Alstom rejects French government bid to save iconic train factory

Alstom will go ahead with plans to shut down manufacturing at its historic Belfort plant, its CEO said on Tuesday, setting up a confrontation with President François Hollande who vowed that "everything will be done" to stop its closure.

The French engineering firm, which makes the country's famed TGV high-speed trains and is 20 percent controlled by the state, said last week it would stop making rolling stock at the factory in eastern France, where its first steam locomotive was built back in 1880.

The move caused a political furore over the weekend and Hollande’s government demanded the company reconsider.

The factory’s fate is set to become a hot-button issue as presidential hopefuls gear up for primaries ahead of elections next year, and France’s embattled president is expected to make a point of saving the Belfort site.

But Alstom Chief Executive Henri Poupart-Lafarge showed no sign of backing down on Tuesday.

In a note emailed to staff and leaked to the press, he said ceasing manufacturing at Belfort would help ensure the survival of the company's wider business. The plant is to be reduced to doing maintenance by 2018, affecting 400 staff who are to be offered jobs at other sites.

"Despite all our efforts, it now seems impossible to ensure a sustainable future for the activities of the Belfort site," Poupart-Lafarge said.

"In spite of the great symbolism of Belfort and the group's special attachment to this site, we addressed this scenario today to preserve jobs and the position of the other sites of the group," he wrote.

French protectionism

Less than an hour after the memo was made public, Hollande – speaking during a state visit to Romania – also refused to give ground.

"Everything will be done to ensure that Belfort endures, and that means for years to come," he told journalists.

Alstom has cited a lack of orders and a need to streamline production.

"For over a decade, Alstom has received no locomotive orders in France and production of TGV locomotives, which is no longer assured beyond 2018, is at the lowest rate in its history," Poupart-Lafarge said in Tuesday's memo to staff.

Transport Minister Alain Vidalies said on Tuesday that new orders would be made in the near future to ensure the Belfort plant survives, putting pressure on state-owned railway company SNCF to clinch a deal with Alstom over a train order for its Paris-Milan route.

The French government has a habit of intervening when it deems French companies or jobs to be under threat, particularly from multinationals.

When US conglomerate GE announced a bid for Alstom's energy assets in 2014 the state got involved, getting German group Siemens to put up a rival bid before finally coming down on the side of GE.

(FRANCE 24 with REUTERS)

Date created : 2016-09-13