The 5ft 5ins tall leader is alleged to have sent aides to the plant ahead of an official visit, to stop anyone over 5ft 6 ins from appearing alongside him.
The claims come just a week after Mr Sarkozy was reported to have banned tall bodyguards from his presidential protection team.
Mr Sarkozy, who wears platform heels to disguise his size, is due to visit the Turbomeca areonatics factory near Toulouse on June 22.
But local paper the Republique des Pyrenees said he sent two staff to there first to 'whittle out the tall ones'.
One unnamed engineer working there told the paper: "I am almost six feet tall, and I was told I was not allowed near the official reception group."
The paper commented: "It seems people at the factory decided it was better to yield to the president's wishes than face exile to the land of the pygmies."
Last year Mr Sarkozy was accused of deliberately picking short people to appear alongside him in TV footage on another factory visit. The claim was made by a woman who said she was chosen to stand next to the 5ft 5 ins French president when he visited Faurecia car plants site in Normandy because she was shorter than him.
The woman told the French media afterwards: "It was designed so that no one appeared bigger than the president.
"Access to the factory was restricted so that no one could be shown alongside him."
In May 2009 Sarkozy was pictured using a footstool to make a speech during the D-Day commemorations in Normandy.
The decision to use the six inch wooden box is said to have been made because he was using the same lectern as Gordon Brown, Barack Obama and Canadian premier Stephen Harper – all considerably taller than Sarkozy.
At 5ft 5ins tall in his bare feet, Sarkozy is even shorter than his famous predecessor Napoleon, who was an inch taller.
The president is also one of the world's shortest heads of state – only slightly taller than North Korea's Kim Jong-il and Russia's Dmitry Medvedev, both of whom are 5ft 3ins tall.
The Elysee Palace has always denied any rumours Sarkozy hand picks short people at televised public appearances.