ArcelorMittal Issue – France Has Lost Its Dignity

Lakshmi Mittal Cracks At The Weakness Of The French Government

Lakshmi Mittal Cracks At The Weakness Of The French Government
Lakshmi Mittal Cracks At The Weakness Of The French Government | Source

France Has Lost Its Honour

U-Turn By The French Government

Finally France has taken a U-Turn and announced that it will not nationalise ArcelorMittal steel plant. Trade unions are angry and the French people feel betrayed by their new President. Mittal, the Indian business tycoon from London, has struck a deal with the French government and announced that workers in the plant will not be laid off. This is part of the deal. The French President Hollande has earned a bad name in the deal but who cares as he has already been elected President of France few months back and will enjoy his term till next elections six hears hence. By that time everybody would have forgotten the episode.

Nationalisation Threat Peters Out

ArcelorMittal’s Florange Steel Works will continue. The French government has asked Mittal to inject fresh funds to the tune of $233.6 million to develop the Florange plant. Basically there is nothing wrong in the French government decision as it will protect the workers. Perhaps the French government threatened nationalisation as a powerful weapon to force Mittal to bring in fresh funds and protect the jobs of thousands of workers. But workers and trade unions believed the nationalisation threat as real and expected the government to take over the plant. Had the government done so, the workers would have been quite happy as they need not have to put in hard work and still receive wages. In India, a government job means no work but lot of pay. Though it is not as worse as India in Western countries like France, nevertheless a government job is a cosy job anywhere.

French Minister Eats Humble Pie

Earlier, the French Minister for Industrial Renewal Arnaud Montebourg stated that he no longer wanted Mittal’s methods in France. He accused Mittal of indulging in blackmails and threats. He accused Mittal of going back on his commitments and promises. He even accused Mittal family of trotting out lies. He commented that the bunch of lies trotted out by the Mittal family since 2006 were devastating. He earlier stated that Mittal was an unwanted person in France. Now that French President Hollande has made a big deal with Mittal, what is the minister Arnaud Montebourg saying? Does he approve of the deal? If he does, he will be swallowing pride and bending his knees before Mittal. On the other hand if he opposes the agreement, he should honestly resign from the French Cabinet. He has not reacted to the deal so far. When you say that Mittal is not welcome in France and next day shake hands with him, what kind of hypocrisy is it? Whom are you cheating?

Steel Industry Has Overcapacity Now

Lakshmi Mittal indulged in a hostile takeover bid of Arcelor six years back and succeeded. Arcelor had shareholdings in Luxemburg and Spain. ArcelorMittal employs over 20000 workers in France. It has more than forty small and large sites. Its major plants are located in the North (Dunkerque) and the industrial basin of Moselle in North-Eastern area. The company shut down the blast furnaces in its major plants in Florange and Dunkerque. This has caused ire among the workers. As France is facing an economic slowdown, the steel industry is facing overcapacity problem. It has shut down nine of the 25 blast furnaces in France so far.

Largest Producer Of Steel In The World

ArcelorMittal is the largest producer of steel in the world. It manufactures 10% of world’s steel. It has widespread raw materials sources, many of them captive. It has widespread distribution network. During the last four years, ArcelorMittal has closed down Grandrange plant and several other plants. Three plants were closed down in USA as well. During the last four years, ArcelorMittal has been facing financial problems. From revenue of $105 billion in 2007, the company’s performance has been on a downward trend. During the third quarter, ArcelorMittal suffered a loss of $709 million as compared to a profit of $659 million during the corresponding period of the previous year. ArcelorMittal’s debt amounts to $22 billion. ArcelorMittal was penalised over € 270 million for running a steel cartel in European Union.

Lakshmi Mittal Cracks At The Weakness Of The French Government

There is another reason also for the French government’s decision to strike a deal with Mittal and permitting him to run the company instead of nationalising it. A loss making company needs huge infusion of capital and efficient performance of the workers to turn around. The French government cannot do this as it is reeling under economic downturn. Credit rating agencies have already warned the French government of a possible credit downgrade. The government will find it difficult to pump in huge capital into the company. Lakshmi Mittal has understood this psychology better than anybody else. Even the London Mayor Boris Johnson mocked at the French minister’s jibe at Mittal.

European Union Is Dependent On India And China

The truth today is that European Union has to cringe before nations like China and India for survival. Gone are the days of their supremacy and Colonial plunder. India is the largest investor in Britain also compared to any other European Union nation. Many European Union countries like Greece, Spain, Portugal, Ireland and Italy are reeling under debt problem and need massive bailout and investment. Indian and Chinese economies on the other hand are performing relatively better. Europe needs India and not the other way round. That is why the French Minister who asked Mittal to go home had to eat a humble pie as reality has dawned on him. If the European nations ask Indian investors and business people to pack home, they also will collapse like a pack of cards.

France Has Lost Its Honour

The French President Hollande brandished the weapon of nationalisation before Lakshmi Mittal in his private meeting with him. But Hollande in the end ate humble pie. Who won India or France? France lost but it was not an Indian victory either. In fact Lakshmi Mittal has no respect in India as well. Recently Indian steel minister Beni Prasad Verma asked Mittal to stop maligning India and instead invest in India. Mittal has not begun work on his promised projects in India. Lakshmi Mittal is a cheater and a dishonest person. He can strike deals with big politicians and governments – whether they are socialist or capitalist. He knows the knack of surviving and building up his steel empire. He is one of the richest persons in Britain. Moody’s has downgraded ArcelorMittal to speculative grade. But it is not the ArcelorMittal’s credit rating that matter. It is the honour and rating of the French government and the French people that are at stake. In the ArcelorMittal episode, both have lost their honours.

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