France - The French iron and steel industry

 No. E 34/49 This study is not to be published or 66879 quoted as representing the Bank's views, INTERNATIONAL BANK FOR RECONSTRUCTION AHD DEVELOPMENT THE FRENCH IRON AND STEEL INDUSTRY April 20, 1949 Department: Economic Prepared by: J. Grauman and E.W. Rembert  TABLE OF CONTE1~T S Page roo Summa.ry and Conclusions Section I - Basis of the Industry 1 Section II - Raw Materiels 2 (eJ Iron Ore (b) Coal and Coke (c) Scrap (d) Me.ngfl.nese and Other Alloying Elements (e) Refractories (f) Other Materials Section III ·-Pig Iron 10 Section IV - Crude Steel 14 Section V - Finished Steel Produ.cts 15 Section VI - Foreign TrAde in Iron and Steel 16 Section VII - rabor Productivity 18 Section VIII - Problems of the French Iron Dnd Steel Industry 19 List of Tables Table 1. Pro0uction, Imports, Er'Jorts and Consumption of Iron Ore illjined in Frl'l.nce, 1929-1948. Table 2. Pronuction, Imports, E)~orts and Consumntion of Coke in France' for Sele~ted Years 1929-1948. r;rable 3. Production~ Imports, Exports and Consumntion of Coal in France for Selected Years 1929-1948. Table 4. Production, Imports. Exports and Consumption of Pig Iron in France for Selected Years 1929-1948. Table 5. Production of Pig Iron and Ferro-Alloys by Type, 1929-1948. Table 6. Production of Crud.e Steel and Exports of Crude and Semi-Finished Steel, 1929-1948. Table 7. Production of Finished Steel and Exports of Crude a.nd Finished Steel, 1929... 1948. Table 8. Production of Finished Products by TyPe of Product, 1929-1948.  THE FBEUCH IRON AND STEEL INDUSTRY ~a£[ and Conclusions 1. When operating substantially at capacity in 1929. the French iron and steel industry -produced about 51 million tons of iron ore. 10.1 million tons of pig iron, 9.7 million tons of crude steel, and 6.7 million tons of finished steel. In 1939. when operating at about 80% of capacity, France was the third largest steel nroducer in ifestern Europe; but, at that time, French production was only 35% of that of Germany including the Sear and less than 60% of British ~roduction. At present, because of the low level of 1)Toduction in Germ8.ny, France is the second largest ~roducer of steel in Europe, crude steel production being at the rate of about 8.5 million tons per year as compared with the current rate of 15.5 million tons ~er year in Britain. 2. Within the Frencll iron and steel industry the Lorraine district (Depart- ments of Ivloselle and Meurthe-et-Moselle) accounts for about 95% of the ore produc- tion. 78% of pig iron prodUction, 70» of crude steel, and 60% of finished steel production. Less importpnt centers are located in the North of France, the Center, the Loire, and the Alps. 3. France has very extensive reserves of iron ore and is on a net export basis with respect to this commodity. The country, however, is not self-sufficient with resnect to eoIdng coal and coke. Les$ than 40~ of requirements of metallur- gical coke "Jere obteined prior to the war from French coal and. currently, the situation is about the same. To make up the deficit. both co]ctng coal and coke are imported from the Ruhr, the Saar, Belgium, and the Netherlands. 4. The structure of that ~ortion of the French iron 2nd steel industry in the Lorraine Basin is best understood by considering its origin as being a part of the develonment of the coke and steel industries of Germeny nrior to the first \vorld War. In the development stage this section of the French industry was considered as denendent in part on Ruhr coal and coke production and this condition has  - 11 - continued. Technica.lly, the industry of this area is very similar to the industries of Belgium. Luxembourg, the Sa.ar, and a nart of the Ruhr, all of them being based upon the use of essentially the same ,Jrocesses and raill materials. 5. The development of the Basic Bessemer or Thomas "rocess for the production of steel from high phosphorus ore made !Jossible the extensive use of FrenC~l ore ::~'om the Lorraine Basin and, at present, this process represents about 60% of the to~al steel malting capac! ty. About 3.3% of the capacity is re~resented by the open hearth process '\'li th electric furnaces, ",i th other methods accounting for about 7%. Common steel production for internal use and for export is produced largely by the Thomas method, the other processes being used essentially for the production of h1g:1. and special steels. 6. Prior to the war, France "Jas the second largest producer of iron ore in the world and the largest exporter in Europe, surpassing Sweden in this respect. This condi tion is of interest "'hen one considers that Sweetish ores are far superior to Frenc..~ ores in quality. French exports are confined. almost entirel:, to ne2erby m::lrkets in :3elgium, Luxembourg, the Saar, and the Ruhr. High gre.de are mined in French North Africa was sold almost entirely for export, only a small percentage being consumed by the French int'1ustry. Frr'.nce i'Tas also a very important eX'1Jorter of pig iron and semi-finished steel products prior to the war. 7. Since the Thomas process predominates in the French industry and scrap con- sumption by this method being limi ted, Fr~nce lITas before the war the second largest exporter of scrap in the lIForld, and the largest in Europe, Under existing c011,1i tions, due to the shortage of coke in Euro~e, France, like other countries, has increased the consumption of scrap as an indirect substitute for coke in blast furnaces. As a result. exports of scran have until recently been negligible and it is not lil\;ely that Fr?nce will again become an e:lq)orter of BCrEt}') in :nreV<?r quantities so long as the demand. for steel continues at a high level and coke reme.ins in short supply at high prices.  - iii - 8. Prior to the \'lar, exports of finished steel products \'lere an important item in French foreign trade. In terms of tOIlllage, finished steel exports were about equal to the combined exports of nig iron and semi-finished steel. The French industry enjoyed a substantial cost advantage in the production of pig iron and semi-finished steel under nrewar conditions, this advantage, however, decreasing subst~ntially in the production of finished steel items. The explanation for this cost structure apparently lies in the fact tllat fixed charges were only a small item in French unit costs, since the French interests had obt~,ined the steel mills \,,111ch were confiscated from the German otmers of Lorraine follo\>Ting the first lvorld War at a very low cost. The rolling mills acquired, however, were in general relatively small and ineffiCiently equipped. In many cases, long hauls of semi~ finished steel were required bett1een the steel \\forl:s and the rolling mills. 9. In the French modernization and development nlans the immediate goal is a capaci ty of 12 million tons per year each of pig iron and crude steel, \'111ich is about 20~ above the 1929 production level. This capacity plus about 2.5 million tons per year in the Saar will raise the capacity of the French industry to nearly that of the Eritish. The qU8.1ity of the steel produced by the French and Eritish industries, however, will be different, since the latter industry uses the open hearth nrocess nredominately "'hile France \\1il1 continue to :oroduce about 6096 of the total by the Thomas process. It is also hoped, if conditions are favorable, to raise the capacity of Continental FrFlnce ultimately to 15 million tons of crude steel per year, so that France and the Saar "rill ha.ve a combined capacity of about 18,000.000 tons. 10. In order to carry out the -:"lroposed eXll1"l1sion Elnct modernization progrc-m effectively, the follov'ling steps \-,i11 be n9cesspry: (a) EX1)ansion of the labor force particularly in iron ore mining, (b) eXT)1:'nsion and modernization of coke ovens, (c) modernization and improvement o:f blast furnaces, steel '<larks and rolling mills. Some progress has been made in this nrogram but the original schedule has  - tv not been maintl"ined. Contributing factors to the slo\! rate of progress l'r11ich has been reelized have been the unsettled condition of world affairs, the inflationary trend in Frpnce \1hich has made financing difficult, ?J1C. uncertainties regar':'ing the ultimate profitability of some of the proposed units because of the high fixed chElrges 1I/hic11 "lill result from current investments. Purely physical factors SUC:l as the time required to estfl,blish a firm plan in detail and to nut it into ef:ect have also influenced the r!:'tte at 'I',hleh the T)rogrem is carried foruarc.• 11.. The French emanaion 'Plan contemplates extensive exports of firdshed steel items. It appears likely, however, that for the time being exports ~'Jil1 con,- tinue at a 101lT level 1I711ile intprnal demand reme,ins high. As the interne,l de;~l;:.:L,d is satisfied, hO'Vlever, i t may be e;x:nected th.,tt exnorts \'1ill reach higner levels th2n at nresent. The character of the exports of the French ind'\.lstry \'lill change, how- ever, \,ri th respect to the 'Dre"1ar nattern in that less emphasis will be placed on lower uric6 items such as 1)ig iron pnd semi-finished StG81. The ultimate goe,l of the French Drogrem is to exn8.nd the fabrice.ting inciustries \-,i thin the country and to export steel in the form of advanced manufactured items such as automobiles and machinery. 