‘Good agreement’ for Florange; company to find alternative roles for 629 employees

Following discussions with the French Government ahead of a midnight deadline, ArcelorMittal has struck a deal over the future of two blast furnaces at its plant in north-eastern France, averting recent threats of temporary nationalisation.

ArcelorMittal will invest €180 million (Rs 1,270 crore) in the Florange site over the next five years. Exactly where and how the investment will be made remains the subject of negotiations between ArcelorMittal and the government.

While the furnaces, which were idled in June and October last year, will be closed, they would not be dismantled and will remain on the site.

The agreement also involves no compulsory redundancies, with the company working with unions to find alternative roles for the 629 affected employees. “With regard to resolving the social aspects of this project, ArcelorMittal will not implement any social plan and an agreement will be negotiated with the trade unions on a voluntary basis,” the company said.

“In the context of the current economic environment, this is a good agreement which will allow Florange downstream activities to pursue its development and to deliver value-added steels,” said Henri Blaffart, Vice-President of Flat Carbon Europe at ArcelorMittal.

“The government decided against the idea of a temporary nationalisation that was floated in recent days,” French Prime Minister Jean-Marc Ayrault was quoted by Reuters as saying.

Tensions mounted over the past few days following controversial comments by French Industry Minister Arnaud Montebourg, who told financial daily Les Echos earlier this week that the company had reneged on commitments it had made, and that the government would consider temporary nationalisation until a buyer could be found, to preserve the 629 jobs.

While the threat provoked an outcry by those fearful that it would tarnish France’s image, few believed that the government would act on its threat, seeing it more as a response to public fears about mounting job losses in the country’s industrial heartland. “I think Hollande realises that nationalisation would be catastrophic for the country, and FDI,” IHS Global Insight analyst James Goundry said ahead of the announcement.

During the merger, back in 2006, ArcelorMittal said it intended to continue with the restructuring plan being pursued by the previous owners, which would have resulted in the closure of the Florange blast furnaces.

The company, subsequently, shelved the closure plans, but following further weakness in the market announced that it would idle the two blast furnaces last year. The company plans to keep the remainder of the site, employing some 2,000 people, as an automotive hub, and has rejected the French government’s calls that it consider sale of the entire site.

(This article was published on December 1, 2012)
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