacturing domestically. While some heavy hitters like François-Henri Pinault have publicly sworn off U.S. production, other French firms have taken a different route in recent weeks. Sanofi's recent move, sparking a heated response from the French Minister of Economy and Finance, is just the latest example. In an interview on BFM Business on May 15th, Eric Lombard called it an "awkward moment" and said he'd have preferred Sanofi make a different decision, as it sends a "low blow" for French investments. But Sanofi is far from being the only one jumping ship.
Sanofi: Racking Up $20 Billion by 2030
The die was cast. Like other foreign pharmaceutical giants such as Eli Lilly, Johnson & Johnson, Merck, Roche, or Novartis, Sanofi declared it's intent to "splurge at least $20 billion in the United States by 2030." Their objective? To shield themselves from potential import taxes in the future, as the company produces 25% of its goods there. Sanofi, which aims to "scale up its production capacity," had already laid the groundwork in April.
Investments: Trump is Swiping Biden's Change Purse
$20 Billion Also for CMA-CGM
In addition to Sanofi, it was the French shipping colossus CMA-CGM that took the first bold step in early March, during the trade war between the U.S. and Europe. Facing a 25% import tariff threat, the shipping company promised to invest "$20 billion over four years" to create 10,000 jobs. This investment would span all aspects of the group, including air freight, logistics, handling, and maritime transport. Having been active in the U.S. for 35 years, CMA-CGM specified: "We'll significantly beef up our U.S.-flagged fleet."
Schneider Electric's Blockbuster Announcement
At the end of March, France's digital energy tech titan Schneider Electric made some major headlines. The multinational, specializing in digital energy solutions and automation for energy efficiency and sustainability, plans to invest "$700 million in the United States by 2027" in artificial intelligence, as well as energy. All told, Schneider Electric's investment should exceed "$1 billion over the next decade." No shock there, as the company generates more than a third of its revenue in the United States.
Saint-Gobain Suffers from the Plunge in New Construction, "Notably in France"
Saint-Gobain Stands its Ground
Driven by new growth sectors, particularly in the United States, Saint-Gobain has, for its part, reaffirmed the investments announced in February. The materials giant will invest "$40 billion" into the construction of a factory in New York State, as recalled by Le Progrès. Affirming that there would be "no delay" in the project, Saint-Gobain says it made the decision pre-import taxes, even though Eric Lombard views opening a factory in the U.S. as giving "points to the Americans."
TotalEnergies Makes a Wise Move
On April 15th, energy titan TotalEnergies confirmed signing an agreement with NextDecade for the purchase of 1.5 million tonnes per year (Mtpa) of liquefied natural gas (LNG) from the future Train 4 unit of Rio Grande LNG. This agreement lasts 20 years. "This agreement will help bolster TotalEnergies' position as the top LNG exporter from the United States, enabling it to provide competitive rates to its clients," said Gregory Joffroy, TotalEnergies' LNG Director. As the world's third-largest LNG player, TotalEnergies continues its U.S. ventures and operations.
Stellantis Goes All-In on America for a Revival
Stellantis Tries to Minimize Damage in the U.S.
Lastly, the French-Italian-American group Stellantis, facing import taxes on vehicles, also announced an investment in April, totaling "$4.1 billion," according to Forbes. The strategy? To boost its industrial capabilities in the country, particularly for electric models of Jeep and Dodge. With 40% of its sales in the American market, Stellantis hopes to minimize heavy taxes as much as possible.
Behind the Scenes: investment, Sanofi, *CMA CGM, Saint Gobain*
Reasons Behind the Increase in French Companies Investing in the United States
- Strong Bilateral Investment Relationship: France has kept a strong presence in the U.S., with its direct investment position reaching $370 billion in 2023, making it the 5th-largest investor in the U.S.[2]. This solid foundation likely fuels further investment.
- Economic and Job Creation Benefits: French investments in the U.S. have been substantial, creating or maintaining thousands of jobs annually. In 2022, new French FDI created or maintained 11,000 jobs in the U.S.[2]. Job creation can be a significant driver for continued investment.
- Diversification and Market Access: Investing in the U.S. allows French companies to tap into one of the world's largest markets, offering access to new customers and diversifying their revenue streams. This can be particularly appealing in times of economic uncertainty in Europe.
Potential Implications for French Investments
- Economic Challenges in Europe: With economic growth slowing in Europe, particularly France, companies may seek opportunities in more stable markets like the U.S. to mitigate risks[1][3].
- Trade Tensions and Political Implications: The call by President Macron to freeze EU investments in the U.S. due to U.S. tariffs could impact French investments negatively, potentially leading to a reduction in new investments[4]. However, this might also lead to a strategic reassessment of investment priorities.
- Competitive Advantage and Innovation: Investing in the U.S. can offer French companies access to cutting-edge technology and innovation, improving their competitive edge globally[2]. However, this means they must adapt to rapidly changing market conditions and regulatory environments.
- Global Market Shifts: The U.S. remains a vital market for many industries, and French companies may need to maintain or increase their presence there to remain competitive globally[3]. This could lead to increased competition and investment in the U.S. market from other countries as well[3].
- Sanofi, similar to other pharmaceutical giants like Eli Lilly, Johnson & Johnson, Merck, Roche, and Novartis, announced intentions to invest at least $20 billion in the United States by 2030, aiming to scale up production capacity and shield themselves from potential import taxes.
- CMA-CGM, a French shipping colossus, pledged to invest "$20 billion over four years" in a bid to create 10,000 jobs, spanning air freight, logistics, handling, and maritime transport, in response to a 25% import tariff threat.
- French digital energy tech titan Schneider Electric plans to invest "$700 million in the United States by 2027" in artificial intelligence and energy, with the investment expected to exceed "$1 billion over the next decade," as the company generates more than a third of its revenue in the United States.
