Labor Dispute Pits France Against ArcelorMittal

“We don’t want Mittal in France because they haven’t respected France,” the industry minister, Arnaud Montebourg, said in an interview published this week in the daily Les Échos, unable to conceal his frustration over the company’s plan to scale back one of its three major French factories and eliminate hundreds of jobs. He called for the “temporary nationalization” and resale of the steel plant, at Florange, in the eastern region of Lorraine.

The ugly dispute pits the French state, in its traditional role as defender of industry, against a company that is trying to reduce capacity in line with the slowdown in the European economy and to cut its $23 billion of debt after Moody’s cut its credit rating to junk. The company wants to close two mothballed blast furnaces at the Florange plant, cutting 629 jobs, while continuing to operate a part of the facility that processes steel for the car industry. Currently the facility as a whole employs 2,700 people. In all, ArcelorMittal employs about 20,000 people in France.

With unemployment hovering above 10 percent, the Socialist government of President François Hollande is desperate to avoid more layoffs by name-brand companies. Several big employers, including PSA Peugeot Citroën, Air France and Sanofi, have announced big job cuts this year. But some analysts say that by taking such a strongly interventionist stand to protect steel workers, France risks sending the wrong signal to multinational companies, whose investment the economy needs if it is to stave off long-term decline.

Mr. Hollande and Lakshmi Mittal, the Indian-born billionaire who serves as chairman and chief executive of ArcelorMittal, met Tuesday evening at the Élysée Palace in Paris, but did not resolve the dispute.

Afterward, Mr. Hollande’s office issued a communiqué saying the president had “reaffirmed his desire to insure the sustainability of jobs at the site and presented the different possible options.” The statement said the discussions would continue.

Giles Read, a spokesman for ArcelorMittal, also said the discussions would continue, but declined to comment further.

To promote France as a destination for foreign investors, the government recently hired the French advertising giant Publicis to create the international “Say Oui to France” campaign, which is running in the United States, Canada, China, India and Brazil.

A glossy brochure notes proudly that France is already home to 20,000 foreign companies and as recently as last year was the leading destination for corporate foreign investment. “Our objective is to leverage France’s attractiveness to remain a key investment destination in Europe,” the brochure says.

But in fact, France is hemorrhaging industrial jobs to such an extent — 750,000 in the past decade — that in a government-commissioned report made public this month, Louis Gallois, a prominent businessman, called for “a competitiveness shock” to stanch the bleeding.

That is why critics say Mr. Montebourg’s hard line against ArcelorMittal is the wrong message at the wrong time.

“The image France is projecting is disastrous,” said Nina Mitz, a public relations consultant in Paris with deep ties to past Socialist governments in France. While she conceded the Florange factory case presented a political thicket for the Hollande government, Ms. Mitz said such bold talk of nationalization — even if served up mainly for domestic consumption — “sends a frightening message, particularly to investors from other countries.”

The government’s stance has invited ridicule from some opportunistic critics. Boris Johnson, the outspoken mayor of London, alluded to the Montebourg threat on Tuesday, telling Indian business leaders they should not “wait to be persecuted by the sans-culottes in Paris,” but should rather bring their business to London.

Mr. Montebourg has since moderated his remarks, saying his objection was to “Mittal’s methods,” which he described as “failure to keep promises, blackmail and threats.”

Article source: http://www.nytimes.com/2012/11/28/business/global/labor-dispute-pits-france-against-arcelormittal.html?partner=rss&emc=rss