Recent Evolution of the French Craftsman Co-ops (1997)

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This document has been made available in electronic format
by the International Co-operative Alliance (ICA)
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April, 1997
(Source: ICA Review, Vol.90 No.1, 1997, pp.48-54)


Recent Evolution of the French Craftsmen Co-operatives
by Eric Bidet*
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If we compare it with other co-operative fields, like agricultural co-ops or
banking co-ops, the craftsmen co-operatives are still very small. But in fact
it has been one of the most dynamic and changing co-operative fields during
the 15 last years. In this paper I will try to describe the main features of this
kind of co-operation and of its recent evolution.

Definition and Legal Framework
--------------------------------------
Craftsmen co-operatives belong to the larger group of  small business co-
ops of craftsmen, fishermen, retailers and transporters. The term "co-
operation of family firms" is also often used to design this group of firms,
which are small by definition (less than 10 employees by French
classification). In a study realised in 1985, Nicolas and Vienney stressed
 the difficulty if identifying precisely this co-operative field because of the nature
of the members who are not individuals but firms (Nicolas, Vienney,
1985). They especially underlined the fact that in these specific co
operatives, the activity was closely determined by the activity of the
members themselves.

In fact, most of the first co-operatives of craftsmen developed under the
legal form of the groupement d'intérêt économique (GIE). As a matter of
fact, the concept of co-operation in the craft industry often includes  other\
types of grouping which are not strictly co-operative, like the GIE and the
non-profit association. Each of these represents around 20 % of the groups,
and then 60 % for the co-operative form. And the name of the national
federation (Confederation Francaise des Co-operatives et Groupements
d'Artisans) explicitly includes this reference to all kinds of groupments. In
this presentation, I will use the terms 'co-operative' or 'grouping' to refer to
all the groupings, unless it is specified differently.

The French Co-operative Law includes a general framework relating to the
whole co-operative movement and some specific rules for each type of co-
operative: workers, agricultural, housing  and small business co-ops.
Among them small business co-operation has been the last form of co-
operation to be specifically included  in the French Co-operative Law in
1983. Of course this kind of co-operation existed before this specific law,
but then belonged to the General Co-operative Law elaborated in 1947. The
purpose of this kind of co-operation is basically to allow their members,
which by definition are few, to obtain greater power of negotiation by
integrating collectively in activities preceding (purchase) or following (sales)
their own activity.

One of the most innovative features of the 1992 Law for Modernization of
Co-operatives was the general rule, previously only exceptional, enabling a
co-operative to have non-participant members (Vienney, 1993). Chomel and
Vienney (in a pessimistic view) and Thordarson (in a more optimistic view)
also underlined that this innovation was one of the biggest changes of the
last ICA Declaration on Co-operative Identity. (Chomel, Vienney, 1996;
Thordarson, 1996).

In the case of co-operation of craftsmen, the 1983 Law already authorised
them to introduce some non participant members in their capital without any
limitation, and to remunerate their social shares. The only actual limitation
concerns the number of votes: the non participant members cannot have
more than 25 % of the votes. 

The Main Economic Data
------------------------------
In 1994, the CADRE1 realised a brief panorama of research on small
business co-operatives, including the craftsmen's co-operative(CADRE,
1994). Among other things, this panorama underlined the weakness of
quantitative elements in this sector which prevents obtaining good global
estimations and the building of historical series. Therefore, the data I will
present will be very simple.

The recent evolution of the craft industry in France shows a remarkable
stability: the number of craftsmen stayed at about 850,000 between 1975
and 1990. We can observe the same stability in the number of groupments,
estimated by the CFCGA at 1,000 for 15 years . 

But this stability does not reflect the high mortality of the organisations and
the important changes among the groupings: 75% of the groupments were
created in the last 20 years and only 1% during the last year (CFCGA,
1994).

As for every organisation in the social economy, the evaluation of the size
of the groupings can be made according to three variables: the volume of
sales, the number of employees and the number of members.

The volume of sales of these groupings increased from 6 milliards in the
early 90's to 7 thousand million today. This represents only 1% of the
global sales of the craft industry in France (757 thousand million in 1994)
but the evolution of craft firms in co-operatives is better than the evolution of
the whole sector. In the 80's, the sales of co-operatives increased on
average by 2% more than the sales of the whole sector - 18% and 16%
(Creyssel, 1992).

There are obviously high disparities between the groupings, especially in
the different sectors of activity: 50% of the groupings realize a sales volume
under 3.5 millions but the two main co-operative unions (one in the building
trade, the other in the field of services to farmers) realize sales of almost 1
thousand million. 

The number of craft firms belonging to a groupment is a little more than
110,000, which represents less than 15% of the firms in the field of craft
industry. If we compare this percentage with the percentage of sales volume
realized by the co-operatives (1%), we can conclude that the co-operative
sector is mainly composed of the smallest business structures.