12. It seems that, if France is to regain and hold her urewar Dosition in the 'vorld export mar:cets, it 1I1i11 be necessary to carry for"'ard a large 'nortion of the modernization 1)roe;ram in the iron and steel inch.l.stry. llhile 10Vl fixed char~;es pro- vide a comnetitive I'\,dvr'.ntage in times of depression, direct costs 1I1111ch are c·v.rrent- ly high in the French industry play a far mere imnortflllt part in datermil'ling unit production costs a,t near cs,paci ty ouer('tion. Hot only are direct costs in 1rance high at the 'Present time but much of the equipment in the int'lustry is obsolete and requires replacement if excessively high ma.inten811ce cl',arges are to be avoided. A large part of the 1Jrogrem of modernize,tion and expansion contempla.ted in the I>1onnet Plan seems to be a necessity \·Jhich must be accomplis11ed. An important element in the plan is the physical integration of canacity into larger and more efficient  -v- plants. It is recognized that, in FrBnce. ",ith a large number of small producers, such integration nla.ns offer serious social problems since 24 integrated \\forks can easily supply the anticipated production of 12 million tons of crude steel contem- nlated. in the immediate T)rogram. At the present time, there are 177 steel \'Jorks in France '1roGucing currently at the rate of about 7 million tons 'Per yea.r. The displacements resulting from the elimination of some 150 steel "Jorks are serious but must be solved. 13. A 'Problem that will require careful considere.tion in order to bring about a successful solution to the difficulties that are currently being en- countered by the French iron 2.nd steel in(lustry. artses from France's high d.egree of dependence upon the Thomas process. For technical reasons steel produced by this process.is not suited for some of the more important present day uses of steel, such as ship plates and sheets for deep dra"ling. Experimentation currently being carried on may ])rovide the a,ns"/er to the nroblem of endowing ThomaS steel with the necessary qualities. If the experiments should prove unsuccessful it may mean that France 1"1111 have to revise its modernization plans to include dunlex furnaces (open-hearth furnaces that refine steel already partially refined in a Bessemer converter), or else find ways and means of expanding its share of the world market in those products in the manufacture of \'Jhich the use of Thomas steel offers no disadvantages.  THE FREUCH IRON MID STEEL IlillUSTRY Section I - Easie of the Industrz The physioal basis of the French iron and steel industry is oommonly asoribed to huge iron are deposits of the Lorraine :Basin, which the invention of the Thomas steel nrocess made it nossible to exploit. For only in iron are is the Frencl~ in0ustry more than self-sufficient. It denends on other countries for about two-thirds of its su!,plies of coke and coking coal, for all of its msnganese f'.:;'::'o. other alloying elements. Hm'l9Ver, to consider the French iron and steel industry as a single indivisible uni t is to over-simplify the description and to lose sight of its most salient characteristics. Actually, there are several iron and steel industries in France. The most important of these is located in the East, vlhj.ch includes the Alsace- lorraine area, accounts for about tvo-thirds of Francels steel production and is dependent, as mentioned aoove, upon imports of coal and some other materials. A second industry is to be found in the north, v!here supplies of coal end of scrap from France's heavy industries are plentiful, but ore is not. A third iud.ustry can be distinguishecL in the Center and in the Loire Basin, based upon proximity to the "new ll mechanical industries such as automobiles D.nd electrical equiument, to whom i t supplies high quality steel. A fourth industry, by far the smnllest, is the electrical steel incustry of the Alps and the Central /!I1assif ",hich is bR,secl u})on the availability of cheap electrical power. Finally, there are scattered p~~nts that cannot be conveniently fitted into any of the above classifications which produce specialized items. The east of Fra,nce is divided into t,,!O sections, Est 1 and Est 2, in official statistical publications. The Est 2 area comprises ths,t :oart of Lorraine ",111ch "'as held by the Germans urior to the first 1:!Orld ",ar and in. \·:hic11 the Germans had es- tablished an iron and steel industry baseo. on the native fvlinette ores and on coal brought in from the Saar and the Ruhr. In this area, the Germans had built up an  - 2 - iron and steel industry, bS$ed on the Thomas or basic Bessemer process which ac- counted for, in 1913. 74% of all iron ore. 40% of all pig iron, and 3.5% of all steel manufactured ,'Ii thin the boundaries of the German customs union. i'{hen France re-annexed Alsace ...Lorraine in 1919, the German o't'mers of the Lorraine ore and steel properties were expropriated, these ~roperties being sold to French interestSb The reversion of this area to France marked the end of the period of its pre- eminence. iihereas in 1913 the 7.st 2 (Moselle) area nroduced about 10~ more pig iron than the Est 1 or French Lorraine area. by 1929 the l)roportions ,,,ere roughly reversed. It would seem, although no direct evidence is available on this point, that after 1913 no eXlJansion of ore extraction and smelting cape,cf ty took place in this area. Crude steel facilities "lere expanded somei"hat, but at a 101:;er rate than for the country as a ,,,hole. On the other hand. apparently substantial additions '\-lere mad.e to the rolling capacity of the mills in this area, since output of finished steel '1:1i thin Est 2 rose by .52% between 1913 a,nd 1929 compared vli th the national average of 44%. Section II - Raw Materials (a) Iron are - France has reserves of iron ore that amount to more than 8 billion tons of proven deDosi ts. Ivlost of the production and bulk of the reserves are in the Lorraine Basin where a high phosphorus low grade ore known as Minette is found in abundance. Some 95~ of the are produced in Continental France comes from this area and. of this total, nearly one-half is produced in the Hetz ...Thionville District. The iron content of these ores varies from 20 - 40% with the average somewhere between 25 and 30%. In addition, about 1.2.5 billion tons of 4.5% ore is found in Normandy. Another 750 million tons of ore containing .50% iron are found in the Brittany and Anjou Districts. These ores are, hO'r,ever, not of the best grade since they contain a high percentage of silicon. In the ~yrenees are an additional 100 million tons of high grade are contc:dning about 60% iron.  - 3 .;.. Outside of Continental France I;).re the African ore fields, the most imnortant of which is the Algerian field followed in order of importance by the Ttulisian and Moroccan deposits. These three areas nroduced before the war about 3 million tons per year and are currently nroducing somev!hat less. Before the '\Tar. France '\Te~s the second largest !,roducer of iron ore in tl-:.e world and, the la,rgest producer in Europe'. Almost.5l million tons 1:16re nroduced in Continental France in 1929, the ~(')eak year for all time. Ho"rever, after 1931, pro- duction never exceeded 34 million tons. The war and the ner10d of German occupation reduced output to levels of nroduction permitted by the Germa~ns. i'ihen the Germo.ns 1Ilere driven out of Frence, the country '-laS faced with generally chaotic cOl1o.i tiona and., along "'lith other activities. ore extraction suffered. only 8 million tons. or about 16% of the 1929 output, having been produced in 1945·. Considerable stric..es have been made since then. although the annual rate of output for 1948 vIas only 23 million or about 4.5% of 1929. It is ')robab1e that considerable difficulty vlill be encountered if attempts are made to raise production far beyond this level, a development quite likely in vie\V' of the increasing German production or steel and the easing of the coke supplies. The mnjor obstacle is lil:ely to be deficiency in the labor faroe, ",hich, before the 1-lar, amounted to about 30,000 miners to a very oonsiderable extent of Italian origin and. ourrently. is at about 23.300. Because of its great abundanoe of iron ores, the iron ore mining industry has served a dual role in the economy of the French iron and steel incustry. First, it has supplied practically all domestic requirements except for small quantities of foreign ore that were imported for technical reasons. Second, FrD,nce being a net importer of coal and coke, nroduction in excess of domestic requirements 'vas used to pay in part for imports of coal and coke into France. Before the war, considerable counter-flows of coke /:l,nd are took plaoe bet'l'!een the Ruhr and France, the ~')r0I'0r;.. tions in terms of both price and quantity being almost exactly three tons of ore to one of coal.  - 4 - 3ecause of the low iron content of most of the French ores t their movement is restricted to rather sma.ll distances. Accordingly, 1t,e find the bulk of the lUnette ores going to Belgium. Luxembourg and the Saar, "ri th some lformandy ores being ship:.oed to the United Kingdom. Im:!,orts have been of minor proportions, the bulk of them being from Lmcembourg. This cross-border trade bet''1een Belgium and Luxembourg on the one hand, and France on the other, in net terms in Francels favor, includes fairly SUbstantial volumes of ores \'lhose movement is dictated in ]')art by considera- tions of ollmershlp of mines \,lhich reflect themselves in :,rices, and also from technical considerations since 1')roper blending of French anc1 Luxembourg ores gives self-fluxing mixtures. Also, imports of rich ores mainly from French overseas possessions, but also to a considerable extent from Spain, reflect in nart the need for certain technical characteristics of ores and in part the fact that a small nwnber of French steel works are located in seaside ports \'111ere it is more advan- tageous to use imported ores of a high grade than domestic ores of low grade. rlhile the most important customers for French ores before the "'ar ""'1ere 3eIgium and Luxembourg, the Saar producers were also highly dependent upon French ores, as was that :i')art of the Ruhr inc1ustry "lhich is based upon the Thomas process. HO\'lever, because approximately half of German capacity ,·Tas in open hearth steel \1hich can employ scrap as a substitute for pig; iron 'Up to almost lOO~. the Ge;rman market ;''las variable at best, fluctuating ~nth the relative nrices of pig iron and scrap_ After Hi tIer came into pO\1er, the German clrive towards Q,utarchy or self-sufficiency re- sulted in a substantia.1 decline in French eXports to Germany, the Saar producers in particular having changed over from Ninette ores to the even 10\',er grade South Baden ores that were available inside Germany. Since the end of the \'lar, the pre\,lar pattern of ore eXports and imports has been roughly re-established, except that Germany, by virtue of the severely de- pressed ste.te of its iron and steel prodi.l.cing industry has not been importing French ores. It is eXpected. hm'/ever, that, as German steel production expands, imports from France will be resumed though probably still at a 10\'l level.  -5- Despite the fact that bet,'Teen 65 - 75% of Fr~mce I s iron ore is mined under- ground, mining condi tiona are so favorable that output of are J)er Til8"n year WaS al- \"ays high and, in some years, the highest in Europe. Condi tiona have been favor- able to mechanization gnd large-scale oTlerC',tions, ''lith mecha,nical loaders, trucks, and belt conveyors being used vlherever possible. Electric locornoti ves Here llsed for transport. It must be said, h01!leVer, that in some part the high level of out- put n9r man stems from the fact tllatt before the \'Jar, are preparation \'1aS not practiced in Frence. Plans are undert"ay for introducing are nreparation equi',:r:lent and, '>1hile this may have some adverse effect upon the ratio of output tola.bor reqUirements for iron ore mining, in terms of over-all efficiency of t:1e iron and steel producing industry there will be a net gain. (b) Coal ~:tnd Coke - Although France ranked fifth C'mong 'VTorId 11ro(1ucers of coal before the "Tar, it e"ceo1Ulted for only :3 - 4% of the Horld's output. Produc- tion i'JaS insufficient to meet internal requirements pnd both coal and coke \'Jere imuorted in large qu"mti ties. Coal denosits are located in ';fidely cispersed areaS in France. HO\'Jever, the fields in Hard and Pas-de-Celais are by far the most important and suppljr roughly half the total output. Develonment is currently being carried on in a new fie Id in the Lorraine area and it is exnected the.t, in the future. this new source 'V!ill augment "lhat "IQuld otherwise be a diminishing vol\une of nroducUon as the older mines .become umJOrkable. DeSl)i te the CI.isruption caused by the last "Jorld \'lar, Fl.'ance managed to produce in 1945 about 60% of her neak output of 67 million tons. However, because of the "'Torld s~1ortage of coal, imports had dJilindled to about 4.5 million tons or less than one-fifth of her neak prewar imports. Thus, althouch domestic nrod.uction increased rapidly, partly as a result of the use in 1946 - 1947 of German prisoners of vIal', consUlll1Jtion could not regain pre'Vlar levels. :Before the \A'ar, the Uni ted Kingdom accounted for roughly t'VlO...fifths of French imports of coal, most of these going to the northern })orts. The B.u.hr and the Saar  - 6- together accounted for about one-third of ffrench imports and most of the coal .M 'imported from these sources ",,,ent to the Lorraine area; similarly, \-;1 th the coal im- port~d from :Belgium and Lu..-o:embourg,\'lhich together accounted for about' one-sixth to ,me-fifth of :?rench imports. Poland and, the 1Tetherlands each accou.'1ted for be- tween 5 and 10% of French imports. vlith the breaking dovlU of Europels productive c8.pacity right after the ,var t the United Ste,tes nnd Great Britain urovided about 80% of French coal imports in 1945, in about equ.p.l proportions. lim-lever, the groving stringenc~r in coal supply in Great Britain resulted in a d,,,indling flm{ of British coal exports to France and the United States was responsible for almost 60% of French im'Dorts in 1946 and for about 87% in 1947. In the latter year, the stream of U.K. coal eAllorte to France had almost completely dried up, ",hile exports from both the Ruhr and the Saar de- clined to about half of 'Vlhat they had been in 19L~6. J3elgium "las able to resume slightly larger exuorts of coal to France but, even so, the emounts shipped consti- tuted less than 5~ of prewar shipments. Polish coal, too, vIas shipped, but in quantities approximating only one-third of the prewar level; this despite the fact that, as a result of wartime changes in boundaries. Polish coal reserves and yroduc- tive ca)Jacity have both increased considerably. By 1948, h0\1ever, although the U.S. still accounted for almost t""o-thirds of total coal shipments, there vias a COll- siderable return of the pendulum towards -ore""ar patterns. A bilateral agreement t'lith Poland has restored Polish shipments to about pre,'lar levels \'lith prospects of still greater increases. The Saar has managed to increase its shipments and the Ruhr lLes made tremendous strides in that direction. In recent months, RulLr-Saar shi9IDents have averaged about 75 - 80% of 1938. Some additional coal has also been forthcoming from Czechoslovakia, and Britr-,in has again resumed exports of coal to Fre,nce, so that i t has been possible to reduce imports of U. S. coal to only 55% of the 19L~7 rate. The French iron and steel industry lLas been even more dependent upon foreign markets for its coke supply than the country as a uhole has been for its coal  - 7 ... supplies. Only a smHU nroportion of :21'8 nee I s indigenous coal supplies are of cok- ing quality, so that, although considerable coking capacity exists in ?rance, it has been de:nendent upon imports of' coking :ines for their continued o:per~\tiol1. As a result. although coal production ]:1..as been lifted to almost 1929 levels, tile out- :nut of coke had. as of' mid-year, reached only 7S~-; of the output in tllat ;.'oar. i'~ore­ over, iml)Orts vlere at only about half the 1929 level, so that the ave,i1abili t~T of mete.llurgical coke vIas at that time only sli€~htly better than ti"o-thirds of til!') amount in 1929. HOHever, wi thin the past months, coke has -become more T)lentiful and Frsnce should be easily able to obtain all of her requirements if foreign eXcLlange balances nermit her doing so. As in the case of coal, the domine,nt phase of Ifrance I s external coke tr["de is the imnort trade. About one-fifth of Pre,nce f s requirements of co1::e was L::cDorted in most years and in no prewar year di0 the quantity of coke imported as such fall belo\,1 one-sixth of total requirements. About t\'!o-thirds of :France f s imnorts of coke 'Drior to 1938 Came from the Ruhr and the Saar, and their current :;;roportiol1 is higher than it \vas before the war. Belgium accou..'1ted for rouchly one-sixth to one- fifth ure\V'ar imports, and the lletherlands for a somewhat larger nroportion. Currently, the share of imports from Netherlands has cleclined to about 6 - 8~bt while shipments from 3elgium have declined steadily to less than 10~ by the end of 1948. On the other hand, Poland, v/hieh ,'/8,S lOt negligible e:A"norter before the \-rar, has been eX1)orting coke at e:oout ten times its 1)re"Tar level and Czechoslov8,kia has also increased shipments of coke to France, although both countries are still rela- tively uninmortpnt sources of sup111y. The degree of French dependence upon foreign countries for its supplies of meta,llurgic.al coke is indicated from the folloi'Jing. :Before the \var, about 37~ of the coke cons~~ed by the industry originated in france, or, if the Saar be included, 41560 The Ruhr .....Aa.chen District accountecl for 27/:>. :Belgium 17%, 8.nd the Netherlands 11%. Today, the situation is subst8.ntially the same. Only 39% of the coke  - 8 - delivered to French iron and steel furnaces during the second half of 1947 was ob- tained from clomestically mined coal. Although France nroduced consid'erable quanti ties of coke vii thin her ollm border, a substantia,l }'Jroportion of that coke vIaS obtained from imported coal. Since coke '"las extremely difficult to obtain after thewar,the ~Ionnet Plan laid great stress upon modernization of France's coking capacity, ,in order to reduce \'Jaste and con- serve fuel. So far, because of difficulties \'lith respect to financing, very 11 ttle of the modernization program for coke ovens has been brought to completion, less than 20% of the new capacity having been put into place. It remains to be seen ",hether, as a result of the incree_sed supply of coke now available, these ulants \1ill be modified. (c) Scrap':' Since France's steel industr'lJ is based meinly upon the Thom€ts ~rocess, its consum~tion of scrap has been low compared to other Eurogean cOUlltries, except ~elgium and Luxembourg. Thus, Fr~~ce consumed in 1937, 420 kg. of scrap ner ton of finished steel compared to 600 kg. in the United Kingdom. About three- fourths of the total amount of scra~ consTh~ed in anyone year goes to the open hearth and eleotric furnaoes, \'Ji th the remaining one-fourth going to the blast fur- naces. Consumntion has varied bet,',een 2.5 and 3.5 million tons in nrel'Jar years, den ending upon th~ degree of activity. One of the factors that ma.de it possible for Frnnce to increase nroduction rapidly after the war despite the disorganization of industry was the large quantity of scrap generated by the war. In the inter-~Tar ye/?rs, Fr~mce was an im"Qortant exporter of scrap, second only to the U.S.A., her eYrlorts amounting to over half a million tons ner year in most of the nre,.,a,r years. Although in the ea,rly 1930's the feeling began to gr01lT in France that (a) scrap "'fas a national resource comparable to ore or coal and that it should be saved for internal ~se, and (b) that french e~~ort trade in finished products ,,,ould be strengthened by more Martin steel output, eY1:)orts continued to flow out in large quantities.  - 9 - France's 1)rincipal foreign markets before the war were Ita.ly, the U.K., a,nd Belgium~ Both Italy and the U.K. have a lp.rge proportion of their capacity in open hee.rth or electric steel requiring large quantities of scrap. Frence, on the other hand, ~roouces most of its steel by the Thomas 1)rocess; and, since it riELS important steel consuming industries within its oWn borders, generates considera- ble quantities of scrap. Thus, a na,tural outlet for this by--product of metal ID8.nu- facturing was to be found in these countries. Because of the post"'var colte shortage scrap was kept at home Ul1til the end of 1948. Recently. exports have been at the rate of about 150,000 tons per year. (d) Man,ganese and Other Alloyi;n,g Elements - France has no internal sources of mang8,nese. Almost all of her prewar and current requirements for manganese and other Alloying elements have to be imported. In 1938, consumption of mangstnese ore reached 316,000 tons, practically all of ,,!hich vent into the blast furnaces ,,:\TId electric furnaces for the production of ferro-alloys. Deposits of manganese ore have been found in French f-1orocco a.nd it is expected tha.t Frl:1nce will expand their exploitation as rapidly as uossible in order to save foreign exchange. Some progress has also been made in the develoi)ment of substitutes for manganese and it is expected tha.t the unit reqUirements of manganese "Jill be reduced in the :;:~uture. though not to the point of actually solving the nroblem of France's denendence upon foreign ores. vii th res"lJect to other ferro-a.lloys. the ores have to be imported into .:s'rpnce in part from french African nossessions, but traditionally french requirements for ferro-alloys as such have been substantip-.lly met by (lomestic nroduction. 'rhe ferro-alloy -producing inDustry is a seasonal one, being concentrf".ted in areas ,·,here hydro-electric "00'",er is availl'l.-ole, I'md depending upon the use of off-season power. (e) ?efractories - France depends for its supplies of refractories largely upon foreign countries; before the "'ar. its dolomite came from Belgium. its silica bricks from Germany, pnd its magnesite from Austria. At the time of writing', the  - 10 - situation has not changed much. but it may be thflt France Can reduce its dependence on imports of these "Droducts by developing marine sources of magnesite, as \'lell as 671)10i ting some l:no1rJn denosits of dolomite. It rloes not appear, hOil,ever, as though domestic sources of dolomite are or will be su.fficient to meet Frp.nce I s needs. (f) Other Materials ... Abundant supplies of limestone, fluorspar and phosphate are to be found. i,;1 thin Fr~lnce. France is also fortunate in the fact that the i'linette ores are almost completely self-fluxing, thus reducing Fra.nce' s dependence upon these fluxing materials. Section III - Pig Iron French nroduction of pig iron amoll.'1ted to some\\That over 10 million tons in 1929; and Saar nroduction in the same 'Period amounted to ebout 2 million tons. The low points so fa.r as France prO"Der is concerned 'IIlctS reached in 1932, in t\Thich year output 1t/as only 53% of the 1929 level. Recovery from this low level was, how- ever, slow in getting under way and never again in nrewar France did production reach more than 75% of the 1929 level. During the war ;Tears, output was both severely limited and strictly controlled by Germany. The year 1945 ",Tas one of severe disorganization in the iron and steel industry. explainable to a very large extent by the fact that the bulk of the in- dustry had been shut down (3.uring the war years. Only about 10% of the 1929 output rate was achieved in 1945. Progress since then has been very :rapid. however, nro- auction reaching about or-e-third of the 1929 level in 1946, almost one-half of that level in 1947, and ,-ras at a level of about 70% of 1929 until the coal strike reduced nroduction. After the end of the strike. nroCluction spu.rted upi·Tard to an annual rate of about 8 million tons per year. In the Saar, \-far C1islocations lITere far more severe tb.8.n in France proper and :production since the end. of the war has increased only haltingly. Almost no steel was produced in 1945 and only one-quarter of a million tons in 1946. Currently. the inoustry is producing at a rate of about 1,500,000 tons 1tJhich is about 63% of 1938, peak year for the Saar.  - 11 - Before the war. France conducted a large exnort trade in pig iron, ~nlile her imports "lere minor being confined largely to cross-border movements to and from Belgium and Luxembourg. The principal foreign markets for French TIig iron before the "Tar "'ere Belgium, Luxembourg /).nd the U.K., each of \·;h1.ch accounted for roughly one-fourth of total shi)JIl1ents in 1937. Although before Eitler's ascent to povIar Germany we.s an imnortant customer accounting for about 20% of Frc.nce t s !Jig iron ex- norts, the German striving towards national self~sufficiency resulted in a steady diminution of French exports to Germf'my. Also t the deTIres sion of the 1930 t S vrit- nessed a sharp reduction in French exports of pig iron, partly as a natUl'al conse- quence of the shrinkage of \'lOrld tre.de e.nd nartly as a result of various restric- tions on imnorts e.do'ited by most countries. Thus, for several years the United Kingoom imT)orted no nig iron from Fr1mce because the preferentil1.l tariff s~rstem fpvored imnorts from India as against those from other countries. The restoration of pig iron to the free list in 1937 resulted in a me,rked resUJ'nntion of French ex- ports to those mar~ets. Italy also constituted a fairly im~ortant market for FrenCh ~ig iron in the late 1920 l s, but decreased in im~ort~nce during the 1930's. An importe,nt domestic market for nig iron in France t1as the foundries vJhich accounted for about one-sixth of total nig iron demand in the early 1930's, Cur- rently, foundry pig iron, though still importcnt, has declined to only 11% of the total. It is not clear, hot-lever, ':'hether this reTIresents a starving of the found- ries or a na.tura,l shift in the composition of proc1uction such as t8.I{en place in most industrial countries. J3ece.use of the dominance of the Thomas nrocess and because subste.ntial quanti- ties of 'Dig iron "lere exnorted, this cornmodi ty ple.ys e, much more im1')ort~o.nt role in the French inr1 ustry than i t does in the incustries of other im:nortant Euro;)ean steel nroducers, except :Belgium a.nd Luxembourg. Thus, while in Great Britain the ra.tio of pig iron to steel proouced \\Tas 65% in 1937, in Prance it was 100%. nevertheless, there has been in Frpnce as in other cou.'1tries a steady decline in the ratio of pig iron production to steel ingot production.  - 12 - Geographically. the east of FrHnce, that is, the Moselle and the Meurthe-et- Moselle areas. together account for an almost constant 79~ of total nig iron produc- tion. This percentage has varied very little in the course of all the prevlar years and the same is true even at the present time. The relative distribution of output by regions has been maintained over a period of ~Tet'trs in a]?'Proximately the following ~)l'o"!')ortions: Region Percent of Outnut Est I 43 Est II 35 Irord 13 All other --2. 100 The nred.ominance of the east of France in the 1"')ig iron making nat tern is, of course. intimately tied up pith the location of ores and the prod.uction of steel by the Thomas process, this area having the nreuonderance of both the ores a.nd the Thomas steel making ca:013.ci ty. The average size of the French blast furne.oe is sma.ll, even after account is token of the fact that the noorer the ernde of ore, the 101-Jer is the average daily out1:)ut of a blast furnace of given size. It has been estimated by a commission of eX"Oerts established und.er the Monnet Ple,n that for Frnnce modern efficient ura-ctice calls for blast furnaces with an annual C8.!)P.City of close to 200,000 tons :oer e.nnUlll, under normal operating condi tiona bf'.sed on a charge of Ninette ore and 10l'ler i'ropor- tions of scr..:rp than are currently being employed. tlhile no figures have been pub- lished concerning the distribution of French furnaces by size, it is possible to compute from available staUstics an average output per active furnace. Average out- put 'Oer active furnace 11<11'18 betueen 67,000 and 75,000 tons per year. The average canacity of France's blast furnaces is thus seen to be less than half the size recommended by the experts. The average yield per active blast furnace in France is very nearly the same as in Great Britain, but considera,bly inferior to the average for Germany, in which output per blast furnace amounted to over  - 13..,.. 