Hollande Visits Florange to Repair Rift Over Furnace’s Closing

French President Francois Hollande, visiting a steel furnace whose closing caused the greatest rift in his 16-month-old government, pledged he’d come every year to ensure that ArcelorMittal (MT) lives up to an accord it signed with the state.

“Steel in Lorraine has a future,” said Hollande at the Florange plant in northeast France, also announcing a government funded research center. Union leaders thanked him for his visit, while saying they still feel betrayed.

The Indian company’s November 2012 decision to shut furnaces at Florange challenged the government’s commitment to prevent factory closings, and exposed divisions within the Socialist Party. With 600 jobs at stake, Industry Minister Arnaud Montebourg first said the Mittal family was no longer wanted in France and then called for the plant’s nationalization. He was overruled by Prime Minister Jean-Marc Ayrault, who negotiated a plan to mothball the furnaces awaiting the 2016 start of a European Union-backed plan for low-carbon steel making.

“It’s a very risky move for Hollande to visit Florange, a bit like a return to the scene of a crime,” said Laurent Dubois, a politics professor at the Institute of Political Studies in Paris. “It’s the scene of broken promises.”

Hollande visited Florange as a candidate in February 2012, climbing atop a union van to tell a crowd that he’d “defend the steel industry” and announcing plans for a law that would oblige any company shuttering a plant to seek a buyer.

Defining Moment

Ayrault and Hollande’s decision not to nationalize the plant was a defining moment in Hollande’s presidency, Dubois said. “It sent the message that they were social democrats and that they accept the market as it is,” he said. “That was when Hollande made his definite break with the far-left.”

In a meeting today with union leaders at the plant, Hollande said he’d told them he stood by his decision. He also announced up to 50 million euros ($67 million) of public money, with 20 million euros spent next year, to open a research center in Florange to work on the “steel of the future.”

Edouard Martin, a represantative of the CFDT union, said he’d reiterated to the President that workers felt betrayed last November. “I didn’t take back anything we’d said, the history hasn’t changed, but now we have to look at the future,” Martin told reporters. “The research center goes in the right direction. At least the government is putting its hand back in.”

Ministers’ Arguments

Ayrault and Montebourg said later that they’d had screaming arguments over the issue, and that Montebourg almost quit. Montebourg justified nationalization by citing what the U.S. did with its car industry; Ayrault said state ownership wouldn’t solve oversupply in the European steel industry.

A few dozen workers booed Hollande’s motorcade as it entered the plant. “Hollande made promises and then just let us drop,” said Pascal Olivarez, a 43-year-old who works in maintenance at the furnaces as he awaits a new assignment. “Hollande betrayed us. If you add to that his tax increases, he’s much worse than Sarkozy,” he said, referring to Hollande’s predecessor Nicolas Sarkozy.

Alvarez said he believed Montebourg’s pledge to nationalize the plant “up until the end.”

Parliament next month will vote on a proposed bill -- called the “Florange law” -- to force companies with more than 1,000 employees that plan to shut a site to “actively” seek buyers for three months, or risk financial penalties

Mittal Plant

India’s Mittal family bought Arcelor in 2006 for 36 billion euros. While attention is focused on Florange’s unprofitable furnaces, the site’s specialty steel operations continue to employ 2,000 people, with 64 percent of the output exported, about half of it to the automobile industry. Of the 629 workers at the furnaces, whom Mittal pledged not to fire as part of its agreement, all but about 40 have accepted early retirement or gone to work at other sites, the company says.

Hollande’s visit is aimed at promoting the tax cuts, labor law loosenings, and investment spending that his government has undertaken to help French industry. Later today, he’ll visit Crown Bevcan, France’s largest can maker, which opened in 1984, and employs 5,000 people making 1.2 billion cans a year.

Montebourg didn’t accompany Hollande on today’s visit. Instead, Hollande brought his culture minister, Aurelie Filippetti, the daughter of Italian immigrants who worked in the local coalmines.

France lost 750,000 industrial jobs in the past 10 years, according to the government, and industry accounts for about 11 percent of the economy. The average in the European Union is 22.5 percent, with Germany, Italy, Spain and the Netherlands all ahead of France.

Hollande’s Standing

Only 23 percent of the French approve of Hollande’s performance according to Ifop’s monthly poll for Journal du Dimanche released over the weekend. That’s the lowest for a sitting French president since 1991. Ifop sampled 1,901 people.

The number of French job seekers fell 50,000 in August, the first monthly decline since April 2011. The 3.24 million people looking for work remains near a record record high.

The unemployment rate in Lorraine, the industrial region around Florange, is 10.9 percent, compared with 10.5 percent nationwide. That rate is almost double Germany’s and at a 14-year high. Excluding overseas territories, France has 22 regions.

To contact the reporter on this story: Gregory Viscusi in Florange, France at gviscusi@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.