The doom cycle of French industry

The two main assets of a company

Corporations can enter doom loops if they abandon the protection and enhancement of the two fundamental assets of the company:

• People employability;
• Quality of the production tools.

The erosion can be quite slow and is submitted to reinforcing loops making systems thinking a good tool to analyze the vicious circles that can cause massive impacts in some companies or even complete country markets.

The case of French industry

Let's consider the diagram below:

The issue of a part of French industry

This diagram represents very schematically the problems faced today (and for almost 30 years) by a part of the French industry.

On top of the diagram are the constraints the industry is facing, essentially foreign competition and productivity enhancement in other countries. Those countries are not only Asian countries (as it is often wrongly believed) but European countries (such as Germany, Italy or Spain).

The French industry doom loops are quite complex and melt several forces, illustrating themselves as patterns where unions and management often end up letting go the main assets of the companies: people and production tools.

Breaking people asset

On the left of the diagram, we can see how unions, driven by French anti-business ideology, are building people non-employability. Workers should not evolve, people should not be trained, industry should not modernize because it could put at stake the current jobs. For sure, training cannot be said a bad thing up-front by the unions but the consequences of their actions is always that there is no need for trainings that can create evolutions for workers.

The consequences of such a policy is that workers won't get competences that will enable them to evolve in the market if their company is bound to reduce the staff. The more they see they lack competences, the more they will fight to preserve what they have as if it could never change.

Management is facing the day to day conflicts with unions. To change something in the industry, you have to change at least one thing, to evolve, to enter a virtuous Deming loop. Instead of that, union conflict leads to status quo, preserving what is existing , but putting the whole company at stake.

After some years, management "resigns from their duty" and are, at the end of the day, accomplice with unions in doing nothing and protecting privileges. Management also will loose competences and, more problematic, will lose the focus on the job.


The responsibility of top level management is also important. Seeing that French industry is facing serious structural problems with the unions, the company seeks for external solutions.

Behind the non modernization of people competences lies the non modernization of processes.


Not enhancing processes will lead to progressively increase costs whereas the competition is in a virtuous loop.

Breaking production means

On the right of the diagram, we have the same phenomenon about automation of the industry, automation that can be:

• The core industrial problem (such as in robotized assembly chains);
• Or more a back office problem (often solved by IT to enhance the global productivity and focus people on added-value tasks that cannot be automated). 

The non modernization of production tools can be piloted by unions who have short term perspectives of keeping the jobs as they are. As automation is seen as a job destroyer, automation is refused which leads automatically after a decade to the impossibility of modernizing due to the requirement of having too massive investments.

Modernization of the production tools is a continuous process. If for a decade, no modernization investment is done, the tools are working badly and induced costs can be big. When it is time to "update", companies would better rebuild another factory considering the investments that should be done to compensate years of under-investment. 

Exit loop is drama

In the two cases (destruction of people employability and destruction of production assets), the exit loop is a drama. Before this exit loop is reached, there are multiple loops of consciousness of the problem, fight between the unions and the management, discouragement of the management and bad social agreements which obey to short term approaches only, both for the unions and for the management that, at one time, will be abandoned by the top level management that will decide to invest in lower costs countries.

This diagram illustrates the vicious circles that are present in some of the French industry and how political short term fights can destroy the production assets, being material or humans while, in the present, teh series of fights can appear as being the right way to preserve the old world.

How Systems Thinking can help

System thinking can help identifying the vicious circles that can have multiple side effects that are not immediately visible. Corporate life is no straight path between right now and an objective but rather a series of loops that can be virtuous or vicious and that can melt together in complex - but recurring - series of causes and consequences.