100,000 tons in llre'-iar years. GonV'en.tiona>l units in theU. S. are rated at about 350.000 tons ~er year. One of the penalties :naid by the French industry for its utiliz8,tion of obso- 1escent equipment is a high consumption of fuel per ton of pig iron nroGuced. The level of coke consumption by blast furl18,ces per ton of )Jig iron is ShOTflD belo1:;~ of coke 12er KF-:1 ton of pig tron 1929 1,010 193 4 1,020 1939 1,060 1946 1,015 The above figures should, however, be increased by roughly 50 kilos per ton, to allow for the consumption of eoke in ancillary se;rvices. Gross consumption of coke per ton of pig iron produced may, therefore, be set at about 1.100 l~. This com- pares rather unfavorably ...lith the fuel, efficiency of Be1eium which, utilizing be,sically the same nrocesses e,nd the same ores, consumed less than 1,000 kg. ~'Jer ton of pig iron in 'PreTflar yet:trs. In order to incr0ase fuel effie iency. it has been recommended. that ore 'Preps,ration machinery be instf'lled. p,ncl thp,t the blasts for the blast furnaces be modernized. Currently, a substrntial number of firms are en- gaged in 'Putting this recommendation into effect, but details concerning the rate of' "jrogress are not available. Unit labor reqUirements of blast furnaces h~ve been among the lowest in ~~ope in most prevlar years. This high rate of output per m8.n, counled vrith 10'" fixed charges and lov' ore costs. gave the :French industry C',n imnortflnt advantage over its comnetitors during the depression years. At the 1Jresent time, hm-Hilver, "lith all steel industries oneretinG at or near capaci ty t lOll! fixed ch8.rges are no longer an important advantage, since o,!!ere,ting cherges of France's equipment t badly in need of modernization, are currently Very high~ The bearing of this upon the prospects of the industry is discussed later~  - 14 - Section IV - Crude Steel, Production of crude steel in i!'r£lnce reached its peak in 1929, declined to about 6050 of the 1929 level by 1932. and recovered to e,bou.t 80% of the ],)re\'rar level in 1937 fmd 1939. In all other nrS'ltTar years, 'Oroduction \1aS belo'lt! 7 million tons. Output of raW steel in 194.5 was about 17% as high as 1929. indicating th£"t the shutdO\-In of nroduction during the years of Germe,n OCCU1,)2tion in France did not affect steel ingot nroCluction quite as sharply as pig iron product1on--Ia,rt:ely as a result of scrap available in the months immediately follo'ltring the cesse,tion of hostili ties. By 19L~6t the steel "lOrks had reached 4,550 of their 1929 rate and by 1947 had recovered to 1)re'''ar depression levels. 3ecent1y, the industry 'ltTaS ~)ro- duoing at a rate of about 8 •.5 million tons ')er year or 8,bout 88% of the 1929 level and I'l,bout 11050 of the 1937 level. Most of the 'r)roouction of crude steel, as 'VIell [,tS t!1e ';")roduction of pig iron is concentrated in the Est 1 a.nd Est 2 areas. HO'rleyer, these areas do not Ciomi- nate quite as large a nroportion of the crude steel nroduction as they do of the 1)ig iron ")roduction, accounting for ti'!o-thi~ds of crude steel ~0roduction in :'1re- war years as contrasted \'!i th 78~ of the :'Jig iron output. The north and center areas \-,hi eh .,."roduce On en hearth and electric steel are rele,ti vel;)' more imT-lort;:',nt in the steel nroouction pattern than in the pig iron pattern, At the end of 1946, the French steehJOrks (exclusive of steel foundries) com- 1)riseo, 93 Thomas converters, 125 J..'Iartin furnaces--of which three 1I1ere of the acid type. 86 electric arc furnaces, 39 electric induction furnaces. and 32 small furnaces mainly of the crucible tY);le. The east of 1rance o'lfmed 77 of the 93 Thomas converters, the north of Fr8nce 13. a.nd the ~'Jest the remaining t!1ree. Only 39 out of the 125 Martin furnaces \'19re located in the east of France, since in this section the function of the Martin furnfl,ce is chiefly the disuosal of the scran generated in the rolling mills. Accordingly. the i':is,rtin units in this area are sma.ller than the average. The north and center account respectively for 42  -15- and 24 furnaces. with the remainder scattered throughout the other departments. The ea.st is also under represented in the electric furnace sector. ~ossessing only 15 Elrc furnaces and no induction furnaces. The center is the chief electric steel prodUCing area, with 32 arc furnaces and 29 induction furnaces. No systematic desoription of steel-making oapacity by size of furnace is avail- able. Some notion of the size of units may, however, be obtained from the follmdng: In 1937. average annual outT.)ut per active furnace was 62.500 tons for the Thomas converters. 28.300 for the open-hearth furnaces, and 6,600 tons for the electric arc furnaces (electric induction 8,nd crucible furnaces are normally quite small and confined to smEdl operations). Section V - Finished Steel Products Production of finished steel equalled about two-thirds of the tonnage of crude steel nroduced in most yea,rs. This does not imply. however, that fabrioating losses amounted to one-third, for, in addition to deliveries of ingots and semi- finished nroducts to rolling mills under the same mmership, a substantia,l quantity of semi-finished steel was offered for sale as such. Deliveries of semi-finished nroducts averaged nearly one-fifth of total crude steel nroQuction during the years 1934-37- A substantial nroportion of such spIes ,.,e;t"e made abroad, amounting in 1934 to about two-fifths of total sales. and in other years to roughly 30%. Domes- tic sales of semi-finished products include se,les to subsidiaries of parent com- pe,nies, though to an unknown extent. But the fact tha.t the volume of domestic sales of semi-finished steel was only about one-tenth of the total indicates that about 90% of the rolling mill output was from mills owned by companies that also operated steel \"lOrks. The geographical distribu.tion of 'T)roduction suggests, however, that, while financial integration of steel producing and finishing capacity was the rule, technical integration was far less commonly practiced. As in the case of crude steel, 1929 was a ~eak year and 1932 the lowest year in finished steel production, production amounting to only 4 million tons of  - 16 - finished stee'! in that year. Recovery thereafter W8.S at a slow pace, with 1937 as the best prewar year, 5.2 million tOllS having been 'l')roduced in that year. or 78% of 1929. Since the end of the war, nroduction has recovered substantially from t.he low of 1945. amounting currently to an annual rate of about 5.1 million tons, or only slightly below the 1937 level. l\oughly, three-fifths of finished steel :oroductlon is concentrated in the Est I and Est II areas, contrRsted with 67% of the crude steel production and 78% of pig iron. The northern area. on the other hand, was almost as important as the Est II area before the war, accounting for roughly one-fourth of the total nroduct:ton cur- ing the nrewar neriod. The current nroduction pattern is not significantly differ- ent from the prewar one. Production of finished stee;!. ,.,as quite \-:e11 diversified in pre"m,r France. About one-sixth of the total output was in sheets. Somewb~t better than one-fourth was in merchant bars and a substantial tonnage Varying betl'Jeen 8 and 15% was in structural steel. Bails and raih,ay materia,ls together accounted for apnroximately 10%. Currently, although total production is at about 1937 levels, sheets are about 25% above levels in that year. Other lJroducts tlm,t have increased markedly since before the war are strip and nipes and tubes. tonnages of those items amounting to roughly 00uble the prewar level of lJroduction. Wire rods have also increased in reletive importance, while other products have declined....-the decline being fairly well suread over all of them. Section VI _ Foreign Trade in Iron and Stee! Before the Wa,r, foreign trade in iron and steel products was an important phase of the French economy. Except for a small number of special items not produced in France. the country was on a net export basis. Large quantities of pig iron and semi-finished steel ,,'ere eXported, at a level equal to about one-third of the ex:oorts of finished items. These relatively large shipments of low-priced nroducts 't':l'ere  - 17 - made 'Poss1 ble by France's ability to nroduce pig iron and semi-finished steel at low cost. The most importa~t importers of pig iron were the steel companies of Eelgium pnd Luxembourg, many of whom had financial ties with the French producers. Other importe.nt outlets for these products t-/ere Germany and the U.K •• although the German drive toward self~sufficiency and the British system of Empire 'Preference trading cut drastically into these markets during the middle 1930's. Far more important, however, were exports of finished steel in respect of both tonnage and value. During the five-year period 1929~1933, about 40~ of the total output of finished iron and steel nroducts in France and the Saar was marketed in foreign countries. In 1936 and 1937, a.bout one-~ourth of French production was shipped abroad. Before the return of the Saar to Germany, that country was an im- portant importer of finished iron and steel nrocucts. After 1935. French shipments to Germany declined and the U.K. became the pri~oipal foreign outlet for French pro- ducts. Other importa,nt conSUJilers were the Scandinavian countries, Switzerland, Belgium, Luxembourg, and the U. S., as \'lel1 as France t s overseas uossessions. Currently, relatively little is being exported. Recent shi~ments are only 8bout one-fifth as high as 1929 and almost one-third of them go to France's overseas possessions, contrasted with only about 9~ before the war. On the other hand, while in terms of tonnage French exports have lagged severely behind their prewar level, their co~osition has changed, with the more highly finished products increas- ing in import1'lnce. Thus, in 1929. while almost one-third of the French exports were in the form of nig iron. crude and semi-finished steel, only 10% of total shipments in May 1948 were in that category. Thus, France seems to have regained a rather larger ~roportion of its ~rewar e:x:oorts than the crude figures indicate, although, even after due allowance is made for this factor, French exoorts are still only about 70~ of 1938. It is 'Possible that. despite efforts on the part of European producers to per- mi t only highly fabricated prod.ucts to enter the export stream, French e:x:ports of  - 18 - pig iron and semi-finished products may vJell increase this yea.r. The chief customer is likely to be the U.K., although It8~ may also enter the market for pig iron and semi-finished steel. The chief reasons for this develo'1ment in, the case of Great Britain lies in the inability of British sources of ~ig iron and semi-finis~ed steal to meet internal demend. 