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france 24 Business

French govt buys fast trains for slow tracks to save historic Alstom plant

© Fred Dufour, AFP | The high-speed TGV train is the pride of French engineering – and an expensive one too.

Text by FRANCE 24

Latest update : 2016-10-04

France’s Socialist government has announced orders for 15 high-speed trains, mostly for tracks on which they cannot run at their maximum speed, in a pre-election bid to preserve jobs at a historic Alstom plant.

Industry Minister Christophe Sirugue outlined the plan at a Tuesday morning meeting in Belfort, a city of 50,000 people in eastern France, extending a lucrative lifeline to the plant that produced France’s first steam train in the 19th century and later pioneered construction of the high-speed TGV, the pride of French engineering.

Alstom caused a political storm last month when it said it would transfer 400 of Belfort’s 480 jobs elsewhere, reducing the historic plant to a maintenance depot. The factory’s fate has become a hot-button issue as presidential hopefuls gear up for primaries ahead of elections next year, and France’s embattled President François Hollande has made a point of saving the Belfort site.

“Every time I travel abroad, both in emerging economies and in developed ones like the United States, Alstom clinches new contracts,” Hollande said last month, referring to a successful bid by Alstom’s US branch to build high-speed trains for local rail operator Amtrak in a €1.8 billion deal.

“What I did for Alstom abroad, now Alstom must do for France,” the French president added, calling on rail operators in France to ensure the trainmaker’s French factories had enough business to stay afloat.

Apparently heeding Hollande’s call, France’s national rail operator SNCF on Tuesday confirmed orders for a further 6 high-speed trains linking Paris to Milan, in Italy. Those orders, combined with the 15 trains ordered by the government, are worth a total of 630 million euros ($700 million).

Sirugue, the industry minister, also promised investment to help transform the struggling Belfort factory into a European train maintenance hub. There are also plans for a research centre on electric buses to be located there.

French interventionism

The prospect of job losses in Belfort is of concern to the ruling Socialists, with polls showing them headed for a drubbing in presidential and legislative elections in the spring, partly because of their failure to make a serious dent in high unemployment.

Critics have accused the government, which owns 20% of Alstom, of waking up too late to the company’s problems, and putting together a wasteful plan for electoral reasons.

The rescue has sparked considerable debate about the cost to taxpayers and the long-term viability of maintaining production at the historic Belfort factory, with some saying that the SNCF rail company does not need the trains being ordered.

The 15 new TGV trains will run on inter-city lines in the south of the country that are not equipped for high-speed trains. While there are plans to upgrade some of those lines to TGV speeds, there are also doubts about when – and even whether – this will happen.

French senators last month called for a 15-year freeze on financing for new TGV lines amid concern the high-speed trains – each of which cost €30 million to build – are unprofitable.

But Laurent Berger, leader of the CFDT labour union, said the Belfort plan was vital to protect jobs and see the factory through a rough patch. "People would have to face up to the matter if this industry sector was doomed, if it had no future, but that's not the case," Berger told Europe 1 radio.

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 : 2016-10-04

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