Breaking News ... Update On French Negotiations with ArcelorMittal Steel

A compromise has been reached between France and ArcelorMittal whereby the company will shutter its furnace operations but agree to maintain its current level of employment by shifting work to another part of the total facility.

While I guess that's progress, my bet would be that saving six hundred jobs in France will come at a heavy cost to the country and its workers. Companies deciding where to invest in the future will almost certainly decide against France more times than not after all the nationalization talk by French President Hollande this week.

ArcelorMittal Negotiates Closure of Furnaces in France has the story:

"PARIS—The French government and ArcelorMittal were in discussion on Friday to see how the steel giant could close part of a plant it owns in the country while escaping the threat of nationalization leveled by Socialist President François Hollande.

Under a proposed compromise solution, ArcelorMittal would close the two blast furnaces at its Florange plant in eastern France, government and company officials familiar with the matter said. But instead of simply eliminating the 600 jobs attached to the furnaces, the company would commit to creating the same number of jobs elsewhere in the complex, these people said.

The French government and ArcelorMittal have been at odds for months over the fate of the Florange plant, which employs about 2,600 workers. The dispute reached fever pitch on Tuesday when Mr. Hollande summoned ArcelorMittal Chief Executive Lakshmi Mittal to the Elysée palace and said his government would consider temporarily nationalizing the plant if the company didn't retreat from its decision to close the blast furnaces or refused to sell the entire facility to a competitor.

ArcelorMittal, the world's biggest steelmaker by volume, said it wanted to close the furnaces because they are too small and far from raw-material sources. Yet, the company said it didn't want to sell the rest of its Florange plant, especially a factory which refines and finishes steel, mostly for the auto industry.

Union officials, who were briefed on Friday's discussions by the French government, said they feared it will be hard to create new jobs in other parts of the plant because demand for its products across Europe is weak.

"We know the demand for cars will be low next year," said Frederic Souillot a worker representative affiliated with the Force Ouvrière union. "If there is no market for the increased output, there is no guarantee for the jobs."

A nationalization of the Florange plant could fuel concerns about France's treatment of foreign investors.

"Even if the nationalization is avoided, the whole mess was very bad publicity for the government," said Elie Cohen, an economist at the Sciences Po university in Paris. "Investors have no clear vision about what are the government's policies toward business in general."

A nationalization would also be a headache for ArcelorMittal.

The company, which employs 20,000 people in France, would need to restructure its regional supply chain."

Summing Up

Well, it looks like ArcelorMittal will dodge a French nationalization bullet this time.

Now let's see what the French government does about the shipyard unions wanting to nationalize the Korean company's operations. {NOTE: For that story, please see the post immediately preceding this one.}

Only in France is stuff like this the subject of serious discussion.

And as a result, France and its citizens will suffer economically for a very long time to come as companies will certainly choose to invest elsewhere in the future. Who can blame them?

Thanks. Bob.