'l1h1le in the case of Ita~ the reasons are rather more com- plex and are linked ",ith the necessity for integrating the economies of the hIO countries if a successful economic union is to be made a reality, sometime in the future. Section VII ~ Labor Productivity Information on this subject is rather scanty and difficult to ap}")raise :9rO})erly because of the variations in definitions of the term "iron and steel industry" be- tv-leen one countl"'J and the next. HOHever, even after Due allowance is ma.de for in- comparability, available figures indicate that Germany and France were at roughly the same level of output Derman year, Germany having somewhat of an advantage in pig iron production and Francs. in crude steel production, ltIi th the U. S. far out- stripping both. Great caution should be used in interpreting this statement, since, in addi tion to problems of defini tiona of ,·,hat constitutes an industry Hnd "That constitutes a ,,forker attaohed to the industry, there is also the question of the relative number of hours worked by the different emuloyees and the type of equipnent used. Bec8use of v".ria.tions in percent of canacity utilized in different ~rears and the completely different inme.cts of economic and political factors upon iron and steel production in Germany and in France d.uring this 'Deriod, judgments of relative efficiency be,sed upon the relative levels shovm by these figures \'lould be subject to wide margins of error. HO"Jever, com:pa.risons of these countries with the U. S reveal such wide differences that, even after IDe.king due allovlance for all possible errors or other factors, the fact emerges that by com".OEI,rison with the U.S. the labor pro(tuctivity of the French iron and steel ,·!or'.;:er "las far inferior (anet that the same is true of the German worker).  -19 - One must not draw, however, the too hasty conclusion that the French iron and steel industry was in some absolute sense inefficient. Not only is the character of the ~uronean markets different but the characteristic of European ores are such that lrJith the exception of the U.S.S.R. no country has constructed blast furnaces with a capacity much more tha.n half of that used in the U.S. Moreover. if the comparison of relative productivity is made lrJith a view of ascertaining relative ability to compete in foreign export markets. then. not only relative efficiency must be taken into account, but also relative wage rates and relative foreign exc...~ange parities. Section VIII - Problems of the French Irop and Steel Industry For the purposes of the nresent renort. the problems confronting France's iron and steel industry can be most conveniently summarized under t,.,o categories. namely, those relating to the economics Rnd technology of the industry proper and those that stem from Frence's general economic situation, perspectives and plans. Although it may appear paradoxical, the actual fact is that the iron and steel inc1ustry of today !;Iuffers from the fact that Fr~lUce "JOn the first World \iar~ One of the direct consequences of that lrlar lrTaS that France obtained the iron and steel in.- dustry of Lorraine by.the act of exnropri~'ttion of the former German mrners of these properties. The French industry bought these :oroperties from the government at low prices and, as a result, were able to operate them at a profit without much regard to utilization of technical aids to efficient operation. such as modernization of eqUipment and. rationalization. Given the nrimary fact of olr:nership of a large in- dustria.l plant obtained at a low financial outlay, there was an obvious and under- standable reluctance to snend heavy sums for modernization progtams. Thus, the tend- ency toward using financial integration as the basis for technical integration ex- hibited in its most obvious form in the United Ste.tes, but common also to other in- dustrial states, was notably lrleaker in France. For vertical integra.tion in the iron and steel ind.ustry is far more than COlmnon o\'Jnership of faciH ties from J)rimary through finishing stages. If the benefits of vertical integration are to be  - 20 - realized, the buildings for the ve.rious olJp.r8tions must be contiguous; opere_tions must be dovetailed, although, of course, to a far lesser extent than in the mechan- ica1 industries; and, in addition, integration combined with large-sc8. le operc·.tion :makes it economical to USe various heat-and-labor-saving devices, 1ilhidl are out of the question for the small producer. The 1m'! degree of technics.l as distinguished from financial integrrtion of the French iron and steel in0ustry is well described by the following figures: Out of a totel of 177 ",orks covered by the Chambre Syndicale de la Siderurgie. 23 are fully integrated. i.e •• cOIllprise blast furnaces. steel \10rks and rolling mills, and have additional capacity for further fabrication of finished steel products; 23 own blest furnaces only; 40 are semi-integrated, i.e., they combine steel "I)rks \vith rolling mills and further fabricf'lting machinery only. This census excludes, 'oy definition, foundries, tube mills and certain r.:.inor steel and wrought iron "fOrks, which inclusion 'ltlould s\"lell the count of non- or semi-integrated '·lOrks. An even more striking illustration of the same ~oint is shown by the following figures: The east of Fre.nce before the war produced- 78% 4 of all the uig . iron. but only 70;" of !'l.ll the crude steel. and only 60% of all finished steel. Thus, non-integration in Fr::mce resulted in large-scale geographical mOV8nents of lJig iron and crude steel even after allowance is made for eXDorts of these nroducts. The cost advantages ''''h1ch Fra,nce enjoyed in the manufacture of pig iron and crude steel, disappeared by the time the finishing stage was reached. Another consequence of the return of Alsace-lorraine to France "'as that it re- inforced the already domina.nt Thomas process and, at the same time, increased Fra.nce's denendence upon foreign sources of coke. The characteristics of the Lorraine ores are such that they can be successfully exploited only by the Thomas process. Yet the trend on the \"lorld markets has been a'lflay from Thomas steel e.nd toward Hartin or electric steels because hi the;rto the open hea.rth ;:md a fortiori the  - 21 - electric furnace ~ermit much closer control of quality and greater flexibility in the u~e &f raw materials. In England. U.S.A., U.S.S.R •• Germany, p,nd Central Europe, the mass :-:ls,rket is supplied by open hearth steel. In France, the mass market is supplied by Thomes steel. But Thomas steel possesses two disadvantages: First, because the refining urocess takes only a very short ~eriod it is impossible to control the physio- chemical nronerties of Thomas steel as precisely as is desirable; and second, in the process of blo\·Ting a blast of air through the molten charge in the Thomas converter a certain amount of nitrogen is absorbed which has a tendency to mal<:e the stefll brittle after several years of use. For this reason, Thomas steel is not accentable for ship-plates, sheets for deep dra1lJing, and similar uses. As a result, TJroctucers of Thomas steel have found themselves at a disadvantage in competing for very im_ portant markets and have been able to compete mainly on a basis of price for uses where less precise ste,nde,rds of strength, durability or finish of steel items are required. However, 90 great are the limitations placed. u~on French industry by its re- liance upon the Lorraine ores that the current modernization :olan for the French iron and steel 1ndust~J does not envisage any important shift from Thomas to open hearth steel. Yet the dominance of Thomas steel means heavy dependence upon coke and, for France, \Olhich imports a,bout 60% of its coking requirements either in the form of coke or coking fines, this is a serious limitation. especially \·,hen it is realized that in order to pronuce one ton of pig iron about 1100 kg. of coke were required before the war, or about 10% more th~m Belgium vi th its requirements of only one ton of coke 'Der ton of pig iron. Thus, the l8.cl~ of technice,l integration of the French industry. 