James Bond, Britain’s most famous spy, owes a lot to French nerds in lab coats.
In “Skyfall,” Metro-Goldwyn-Mayer Inc. (MGM-R) and Sony Corp.’s latest blockbuster starring MI6’s best-known troubleshooter, the fog and wastelands surrounding Bond’s childhood home -- the setting for the movie’s climactic scenes -- and the smoky fire engulfing his exploding Aston Martin were effects created using technology from Technicolor SA (TCH)’s labs in Rennes, western France.
France’s mathematicians and engineers, once sought by banks to build financial models and by industrial groups to design superior machines, are increasingly finding themselves in virtual and make-believe worlds, using algorithms for Internet advertising clients or to create “floating magic” effects when Harry Potter uses his wand to throw a spell at Hogwarts School of Witchcraft and Wizardry.
“Those who used to work at Airbus (EAD) or were doing nuclear calculations, they work in our labs now,” said Gary Donnan, the 54-year-old head of research at Technicolor -- who himself worked on satellites, nuclear systems and high-speed TGV trains before joining the company in 2010 -- as he took visitors last month around labs where engineers worked with a virtual robot or experimented camera angles with a flying drone.
Technicolor, which added color to the black-and-white world of movies in classics such as “The Wizard of Oz” in 1939, and Walt Disney cartoons including the 1937 version of “Snow White and the Seven Dwarfs,” finds itself on the cutting edge of the industry again as it attracts France’s best mathematical minds. Sales at its entertainment unit -- revamped several times over the years -- rose for a second year in 2011 to 1.78 billion euros ($2.3 billion) after sliding since at least 2005.
While graduates of France’s elite math and science universities have traditionally gravitated toward banks and industry, the euro area’s three-year-old crisis and France’s economic slump are steering them into newer domains, including online services, consulting and entertainment.
“‘Data scientist’ has become the more sought-after resume title in the past two or three years, but students are only just starting to realize it,” said Francois Le Lay, a statistics engineer and head of data at Paris-based Viadeo, the world’s second-biggest professional network after LinkedIn Corp. (LNKD) “For years, banks have hired nuclear physicists, making them traders. Web companies are starting to do the same.”
Viadeo hired Le Lay three months ago to build a team of math-whizzes. He has since hired a mathematics graduate and is scouting for more, as Viadeo continues to expand after raising $32 million in financing in April.
France produces the highest number of math, science and technology graduates in the European Union. The country had 164,400 such graduates in 2009, compared with 133,500 for Germany and 146,400 for the U.K., according to the latest figures from Eurostat.
Two French institutions -- Pierre and Marie Curie University and University of Paris Sud -- feature on the list of the world’s top 10 mathematics schools, the Academic Ranking of World Universities shows. The country holds 11 Fields medals, the Nobel Prize equivalent for mathematics, awarded since 1936, second only to the U.S.
Graduates of Ecole Centrale Paris and Ecole Polytechnique, two of the country’s top engineering schools, have over the years helped French banks build options-based contracts and other exotic financial instruments to climb to the top of the global derivatives rankings. Other employers have been energy companies, including the world’s largest nuclear-reactor builder Areva SA (AREVA), and industrial giants such as planemaker Airbus.
Employment figures now show that the proportion of graduates going into finance has shrunk by as much as a third since the subprime crisis roiled markets five years ago. While banks and industry still get more than half the students, their share is falling. That of technology companies is rising.
Technicolor is using its mathematicians and scientists to help make software that lets Hollywood producers compress videos, sharpen images and simulate special effects.
Its researchers develop technology that allows its post-production Hollywood unit, Moving Picture Company, to take on the likes of George Lucas’s Industrial Light & Magic, James Cameron’s Digital Domain and Sony Pictures Imageworks.
The same French skills are also spawning other businesses.
“It was mathematical algorithms that allowed us to start doing business,” said Romain Niccoli, one of the three engineers who founded Web advertising startup Criteo in Paris in 2005. “For our company, R&D is a matter of life and death.”
Criteo helps clients such as EBay Inc. (EBAY) and Expedia Inc. (EXPE) spot hesitant shoppers online and flash them tailored ads at the right time to tempt them back into a purchase.
The company, backed by Index Ventures among other investors, had sales of 143 million euros last year and has been making profits since 2009. It has said an initial public offering may be in the cards in 2013 in Paris or New York.
With 800 employees, 320 of whom do research, Criteo is sticking around the French capital for its top-notch engineering and science talent, Niccoli said.
“These types of skills are in high demand,” he said. “We’re up against other Web companies like Google and against banks... But we don’t have a lot of competition from industrial companies, maybe because they aren’t hiring much.”
While tax increases by Socialist President Francois Hollande are prompting some entrepreneurs to leave the country, France, whose unemployment rate is at a 13-year high, needs to keep job-spurring research at home.
Tax breaks on research spending are key, Louis Gallois, the former Airbus chief charged with reviewing French competitiveness, wrote in a report last month.
For Technicolor, for example, 10 million euros out of the 50 million euros it spends annually on research comes from the state. The company, which last month moved its research team into a new cutting-edge building in Rennes, wouldn’t be able to afford it otherwise.
“We keep our research in France because the skills are here, but without the tax breaks research costs wouldn’t be at a competitive level,” said Stephane Rougeot, Technicolor’s chief financial officer. “We wouldn’t be able to keep such an important number of researchers here.”
The unprofitable company is looking to turn its fortunes around by grabbing a piece of the digital film market, as it moves away from its declining historical business of making equipment. The challenge has been turning smart ideas into revenue quickly, said research chief Donnan.
“France has brain potential, but it needs to learn to do research differently,” said Pascal Morand, a Paris-based economics professor at ESCP business school. “The biggest danger for France is that the lack of economic growth will translate into a depressed mood, and depressed people don’t innovate.”
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