As Nicolas and Vienney pointed out, in the case of small business co-ops,
employment must be considered from two angles:  employment in the co-
operatives themselves and employment in the firms which are members of
the co-ops (Nicolas, Vienney, 1985). The number of employees in the
groupings themselves has stabilized between 4,500 and 5, 000 since the
early 90's. 

This means that the average number of employees per grouping is a little
more than five, but the reality presents many disparities: almost 40% of the
groupings have no employees and 75% of them have less than 2 employees.
On the other hand, only 4% have more than 20 employees, but only 24% of
the groupings can count 70% of the employees (Creyssel, 1992).

The number of employees in the enterprises belonging to the groupings is
around 180,000, which represents about 15% of the employees in the
whole craft industry. Ten years ago they were 120,000  representing 12%.

The disparity is also very high according to the number of members in each
grouping: half of the groupings have less than 20 members and 5% of them
make up more than 40% of all members (CFCGA, 1994). This small size of
the groupings of craftsmen is related to another specificity of this kind of
co-operation: it is mainly a co-operation of proximity. 80% of the members
are less than 50 km from their co-operative and 70% of them are located in
cities having less than 50,000 inhabitants (CFCGA, 1994).

Propensity to Co-operate 
-----------------------------
As I mentioned at the beginning, the legal framework has been well suited
to the 1983 Law and allows a large development of the co-operative form in
the craft industry. Generally the attitude of the government has been very
positive for the craftsmen co-operatives, allocation of public subsidies,
fiscal advantages, opening of public markets.

But on the other hand, Malo underlined that family firms have generally a
weak propensity to co-operate (Malo, 1996) and Auvolat showed that the
development of the co-operation of craftsmen has been limited by two
elements (Auvolat, 1992).

The first is the inexistence of a solid financing network, especially because
of the lack of links with the natural financing partners in the social
economy. The credit co-operatives, especially the Crédit Agricole, never
considered the craft industry and the co-operation of craftsmen as a major
market and the craft insurance mutuality (MAAF) never developed close
links with the co-operatives.

The second element is the existence, and the importance, of a traditionally
strong corporatism in many fields of activity, especially in the food industry
and in the services. This professional trade-unionism, closely linked to
traditional wholesalers, has always been very suspicious with co-operation
that appeared as a threat for the traditional equality and unity between
craftsmen. 

It is only since the 90s and the decreasing of trade-unionism, that the role of
co-operation has been increasing. This kind of factor explain that the
propensity to form co-operatives depends on sectorial and local aspects.

For 20 years the evolution of the building industry has been very favourable
to craftsmen and now represents more than 50% of the production in a
sector shifting from construction of new collective urban buildings to a
more individual, dispersed and rebuilding activity.

The building industry is a naturally well adapted sector for the
development of the co-operation because of the different jobs it needs. The
boom of the individual house in the early 60s also represented a real
opportunity that lasted until the early 80s. From this turning point the
financial limits of the GIE structure prevented the groupings facing
competition.

The field represented 60% of the 800 existing co-operatives in the 80s. It
still represents the area where co-operation is the highest: between 30 to
40% of the co-operatives (Auvolat, 1996).

But even if it is still the main co-operative field, its importance has declined
in comparison to other co-operative fields, especially to the co-operation in
services (services to farmers, hairdressers, car repairing and taxi-drivers)
and to co-operation in the food industry (bakers and butchers). 

The role of co-operation in the field of rural craft includes several activities
like repairing and making of agricultural material or maintenance of parks
and gardens. These co-operatives appeared in the mid 70s. In a sector
where the number of craftsmen declined from 50,000 in the 60s to 12,000
today, the members of the co-operatives also decreased: after a peak at the
beginning of the 80s with about 700 members, this number has stabilizied at
around 400 for the past 15 years. At the same time, the sales volume
increased continuously from 80 MF to 400 MF. These two evolutions
indicate that the sale per member has increased tenfold  since 1982. 

In the field of car repairing the co-operatives developed in the 70s with an
activity of purchasing spare parts. In the mid 80s they met serious problems
because of their lack of assets. As for the rural co-operatives, they first
followed a syndical logic with social shares between 500 and 2,000 Frs.

The oldest groupings of craftsmen appeared in the field of hairdressers at
the beginning of the century and developed mainly under a syndical
influence. A first try to federate in a national union in 1960 failed in the 70's
because of concentration phenomenon that led to a development of two main
co-operative groups realising 95 and 65 MF of sales volume. 

The average sales volume per co-operative varies from more than 30 MF in
the building industry to less than 20 in the case of car repairing and rural
craft and around 10 for the bakery or butchery trade, the two main co-
operative sectors in the food industry.

New Structuring 
--------------------
According to the classification proposed by Chaves (Chaves, 1996), the co-
operation of craftsmen seems to be above all a sectorial co-operation,
between organisations of the same field of activity. It is also mainly a non
integral co-operation: there are very few examples of inter-co-operation with
other movements in the social economy. 