1Ilhich uses basically the same 1'~roces s as the Belgian indus try, result ed in a considerable wastage of fuel. The low degree of integration is \"el1 illustrated by the fact that France, which has t~ im'Dort coking coal. obtained only 43% of her  - 22 - metallurgical coke from cokeries atte,ched to blast furnaces, thus losing an oppor- tunity to reduce fuel consumntion by utilizing the blast furnace gas for the heating of coke ovens. Another failure to effect economies in the use of fuel. particularly coke, re- sulted from the fact that very little use has been made of the sintering process which. according to estimates made by the French Commission de Modernisation de la Siderurgie, should reduce consumption of coke by as much as 150 kg. per ton of pig. Although the net saving is less th2n the ~~ount stated above, since some fuel is needed for the sintering ~rocess, low grade coal can be used for sintering and thereby can reduce France I s depeno.ence upon foreign sources for its high-grade fuels.. It would be obviously incorrect to consider the above rem1.",rks as a description of the method of operation of the entire industry. It is true. hO\1,ever, that there are a considerable number of small and inefficient units left in France from prewar days. vlhile, before the war, Frcmce had an advantage in that it possessed extensive reserves of low grade ore, mining costs of which were practically negligible, plus an extensive group of inste,llations which were obtained, so far as the steel in- dustry is concerned. at relatively low cost and hence substantiall;r reduced the fixed charges carried by the industry. the advantages conferred by these two factors have tended to disappear. In the case of the metallurgical insta.lle.tions, the mere passage of time will, of course, tend to reduce the relative cost advantage by virtue of the need of replacement of French installations, on the one hand. and of the amortization of equinment installed in other countries. on the other h1'l,nd. But another factor, and one ",h1ch mey be of more th8,n temporary nature, has been the shift in cost factors. Labor costs have advanced considerebly and the same thillg is currently true of coal costs which are substantially equalized against U.S. de- livered nrices. Thus. the French ineustry~ if it is to comnete on 1tJOrld mar!cets, has to think in the same terms as other countries. n~llely, rationalization and modernization methods designed to decrease fuel and labor consumption. One line of  - 23 - development may be, though it is too early to tell. in two processes currently bei~ experimented \lTithin France and other EUropean countries. These 'Processes involve the reduction in the nitrogen content of the Thomas metal, thereby (it is hoped) decreasing its brittleness A.nd making it an acceptable substitute for Martin steel. With respect to rolling mills. he,lf are non-integrated .(90 out of 177 works). which in practice means di versi ty of condi tiona generally coupled 11;1 th small ca- pacity. A study made in FrAnce in 1944 investigated :orecisely these questions of the technical efficiency of French metallurgical insts.lts.tions.. The authorities found that French blooming mills (lIfhich convert large ingots into a semi-finished product for further rolling) are rea.sone.bly modern. Sinib.rly, semi-finishing mills for the rolling of billets and slabs (1. e •• smaller semi-finished products) are quite modern and include some continuous mills of the Morgan tj~e. The non- continuous mills also appear to be in reasonably good shape and of suff~cient ca- nacity to cover French requirements for products of this character. The same is true of mills for .rolling small structural shapes. but it is pointed out that the mills have in the past been used ineffiCiently, since, in their desire to increase orders, French manufacturers have tended to accept small-quantity orders, thereby increasing the ratio of time required for changing rolls to time productively uti- lized in rolling. On the other hand. \1i th the exce}Jtion of a few modern 1Ilorks in the east, the equinment for rolling heavy structural shapes is rather old. The eastern mills are. in general, in a better condition than those of other areas of France. The Centre, for instance. has a large number of out-dated mills for the manufacture of light structural shapes and the same thing is true. in genera.l. for mills rolling merchant shapes. France h deficient in equipment for rolling large and middle-sized sheets t whereas, mills for thin sheets are quite numerous in the entire country. However. there were no continuous mills in France in 1944 and, as a matter of tact at the date of writing, the hot strip mill ordered by France from the U.S. and paid for in nart by the IBRD loan has not yet been  - 24 - completed. Simile,rly, in the case of wire rods. there are many installations, rang- ing from modern Morgan mills to mills that are extremely old. In general, canacity for rolling lare is more than sufficient. The technical difficulties that beset the French industry are thus seen to be of a relatively simple character and entail fairly obvious remedies. It will be necessary, in order to place the French industry on a competitive footing, to install equipment that will effect considerable fuel economies by utilizing more efficiently known methods of ore preparation. consumntion of blast furnace gases. charging of furnaces~ and efficient la,yout of plant and equipment. It . .,ill also be necessary to enter upon a nrogram of modernizing the steel \'lorks and the rolling mills. The necessary expenditures will be relatively low, especially in comparison with the United Kingdom. For France nossesses pig-iron and steel-making capacity in 9;K:CeSS of her steel rolling plent, and, in an attempt to balance the latter vlith her blast- furnace and steel 1rlOrks cape,city, 1:lill require, in proportion, fewer inste,llations than the U.K •• where additions to current plant will need to include all stages. Detailed plans for this purpose have been dravm up by the "Commission de Modernisa- tion de la Siderurgie l1 with the coonerntion of the French industry, but, so far. reports on the degree of com~letion of these nrojects are not available. In addi- tion, plans have been drawn for modernizing and consolidating capacity with careful 8,ttention being paid to the problem of avoiding social and economic dislocations that "lould be ca.used by a.ny wholesale drasUc revamping of the industry's technical structure. 1I The most recent expression of the modernization program in financial terms indicates that France intends to spend $600,000,000. Of this total, $100,060.000 !I Someidea of ho~ drastic such a reorganization might be ~f based purely upon tech- nical considerations, without regard to the human factors involved, may be gained from the following'observation. There are currently 177 steel works of various descriptions in France. ConSidering .the goal of 12 million tons per year, it would appear that 12 works, each vlith a capacity of 1 million tons "Oer yearr would be more than amnla to cover the needs of all the mass markets. If allowance is made for the need for s~ecial types of capacity, then it would appear that 24 steel  -. 25 ... is to be in U.S. dollars, another $20,000,000 in other hard currencies. It is ex- pected tha.t $350,000,000 will be available internally from the so-called "technical amortization" funds. V The remainder '''ill have to come either from ECA counterpart fund.s or from loans. Included in this $600,000,000 program are t\<IO strip mills. concerning "lhieh there is disagreement ,lT1thin OEEC. The French position is that (a) sheets, strip and tinplate are in great demand; (b) existing French mills, in addition to being expensive to operate, produoe an inferior product; (c) if the nre)lar distribution of sheet and strip are examined, it \',ill be found that the 'Proposed addition to pre- war capacity is far lower than that planned for Belgium; and (d) Frcmce can enter the export markets for sheet e,nd tinnlate only if she is 'Dermi tted to nroceed with the installation of both mills. This phase of the program is calculated tQ cost about $150,000,000. The other $450,000,000 cover a "'ide multi tude of imnrovements of current facilities and operating techniques, "'hich are discussed in broad detail in the working paper. The effect of these programs should be to expand uroduction and eXport potentials, the former to about 14.5 million tons for France and Saar, and the latter to about 3 million tons. Possibilities of increasing eX90rts de'Dend in the short run upon increasing production of those nroducts most in demand, namely, plates, sheet and strip_ In the long run, they depend also upon the possibilities of modernizing plant and e- qUipment so that production costs ma,y be cut. These two phases have been inte- grated into an over-all program, sound wi thin the frame'llJOrk of the Monnet Plan and sharing, in general, the difficulties associated ",i th its fulfillment. llSteel producers are required to set aside in special blocked accounts certain percentages of the sales price of their products. These blocked funds are re~ leased only upon justification of the eXpenditures actually made for duly ap- proved projects.  TABLE 1 Production, Imports, Exports and Consump- tion of Iron Ore Hined in France,1929-48 (In thousands of metric tens Production Eorts E);Eorts . ' -:(Oparent Metro Belgium Belii~u.'1l Con- Total po1itan Co1o- Total Luxem- Total Luxem- sumption France nies , burg bur~ 1929 53,900 50,731 3,169 l,Th1 577 16,388 12,407 .35,l:.8h 1930 $1,486 48,453 3,0:33 1,012 477 1$,078 11,601 34,386 1931 39,848 38,481 1,367 781 353 12,406 10,060 26,856 1932 n.a. 27,653 n.a • 3.35 153 10,060 9,0,2 17,928 1933 " .30,245 " 561 292 10,985 9,395 19,821 1934 II .32,015 " 941 513 12,641 10,397 20,315 1935 II 32,049 It 443 226 16,6.31 10,384 15,.361 1936 " 32,208 " 391 140 18,251 10,110 1h,3h8 1937 II 33,839 II 920 463 19,320 11,599 1S) ,it39 1938 " 33,176 n 18,541 1939 II 32,993 11 18,170 1945 9,135 7,799 1,336 3,202 n.a. h,597 1946 18,194 16,216 1,978 5,670 n.a. lo,5L6 1947 20,809 18,699 2,110, 6,429 n.p.. 12,4.59 1948 25,886 23,009· 2,017 ; n.a,. n.a~. 