French Future Business as Usual

German businesses like the Saarland-based Hager Group dodged a bullet with the election of French President Emmanuel Macron.
President Emmanuel Macron's victory is a relief for businesses like The Hager Group.

Monday could have been one of Daniel Hager’s darkest days if Marine Le Pen had won the French presidential election. President Le Pen would have sent the German businessman scrambling to enact contingency plans and find a safe haven for his money. Instead, he was able to put his feet up and enjoy the public holiday – held in honor of the end of the Second World War in Europe.

Mr. Hager’s company produces switch cabinets, elector-installations and security technology. The business, founded by his grandfather, father and uncle in 1955, generates revenues of €1.9 billion ($2.08 billion). The Hager Group is headquartered in Blieskastel in the southwestern German state of Saarland, but the majority of its 11,000 employees work in France, just across the border. A victory for the anti-European Ms. Le Pen would have been a catastrophe for Mr. Hager.

But her loss means he can focus on a future of doing business with France. “We will benefit if Mr. Macron stimulates construction,” Mr. Hager said.

The country is in dire need of investment in the industry. Former President François Hollande made some detrimental decisions during his time in office, Mr. Hager says, including cancelling sensible subsidies for construction.

There is less compromise in French politics than there is in Germany and they don’t know how coalitions work. Daniel Hager, Owner, The Hager Group

Then there is Mr. Hollande’s wealth tax, which drove many people to leave the country. “It would be good if they came back now and invested in France,” Mr. Hager says.

The Hager Group boss commutes between the company headquarters and his biggest production location in the Alsace town of Obernai, two hours away. Mr. Hager’s forefathers originally set up shop in Saarbrücken, the state capital of Saarland – then economically annexed to France following the war. In 1959, the Saar area was integrated into West Germany as a new federal state. The Hager Group’s duality made it particularly vulnerable to the consequences of Ms. Le Pen’s plan to leave the European Union.

Mr. Hager says his company is “perceived as a French company.” Its business model relies on a functioning EU with Germany and France. Had Ms. Le Pen won, the European Central Bank would have introduced financial controls, making it harder for Mr. Hager to move his money around. Currently, he keeps his money where interest rates are highest, holding only enough cash in France to meet short-term requirements, including paying his French employees. Financial controls would have forced him to rearrange his finances long-term.

Mr. Hager’s relaxed demeanor won’t last long. His eye is now on the June parliamentary election to see if the president and his year-old party can put together enough candidates to run in each of France’s 577 districts and win a majority. “There is less compromise in French politics than there is in Germany and they don’t know how coalitions work,” Mr. Hager says.

The Hager Group will also be looking to see whether Mr. Macron keeps his campaign promise to award half of all public tenders to French firms. Mr. Hager thinks it’s unlikely that the plan will be implemented as it may contravene European law. “How are you going to unbundle international companies with production facilities in many countries?” Mr. Hager asks pragmatically.

 

Anja Müller covers family and small- and medium-sized firms. To contact the author: [email protected]