Written by Hilary Barnes
France’s minister for industrial “redressement“, Arnaud Montebourg, whose attacks on the management policies of such international giants as General Electric and Unilever may already have damaged France’s reputation as a suitable economy in which to risk further investment, has now enlarged his field to include Mittal, the Indian business family. Montebourg is quoted as telling the Paris business newspaper Les Echos in the November 26 issue:
“We do not want Mittal in France because Mittal has not respected France.”
ArcelorMittal was formed in 2006 when Mittal won a contested take-over bid for Arcelor, the Luxembourg-based Euopean steel group. ArcelorMittal thereby became the world’s largest integrated iron and steel business. Lakshmi Mittal is president of the group.
The spat is over the closure of two blast furnaces by ArcelorMittal at Florange in north-east France, where it has one of its French production sites.
The blast furnaces have not been in operation for 22 months now and were stopped because of falling demand for steel in Europe. About 650 jobs are involved by the closure, which, Arcelor Mittal said on October 1, is definitive.
M. Montebourg argues that an an adjustment of the headcount can never be a justifiable means of restoring a company to health in face of a decline in demand for its products.
Presumably he does not mean this literally. Had Montebourg’s principle been applied since, say, 1945, France would still be a largely agricultural country with a manufacturing sector dominated by textile and clothing companies kept competitive with wage rates at about the level of those in rural China today.
However, he appears to mean it seriously enough to be ready to nationalise the ArcelorMittal Florange site (perhaps only temporarily, he says), as he claims that there are two business groups (one believed to be Russian) who say that are prepared to acquire the blast furnaces and put them back into operation.
But they will only do so if they can acquire the entire Florange site, where a wide range of steel products are produced, many of them sold to the auto industry all over Europe.
ArcelorMittal has said that it cannot accept this solution, pointing out that the group employs 20,000 persons in France and all are dependent on the distribution system for ArcelorMittal products, of which Florange is an important part.
Mr Montebourg claims that ArcelorMittal has failed to fulfil the conditions it accepted when acquiring Arcelor, among them to keep the two Florange blast furnaces in operation. Mr Montebourg told Les Echos:
“The problem of the blast furnaces at Florange is not the blast furnaces ; it is Mittal.”
Lakshmi Mittal’s staff are said to be “surprised” and “shocked” by the minister’s outburst.
Mr Montebourg’s campaign to force Mittal not to lay off workers at Florange is part of a much wider programme by the minister to persuade companies not to cut the labour force at a time when unemployment, now about 10.3 %, is rising steadily and France’s manufacturing industries are suffering from serious problems of competing in both the domestic and international markets.
His threat to nationalise the Florange site is the most radical of the measures he has proposed so far.
About the Author
Hilary Barnes is a veteran economics and business writer. He was for 25 years the Copenhagen Correspondent of the Financial Times, Nordic Correspondent of The Economist for part of that time, and published a paper newsletter, sold to international companies in the Nordic countries, called The Scandinavian Economies for over 30 years.
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