6,311 n..:.1. 16,698 I E.d." Data not aveiJ.ab1e • . ~~ . : \ .... Source! IERD working Daper lThe French Iron nnct Steel Industry!! f Tables 1-, 4 •. ~_'':.  TABLE 2 Production, Imports, Exports and Con- sumption of Coke in France for Select- ed Years, 1929-48 (In thousands of metric tons) I mE 0 r t 5 Apparent Pro Belgium Ne- Consum:etion duc- Ruhr- Luxem- ther- Ex- Iron & tion Total Saar bour~ lands Eorts Total Steel 1929 13,873 5,450 3,648 697 1,074 468 18,856 13,821 1930 14,095 352 18,308 1931 12,285 425 15,258 1932 9,841 333 11,471 1933 10,714 312 12,648 1934 11,422 2,199 1,432 378 ·376 326 13,295 8,,318 1935 9,333 2,111 1,394 342 369 293 11,157 6,400 1936 8,991 2,561 1,572 515 463 266 11,286 6,614 1937 n.a. 3,860 2,351 623 763 233 1938 9,404 2,362 1,075 602 609 212 11,554 6,523 1939 n.a. 2,792 953 1,01,3 766 211 1945 3,328 356 183 141 2 1 3,683 1946 7,970 1,089 529 391 81 46 9,013 1947 / 10,456 2,025 1,215 50S 135 50 12,431 19481 10,500 3,127 2,295 4h5 185 600 12,738 1/ Average for first five monthso Source: IBRD ~'/orking paper, "The French Iron and Steel Industry", Tables 5,5-a and 8.  TABLE 3 Production, Imports, Exports and Consumption of Coal in France for Selected Year 6, 1929-+948 (In thousan~~ of metric tonsl I m ;e 0 r t s Apparent Pro- Belgium eon- duc- United Ruhr Luxem- Ex.... sump- tion , Total Kingdom Saar burg ;eorts M.on 1929 67,356 23,669 13,215 5,148 3,566 5,037 85,987 1930 67,133 24,766 4,067 87,8,32 1931 61,375 23,087 3,504 60,957 1932 56,702 17,863 3,155 71,411 1933 57,446 17,953 2,973 72,426 1934 58,947 16,695 7,731 3,721 3,013 3,,013 72,629 1935 47,910 17,891 7,431 5,066 2,977 1,215 64,586 1936 45,224 18,655 7,199 5,897 2,944 8Bl 62,998 1937 45,332 24,616 9,422 7,994 3,405 617 69,271 1938 46,504 ]'8,685 6,3h7 5,518 3,553 886 64,303 1939 49,147 13,937 5,762 2,746 2,979 810 62,274 1945 36,,851 4,456 1,741 859 21 48 L.l,259 1946 55,092 8~701 703 2,309 40 320 63,473 1941 $5,714 13,780 ;; 1,180 148 69,111 1948 ~511~:U 25,110 115 3,49) 229 4, ~e 66,861 2.1 Estimated. Source: rBRD ,,,Torking Fa.per, liThe French Iron and Steel Industry", Tables 6 - 7.  Table 4 Production, Inports, Exports and Consump- tion of Pig Iron in Fra~ for Selected . Years, 1929 -4 , (In thousands of metric tonal = ; l.pparent Year Production 1:fi=:':~~ Oon- Im- ~~".; Luxem- Ger-.- sump- France Saar Total ports ~o-ta.1 burg many tion 1929 10,130 2,105 12,235 41 562 268 100 11,714 1930 9,797 1,913 11,,710 144 526 11,328 1931 8,023 1,515 9,538 74 417 9,195 1932 5,402 1,349 6,751 59 196 6,614 1933 6,123 1,591 7,714 89 168 7,635 1934 5,,944 1,826 7,,7702/ 65 145 44 32 7,69°2/ 1935 5,612 5,612- 56 137 42 48 5,531"2/ 1936 6,071 6,O7~/ 2/ 66 149 45 57 5,98~/ 1937 7,698 7,69~/ 41 421 112 37 7,,:n~ 1938 6,012 6,012'2/ 34 521 5,525Y 1939 1,376 7,37(;::. 43 468 6,,951Y 1945 1,171 9 , Y 1186 26 ..,. 1,203Y 1946 3,L44 246 3,690 42 20 3,112 1947 4,883 654 5,537 15 15 5,537 1948 6~575 1,136 1,711 38 7,620 1/ Excluding ferro-al1qys. Y From February 17, 19.35 to the defeat of Germany, the Saar was part of that countr,y, and hence is included in the statistics for that countr,y. Source; IBRD working pauer t "The French Iron end Steel Industry". and Bulletin de 1a Chambre Syndicale de 1a Siderurgie Francaise, January 1949.  ..5 TABLE " Proo.uction of P iron and Ferro-alloys by type, 12~ "1948:.~ . ~in thousands of metric tons} Total FoundrX J;1ig iron Steel-making nig iron Special Percent to total of: Year all Phosphorus Hematite Phosphorus pig-iron Foundry Steel-making types & semi- & semi- & semi- Hema- and ferro- pig pig- ", Total pho~phorus hematite Total nhosphorus tite alloys iron iron 1929 10,364 1,749 1,380 369 8,371 8,011 360 16.9 80.2 1930 10,035 1,706 1,341 365 8,088 7,716 372 241 17.0 80.6 1931 8,199 1.344 1,051 293 6,676 6,377 299 179 16.4 81.4 1932 5,537 853 672 181 4,548 4,393 155 136 15.4 82.1 1933 6,324 950 746 204 5,172 4,982 190 202 15.0 81.8 1934 6,151 940 752 188 4.993 4,732 261 218 15.3 81.2 1935 5.789 688 534 154 4,925 4,774 151 176 11.9 85.1 1936 6,230 661 526 135 5,410 5,217 193 159 10 .. 6 86.8 1937 7,914 1,045 756 289 6,654 6,346 308 215 13.2 84.1 1938 6,012 886 660 226 5,011 4,804 207 174 14.7 83.) 1939 7,376 1,048 676 372 6,200 5,870 330 207 14.. 2 84.1 1945 1,183 185 105 80 972 894 78 20 15.6 82.2 1946 3.444 362 231 131 2,973 2~740 233 109 10.5 86.3 1947 4;883 533 346 187 4,144 3,833 311 206 10.9 84.9 1948 6,,515 1,4> 533 212 5/ ,05 5.,1"71 328 )25 11.3 S.3.6 Note: Figures refer to Metropolitan France, excluding the Saar. Source: Recent issues of the :Bulletin de la Chambre Syndica1e de la Siderurgie de France.  TABIE ~ Production of Crude Steel and Ex- ports of Crude & ser:li-5iniShed Steel, 1929-19481 (In thousands of metric tonsJ . P r.o due t ion Year Total Est 1~7 Est 22/ NO~' cen~ suar~~~ua6/ OUestl/ Ex- .- . tre:4 Ouest_ Est_ 4 . ~ - ports .. 1929 9,711 3,674 2,985 1,698 567 56 125 606 493 1930 9,4u7 3,628 2,874 1,732 522 61 135 495 636 1931 7,822 3,019 2,371 1,431 389 59 63 490 463 1932 5,640 2,139 1,759 982 293 38 56 373 253 1933 6,531 2,470 2,086 1,114 362 36 67 396 299 1934 6,174 2,359 1,925 1,059 344 31 65 391 353 1935 6,277 2,311 1,972 1,140 357 34 79 384 n~a. 1936 6,708 2,388 2,208 1,249 367 35 68 393 290 1937 7,920 2,925 2,618 1,!.~26 398 46 78 429 278 1938 6,221 2,145 2,051 1,148 370 44 77 386 182 1939 7,950 2,708 2,573 1,565 505 54 95 450 1945 1,661 423 265 542 276 63 54 38 1946 4,408 1,462 1,19l? 1,026 449 79 86 110 1947.0/ 5,661 1,913 1,799 1,199 440 RR 86 136 1948 7,24.3 2,401 2,391 11522 506 73 88 lh5 il Production for France only. Exports include the Saar through 1934. - '2/ 3/ Includes" plants in the following departments: Ardennes, .4.ube, Bel£ort, Donbs, Jura, Haute-Harne, Haute-8aone, I\:eurthe-et-hIosel1e, Heuse, Vosges Ditto in Aisne, Nord, Oise, Pas-de-Calais, Seine-et-Earne, Seine-et-Oise ~/ Ditto in Allier, Cote-dIOr, Loire, Lozere, Nievre, Puy-de-Dome, Rhone, Saone-et- Loire Z! Ditto in Arieee, Aveyron, Basses-Pyrenees, Dordogne, Gironde, Haute-GaroIUle, Lot-et-Garonne, Pyrenees-Orientales, Tarn 6/ Ditto in Gard, Haute-Savoie, Ieere, Savoie 1/ Ditto in Calva.dos, Cotes... du-Nord, Euse, Loire..,.Inferieure, Eaine-et-Loire, ~~orbihan, Seine-Inferieure ~I Does not include Bessemer and crUCible steels "0:' ,,! t .. " . '. " ... : Source; working pa::>er, tl Frene}l I ron ana ' Steel Industry," Tables 16 and  TABLE 7 Production of F1n:il:;ha:i Steel and EXP£r. ts of Crude and Finished Steel, 1929 - 194&:7 (In thousands of metric tons) Pro d u c t ion Year 8/ Ex- Est I'd Est ~ Nord- Centre- Ouest- Est- Ouest- ports 4/ 5/ Sud 6/ SUd7/ Total 1929 6,732 2,078 1,975 1,789 389 81 110 310 3,213 1930 6,419 1,959 1,972 1,700 337 72 113 266 2,902 1931 5,322 1,619 1,650 1,391 250 60 68 284 2,703 1932 4,004 1,259 1,161 1,025 198 50 69 242 1,955. 1933 4,464 1,462 1,284 1,071 258 50 78 261 2,213 1934 4,121 1,358 1,130 1,039 233 42 80 239 2,539 1935 4,215 1,350 1,189 1,070 237 42 78 249 1936 4,529 1,401 1,271 1,193 251 50 78 279 970 1937 5,222 1,604 1,507 1,434 254 59 80 284 1,242 1938 4,108 1,334 1,201 997 200 57 68 251 1,030 1939 4,894 1,520 1,lt33 1,306 237 62 79 257 1945 1,119 265 179 408 159 41 35 32 1946 2,994 929 815 790 246 66 60 88 1947. ; 4,030 1,275 1,208 1,012 280 80 66 109 194 cr,,: ': 5,129 1,586 1,629 1,318 3~O 72 7.~ 128 Production for France only. Exports include the Saar through 1934. M _I Includes plants the following departments: Ardennes, Aube, Belfort, Donbs, in Jura, Haute-Marne, Haute-Saone, Heurthe-et-Hoselle, neuse, Vosges 3/ Ditto in Bose11e, Bas-Rhin ~ Ditto in Aisne, Nord, Oise, Pas-de-Ga1ais, Seine-et-Marne, Seine-et-Oise _I Ditto in Allier, Cote-dIOr, Loire, Lozere, Nievre, Puy-de-Dome,Rhone, Saone-et-Loire y Ditto in Ariege, Aveyron, Basses-Pyrenees, Dordogne, Gironde, Haute-Garonne, Lot-et-Garonne, Pyrenees~Orientales, Tarn ~ Ditto in Gard, Haute~avoie, I5ere, Savoie _I Ditto in Ca1vados, Cotes-du-Nord, Euse, Loire-Inferieure Source: URn working pa:oer, "The lrench Iron and Steel Industry, Taoles 17 a~d 21.  Ti.:BLE ~ Production of linished products by type of nroduct, 1929 - 1948 (in thous~nds of Ille 'tl'ic jiOl1S) .- ---.--.- -- - ............. ... ...•. •.... - .......... - 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 19/-1-5 1946 1947 1948 Rails 610 582 380 229 324 332 316 281 368 JOl} 240 26) ) ) ~.iesand_ fishplates 187 253 154 87 100 101 119 91 122 115 66 5) 149 ) 233 ) 272 Piling 8 ? .5 5 9 7 17 20 20 28 21 8) ) ) Wire rods -435 -354 302 223 282 298 315 354 404 395 543 '112 326 456 ·5'90 Concrete reinforcing rods ) Merchant bars ) 2.486 2.465 194 1,.884 192 210 171 149 Itl~59 - 1,224. 1.269 190 1,422 185 l,7 lt-3 148 1,327. 222 4~~~ 1,-165 1,485 . 1 ..900 . S-tructura1 materials 878 781 720 1tJi2 52 487 486 448 476 4·65 346 l·a~§ 42 215 258 361, Strip 152 146 154 147 179 155 162 177 223 151 190 42) 261 318 106 50 60 3(1 63 9) 193 ':Cube s and pipes 80 59 57 5~ 58 44 Blanks for tubing 108 71 62 41..J. 74 75 72 90 88 160 217 26 112 198 255 Large plates 73 82 62 42 35 36 45 32 38 33 40 10 33 40 39 Sheets 1,.045 994 846 685 802 730 792 842 977 1,012 - 1,245 279 690 939 1';320" '5. mm and up 366 377 308 223 242 220 238 234 316 278 349 229 89 319 423 2 to 4.9 mm 234 212 168 130 177 141 14) 143 183 164 232 64 136 212 less than 2 ~ 445 405 -370 332 383 369 411 465 478 570 664 126 325 408 l~? Other 82 86 62 40 35 37 45 38 44 51 39 43 111 158 191 Total 6.732 6,419 ·5.322 4,004 4,464 4,121 4,215 4.529 5,222 4,108 4,894 1t-112 2.994 4 •.030 5,J.29 Source: Recent issues of the Bulletin de la Chambre Syndicale de la Siderurgie.