We need bigger factories!

Recently asked by a customer about the link between employment and investment in industry, we have updated some data on the link between the size of industrial projects (in millions of € invested) and employment. 👇🏻

We worked on the basis of 4453 industrial projects for which we have (in the Trendeo France database) both the number of jobs created and the amount invested (as announced by the company).

We have divided them into 4 classes:

• the smallest, with an average investment of €1 million (up to €2 million),
• 2 to €50 million (average €9.7 million),
• 50 to 250 M€ (average 93 M€) and,
• over €250 million (average €1,112 million). These classes include 1,076, 3,087, 251 and 39 projects respectively.

These classes include 1,076, 3,087, 251 and 39 projects respectively.

For smaller projects, we find an average of 13 jobs created per million euros invested.

From 2 to 50, we go down to 4 jobs per M€, from 50 to 250, there are 1.6 jobs/M€, and above that, we drop to 0.6 jobs per M€.

If we calculate the corresponding product, starting from an Investment/Production ratio of 0.25 (there is some debate on this point), we obtain an exponentially-shaped productivity curve per job (on this subject of the increasing efficiency of structures, see Geoffrey West's book"Scale: The Universal Laws of Life, Growth, and Death in Organisms, Cities, and Companies"). We've extracted a graph from it below.

Increasing the average size of industrial projects is therefore a way of regaining competitiveness, since projects with an investment of over €250 million are 30 times more productive, per job, than €1 million projects.

We could even imagine, for the purposes of this exercise, replacing the 4453 industrial projects surveyed between 2009 and 2023 with 88 €1.1 billion investments. The investment cost would be identical, production similar, but instead of creating almost 400,000 jobs, we'd create 45,000. You could say that 350,000 jobs would be lost, or you could say that they would be freed up for other projects - provided that the necessary investment is mobilized. This extreme would also mean replacing the fabric of SMEs and ETIs with large groups, with the limitation that this represents for innovation. This is therefore only an extreme hypothesis, not a recommendation.

Even so, it is possible to consider that an increase in the average size of industrial projects in France would make it possible to avoid the recruitment difficulties observed since 2020, and to regain industrial production capacity and market share. This implies, for example, that we should not consider that we have"filled up" in terms of major projects, but that we should, on the contrary, work to welcome two or three more each year...