The nationalization debate has been sizzling on France’s front burner since last week when Industry Minister Arnaud Montebourg lashed out at the world’s largest steelmaker, ArcelorMittal.
He threatened to nationalize its plant in Florange where some old blast furnaces had been shut down for a year-and-a-half. At stake were 2,500 jobs.
“We no longer want Mittal in France,” he told the Indian owners—though the company has 20,000 employees in France.
Breaking into a cold sweat, executives around France reevaluated their investment plans.
Just then, unemployment hit a 14-year high. Creating jobs was needed more than anything. Scaring off investment was not.
Whether his threat was a form of extortion or an announcement of a hostile takeover remains to be seen. But it opened the door for unions at another troubled company to demand nationalization, and the socialist government might not be able to resist.
The three unions—CFTC, Solidaires, and Force Ouvrière—that represent the workers at the shipyard Chantiers de l’Atlantique at Saint-Nazaire on the Atlantic coast demanded in a joint statement today that the government “must become totally involved to guarantee the future of the shipyards” and must become “a majority shareholder.”
Jean-Marc Perez, Deputy Secretary of the Force Ouvrière, clarified: “Nationalization is unavoidable.”
Chantiers de l’Atlantique is famous for building the largest cruise ships and supertankers in the world, including the Queen Mary 2, the largest ocean liner ever. But it’s in trouble. Its future is uncertain. Its order books are empty; no new orders are coming in. By 2013, after finishing the current projects, it will be practically without work.
Employment at the shipyard is down to 2,100 workers, the lowest in its history. Of those, about 1,000 are on partial unemployment. Of the 4,000 subcontractors who still worked there a few months ago, only a little over 1,000 are left. It’s tough for companies in France [Stimulating The Public Sector, Suffocating the Private Sector].
In their desperation, the unions appealed to Montebourg for help, initially last June. Over the summer, they asked for another meeting. Without response. To draw attention to the “silence of the government,” 500 workers went on a one-hour strike at the end of September. Voilà, on October 15, when Montebourg was in Nantes for another event, the union leaders got their meeting.
Afterwards, instead of making earthshaking announcements, he only said that the government would do “its utmost” to defend the shipyard. “Our position is to find economic solutions, in other words, work,” he said. That was a bit too wishy-washy for the union leaders.
But they did sense that he was determined to maintain the shipyards and the special skill sets. Hence hope that the shipyard might not be closed and that a government sponsored program could retrain workers to build offshore oil and gas rigs or windmills. But diversification, if at all possible, would take time. The immediate solution was nationalization. Once the state owned it, closing the shipyard and laying off workers would become, for a socialist government, politically infeasible.
One of the largest shipbuilders globally, STX Europe owns 66.66% of the shipyard. Headquartered in Oslo, it owns 15 shipyards around the world. It, in turn, is owned by the Korean group, STX Corporation. And who owns the remaining 33.34%? The usual suspect: the French government.
The unions are blaming the majority owners, “the Koreans,” a convenient and distant target. “We don’t see the Koreans, they have done nothing. It’s the state, a minority shareholder, that finds itself playing substitute boss, even though that’s not its role,” said several union sources.
While privatizing state-owned companies has been all the rage since the mid-nineties, by socialist and conservative governments alike, the current morass in the private sector has stopped that process. The dominoes are lined up. Nationalization is being brandished as a solution.
The government, once it owns a controlling share, can force companies to employ people, whether or not they have any work. But it’s an illusory solution. The government already owns a third of Chantiers de l’Atlantique, as it owns major stakes in many large companies. Some, like mega utility EDF, it owns outright. Despite—and cynics say, because of— this profound government ownership, the private sector is in deep trouble, and even more government ownership is unlikely to cure its ills, but might strangle it altogether.
On the other side of the Rhine: In September, the German Labor Ministry sent a draft report “on Poverty and Wealth” to other ministries to be rubber-stamped. Only the final report would be made public. The draft was to remain hidden. But it seeped to the surface immediately. And it was hot. Too hot. Now a new version leaked from the Economy Ministry—without the offending data and comments. Read.... Censored: Poverty Report in Germany.
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