Failing industry risk for French Govt

Press, 14 February 1986, Page 16

Failing industry risk for French Govt

By

Guy Collins,

, of Reuter, in Le Creusot, in France

A swath of wasteland running through the centre of Le Creusot, whose foundries cast the cannon for Napoleon’s Russian campaign, testifies to the painful change jolting France’s heavy industrial regions. In spite of the Socialist Government’s message that the new technology and modernisation are essential to keep France competitive, the social upheaval in France’s industrial cities is hitting its traditional supporters and contributing to the Left’s unpopularity. President Francois Mitterrand, who was elected in 1981 promising to protect jobs in steel, coal mining and heavy engineering, has instead presided over tens of thousands of redundancies as world markets have contracted.

If, as opinion polls predict, the Socialists’ support falls to around 30 per cent in National Assembly elections next month from the& freak 37.5 per cent they won in., the first round of the 1981 poll, the closing of coal mines and

steel mills will be one of the main reasons. Le Creusot’s plight stems from the same problems of declining markets that have hit steel towns from the Ruhr and South Wales to Pennsylvania but the town does not conform totally to the image of a heavy industrial centre. The town is set in the rolling countryside of southern Burgundy only a few kilometres from some of the richest winegrowing areas of France. Louis XVI set up a royal foundry here in 1782 and Le Creusot built the cannons for Napoleon’s 1812 campaign. From 1836 it was dominated by the Schneider family, whose industrial empire controlled the Creusot-Loire steel group until it collapsed in June, 1984, amid heavy losses. The Prime Minister, Laurent Fabius, who at the time was Industy Minister, was the driving force in the Government’s decission not to bail out the company, which had debts of more than 2.5

billion francs ($NZ635.7 million). Just three months earlier, rioting and strikes swept the Lorraine basin in eastern France in response to 20,000 steel job cuts.

The Government’s decision on Creusot-Loire was widely interpreted as a signal that the Socialists would accept upheaval in industrial areas as the price for modernisation.

“We have to diversify the industrial fabric,” M. Fabius told coal-miners in the depressed Loraine area recently. “We have to compete in Europe and accept economic change.”

Economic disaster for Le Creusot was averted when two State-owned groups came to the rescue in late 1985. The lossmaking steel concern Usinor took over the metallurgy and armaments divisions and the nuclear reactor builder Framatome took on its boiler-making sector.

This saved around 5000 of the 6500 jobs under immediate threat at Creusot-Loire, but the ~ psychological effect on the population, especially with the demolition of old factory buildings in

the town centre, was devastating. “The people resented it a lot that the Socialist Government and Mayor could not save them,” one local, woman said.

The Deputy Mayor, Bernard Loiseau, a socialist trade unionist for 30 years in the steel mills, is optimistic. “It has been a difficult period... but the worst is behind us.’\

The town has a 10.5 per cent unemployment rate, not significantly worse than the national average. The Creusot area has been designated a regional development area, qualifying it for State subsidies for new industries amounting to close to 50,000 francs ($NZ12,714) for each new job created.

The construction of a highspeed rail line in the early 1980 s has made Le Creusot a much more attractive place for commercial investment, bringing it closer to its markets.

Le Creusot and the country’s other heavy industrial cities are traditionally centres of Left-wing political support, and their economic decline could pose

political problems for the Socialists.

The Communist Party, which left the governing coalition in July, 1984, amid disagreement over economic policy and unemployment, has suffered even more erosion of support than the socialists. The impotence of the Communist-led C.G.T. union to resist job cuts in the steel, coal, and car industries has been repeatedly demonstrated in recent months.

“At the last election we got more than 50 per cent — this time we will easily get 35 per cent,” Mr Loiseau said, taking an optimistic view of Socialist election prospects. The Socialist deputy for the region, Andre Biardon, told industrialists recently that Socialist A policies, while not producing overnight solutions, were slowly 1 working.

“We in Le Creusot have had to do in three years what a normal process of change would achieve in 20 years,”, he said. “We had to win through or disappear. Today we have 70 per cent won through.”