Frenzied French Leaders Riled by Alstom Sort of Closing Factory

  • Alstom plan to move production sees all workers offered posts
  • France begins presidential election in April next year

Election fever has arrived early in France, with the political class whipping itself into a frenzy over a factory that isn’t closing and jobs that may not be lost.

With seven months still to go before the country elects its next president, news channels have been dominated by claims and counterclaims over train maker Alstom SA’s plans to transfer the locomotive manufacturing activities from its Belfort factory in eastern France to another plant 120 miles (200 kilometers) away in 2018.

President Francois Hollande’s government denounced Alstom’s decision and promised that the Belfort site will stay fully open, though Alstom itself says the plant will remain operating for maintenance work. The National Front accused the government of abandoning French industry, and former President Nicolas Sarkozy’s Republicans said the affair was typical of Hollande’s “piecemeal management” of the economy. The 400 workers affected will all be offered jobs in Alstom’s 11 other French factories.

“I am amazed by all this yelling,” Pierre Gattaz, head of France’s main business lobby, said in a press conference Tuesday. “The company has been sounding the alarm for years and our politicians seem to have just discovered the problem. This is just role playing.”

Finance Minister Michel Sapin and Industry Minister Christophe Sirugue summoned Alstom Chief Executive Officer Henri Poupart-Lafarge to a meeting and afterward expressed their “incomprehension” at the move, declaring it sudden and unilateral. Hollande met with his ministers Monday to discuss Alstom and during a visit to Romania on Tuesday said “all will be done so that the Belfort site will remain open, and that means for many years.” He said the announcement “came quickly and without consultations.”

Sirugue invited local politicians and representatives to his office in Paris Tuesday and said “we must find an industrial project to keep railroad activity at Belfort.”

Industrial History

Alstom has a particular resonance for French politicians and the public. Founded in 1928, it’s played a central role in the history of France’s power generation, marine and railroad industries. Sarkozy’s government rescued it with a capital injection in 2004, and then in 2015 Hollande oversaw the sale of Alstom’s power business to General Electric Co. The remaining company, which kept the Alstom name, makes transport equipment. The government has a 20 percent stake.

The reaction to the company’s announcement was amplified by next year’s elections, but also underscores the attachment of French politicians to traditional industries, said Christopher Dembik, head of macro analysis at Saxo Bank.

“Because of the election, everyone is jumping around to show off their economic patriotism, but without doing the reforms that would allow a real economic patriotism,” he said. “They need to understand that certain industries are doomed to decline.”

Although Alstom saw earnings before interest and taxes rise 23 percent in the year to March, orders from France’s state railroad company SNCF have declined after a busy period when it upgraded many high-speed TGV trains on its Paris-Marseille line and opened a new TGV route to Strasbourg.

In 2008, the Belfort site built 140 TGV locomotives and engines. In 2013, it built 30, but over the next two years it made just 20. As for freight locomotives, the factory hasn’t had an order from the SNCF for the past 10 years. In August, Alstom lost out to Germany’s Vossloh AG for 44 yard locomotives ordered by Akiem, a leasing company 50 percent owned by the SNCF.

Alstom had warned politicians a year ago that the Belfort plant would halt its activities, according to Jean-Pierre Audoux, a representative for the French Federation of Railroad Industries.

“It’s not something that suddenly lands on Earth like a meteorite,” he said by phone.

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