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European Affairs
European Perspectives
Boycotters Beware: "French" Products Are Often American
By T. Allan McArtor
Many people delude themselves that Europe and the United States are so economically self-sufficient that they can impose commercial sanctions on each other without damaging their own economies. Those days passed long ago. In today's world, business transcends national borders, even if political leaders, and the general public, are often reluctant to accept it.
This growing commercial inter-dependence has been demonstrated in bizarre ways in recent months as some Americans have sought to boycott French products to "punish" France for opposing the United States over the War in Iraq. Among the stranger consequences was a statement issued by the company that produces French's mustard (named after its founder, the American George J. French), which felt obliged to point out that it had nothing to do with France.
"There's nothing more American than French's mustard," the statement claimed. French's mustard, which carries the slogan "America's favorite" on its containers, was born in New York and debuted in 1904 at the St. Louis World's Fair "along with its side kick, the hot dog." The release also mentioned French's "New Jersey-based" parent company, Reckitt Benckiser, "a leading North American" food manufacturer.
What the company failed to mention, according to New York Times columnist Floyd Norris, is that Reckitt Benckiser in New Jersey is actually a subsidiary of Reckitt Benckiser Plc of Slough, England. "Perhaps some people at Reckitt fear some Americans don't appreciate the difference between France and Britain," Norris wrote. "Or maybe they think we (Americans) are still mad about 1812."
Further, Norris revealed that the British parent company "chose not to post its French's 'All-American' news release on the web site, where it might be seen by the French." Why? Perhaps, as the column suggests, it is because the company does more business in Western Europe than in the United States.
While politicians and diplomats seek to stir or calm nationalistic passions, and scholars try to explain what is going on, I believe we can gain a great deal of insight by simply reading labels at a local Dutch-owned Giant super market. For example, the label on that gourmet "French mustard," Grey Poupon, says the product is "based on the original Dijon, France recipe." Then it reveals: Nabisco, Hanover, New Jersey. Nabisco is part of Kraft foods, which is part of New York-based Altria. Until January, Altria was called Philip Morris.
French wine labels boast "Product of France" and then list the wine's U.S. distributors in places like New York City, Seattle and Lorton, Virginia. The label on a Vichon Merlot 2000 says: "Imported and bottled by Vichon Mediterranean, Napa, California." A lot of Americans make their livings importing, bottling and distributing French wine shipped to the United States, which was worth nearly $830 million in 2001.
Other U.S. jobs include the truck drivers who deliver the wine and the Giant employees who stock the shelves. France doubtless has similar workers bringing U.S. wine to its market, although France imported only $13 million worth of U.S. wine last year. Those advocating boycotting French products have probably also overlooked that it is Americans who arrive at Giant at 4 a.m. to bake fresh "French baguettes."
The "French fries" that were ostentatiously re-labeled "Freedom Fries" in some restaurants, even on Capitol Hill, are of course made in the United States. In the frozen food section one can find "Ore Ida Country Style French Fries" that are distributed by the Heinz Frozen Food Company of Pittsburgh, Pennsylvania. "McCain Crinkle Cut French Fried Potatoes" are made by McCain Foods U.S.A. of Oak Brook, Illinois.
The Washington Post recently had a good example of "beware of what you wish for," as well as a reminder that the facts are not always as they appear. A Georgia congressman garnered nearly 60 of his colleagues' signatures on a letter asking Defense Secretary Donald Rumsfeld to cancel an $881-million contract with a French company, Sodexho, which, through a subsidiary in Maryland, provides food service to 55 U.S. military facilities. Apparently the congressman did not know that Sodexho has 110,000 U.S. employees, including 4,000 in his home state of Georgia. A Maryland congressman launched a counter-offensive.
A Sodexho representative in the United States summed up the situation neatly: "If you want to take aim at a foreign government, you shouldn't shoot American jobs in the process." To put the comment in a broader context, a recent Johns Hopkins University study says French companies are the fifth largest foreign investors in the United States, owning businesses employing nearly 650,000 workers.
The aerospace industry is a prime example of this trend. The U.S. and European governments often think of Airbus, for instance, as European - mostly French - and its only competitor, Boeing, as American. The governments continue to squabble over aviation trade issues such as subsidies and financing aids for customers.
The business reality, which the market determined long ago, is that Airbus and Boeing are global companies selling to airlines worldwide. In aerospace, Europe and the United States are in fact each other's largest export markets. European airlines buy "American" airplanes; American carriers buy "European" airplanes. Airbus, however, cannot build an aircraft without its U.S suppliers, while Boeing is equally dependent on European suppliers.
Airbus, for example, is currently developing the A380, the world's largest commercial aircraft, which is due to enter service in 2006. Through its Airbus UK division, Airbus has opened an engineering facility in Wichita, Kansas to help with wing design. In fact, Airbus spends about $5.5 billion annually with U.S. suppliers, who employ thousands of Americans in dozens of states. That represents about 40 percent of the company's worldwide procurement - and the A380 will match or exceed that figure. Airbus needs these companies, and their skilled employees, to succeed.
Boeing has described its European suppliers and industrial partners as part of the company's "extended enterprise." The company recently said it spends about 4 billion (euro) annually with 500 European suppliers. In a Seattle Times article last year, a European-based Boeing executive said, "Europeans don't know it, (but) Boeing is an important economic factor in Europe." He said that 100,000 European jobs are tied to the production of Boeing aircraft.
Alan Mulally, the head of Boeing's commercial airplane operation, was quoted in the trade magazine Aviation Week earlier this year as saying that Boeing and Airbus "have more in common than we have differences." He is quite right. Calls for nationalistic, "quick-fix" economic sanctions may make people feel better, but they are usually counterproductive.
T. Allan McArtor is Chairman and CEO of Airbus North America Holdings, Inc.