But it is interesting to mention that some projects which aim to control more
efficiently the whole process of production are beginning to appear. This
trend is also related to the emergence of the topic of quality: first created to
solve problems of quantity, the co-operatives are more and more involved in
a strategy of quality. One example is especially interesting in the field of the
bakery trade: the co-operative Monpain (located in the East of France) tried
to develop a partnership between co-operatives of cereal growers,
independent millers and bakers. 

The development of partnership with other social economy organisations is
currently one of the main concerns of the CFCGA: We can naturally
imagine some closer links with the agricultural field that could involve co-
operatives of services to farmers or co-operatives of butchers and bakers.
We can also imagine connections with the consumer co-operatives, the
retailers co-operatives. The specific statute of social economic union could
be a very effective tool for this kind of partnership.

One of the main recent changes is certainly the emergence of large co-
operatives centralized upon a purchasing function (Auvolat, 1996).
Beginning only 10 years ago, this phenomenon developed particularly in the
fields with low value added and corresponds to a will of craftsmen to escape
from their traditional subordination to their suppliers. This trend concerns
the whole craft industry, except the productive crafts (for instance
electricians and taxi-drivers), but it is especially notable in the building
industry where the groupings have changed from the GIE form, with the
strict  function of building, toward a co-operative form with a function of
purchase.

The development of this new central co-operative function also led to an
increase in the size of the co-operatives. Some of these purchase co-
operatives are now large enough to influence the structuring of their market.
This is the case for hairdressers (two co-operatives of hairdressers operate
at the national level) and for butchers and plumbers (at a more local level).  

These co-operatives also developed thanks to better financial means, the
consequence of a new policy of membership based on  higher member
shares  and membership selection process. According to Auvolat,
structuring co-operatives  according to capital needs implies a renouncement
of the traditional value of egalitarism (Auvolat, 1996). In the case of the
rural craft co-operatives, the share increased from the symbolic amount of 500
Frs to 40,000 Frs on average; that meant  that the assets of the co-operatives
increased from less than 1 MF in the mid 80s to almost 15 MF today.

If we go further in the analysis, we can distinguish between two main types
of co-operatives: on the one hand the co-operatives having the sole  function
of coordination between enterprises, which often in fact have the associative
or GIE legal form; on the other hand, the co-operatives which have a real
function of distribution, production or commercialisation. The largest co-
operatives belong to this second category.

To conclude, we can say that since the installation of the system of free
prices in the late 80s, the  craftsmen co-operatives must face a new
economic context. The price advantage has partly lost its interest and the co-
operatives must diversify services to their members. For a few years they
have been stressing quality. On the other hand, the weakening of
professional trade-unionism offers new perspectives for other kinds of
collective action and co-operation appears in several sectors of activity as
one of the best ways to build a new professional organization. In this
general context, the crisis that met the CFCGA last year seems to be only a
second level crisis and not a crisis of the co-operatives themselves.


Sources
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Auvolat M., Analyse strategique de la co-operation dans l'artisanat,
CFCGA, 1996.

Auvolat M., Les malentandus de la co-operation artisanale, RECMA No.42,
1992.

Bidet E., Principles, Practices and Theory, Communication to the ICA
Manchester Research Forum, 1995.

CADRE, Promotion de la recherche en sciences sociales sur les co
operatives d'entreprises familiales, 1994.

CFCGA, Co-operatives et groupements d'aujourd'hui a demain, 1994.

Chaves R., Une approche theorique de l'interco-operation economique dans
les PMe de l'economie sociale, RECMA No.262, 1996.

Chomel A., Vienney C., Declaration de l'ACI : la continuite au risque de
l'irréalite, RECMA No.260, 1996.

Chomel C., Les incidences de la loi du 13 juillet 1992 sur les statuts co-operatifs
 particuliers, RECMA No.44-45, 1993.

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Creyssel P., Les co-operatives artisanales et le marche unique de 1992,
RECMA No.30, 1989.

Malo M.C., Hugron P., Chausse R., Entreprises familiales, co-operatives
et PME : Quelle.propension au regroupement ?, RECMA No.260, 1996.

Nicolas P., Vienney C., Emploi et co-oprratives d'artisans, RECMA
No.15, 1985.

Singer V., Recherche en sciences sociales et co-oprratives d'entreprises
familiales, RECMA No.256, 1995. 

Thordarson B., L'aboutissement de bouleversements majeurs, RECMA
No. 262, 1996.

Vienney C., L'economie sociale, Reperes-La decouverte, 1994.

Vienney C., Identite co-operative et statuts juridiques, RECMA No. 44-45,
1993.

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* 	Mr. Bidet is deputy chief editor of RECMA (Revue des etudes
co-operatives, mutualistes et associatives). He represented the GNC
(Groupement national de la coopération) at the International Co-operative
Research Conference in Estonia, September 1996.