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Economy

ORIGINAL FRENCH ARTICLE: L’Etat boursicote, les salariés trinquent

by Thomas Lemahieu

France: the State Dabbles in the Stock Market, Wage-earners Bear the Costs.

Translated Tuesday 20 October 2009, by Isabelle Métral and reviewed by Henry Crapo

The strategic investment fund (FSI) was Sarkozy’s “weapon against the crisis”. But the weapon against the crisis has since turned into a bomb against jobs: in the Aisne département the multinational Nexans is going to use public funds to raze one of its oldest plants. Two figures tell the scandalous tale: sixty billion euros to slash 387 jobs!

From our special correspondent in Chauny (Aisne)

They have hung their overalls at the factory gate: the old rags are now too heavy to wear. They have daubed the walls outside with boom’s and long lines of zeros (the compensation money they hope they can eventually take away), and spread their vengeful slogans - midway between sombre omens and distinct threats. The last workers hang about in the North wind, drenched to the skin. The machinery stands idle, its fate now settled, but there’s life on the shop-floor still. The air is damp but mostly it is dreadfully empty: for decades on decades, since 1922 to be precise, Chauny, their small Aisne borough, has lived to the pace of its cable factories, which, after being CGE property, became Thomson’s, then Alcatel’s, then Nexans’.

All these names connect it to Picardie’s industrial flagships, which are the pride of this town, its nervous system, for these factories have employed thousands of people, fed generation after generation of inhabitants. The casting of copper still continues, the first in Europe and the second worldwide: for a long, long time its effluvia filled the air all around. But since news of the end of the Nexans casting and wireworks broke a fortnight ago (there will be 220 redundancies in Chauny out of 387 jobs to be slashed in France) the whole town is etherised, paralyzed so to speak by the veil of tears that both stifles and protects it.

The social cataclysm, when merely in embryo, they thought could never happen: it just couldn’t. To hear the French president’s promises, the men in Chaunay should have had smiles on their lips: in early July the French Nexans multinational (which employs 22,400 workers worldwide, 3,000 in France, with an operational margin of 8.9% and a net profit of 198 million euros in 2008) benefited by an investment from a rather special shareholder, namely the strategic investment fund (FSI) on which Sarkozy lavished so much praise for being his effective “weapon against the crisis”, which he said would safeguard jobs and factories in this country [1]. Hardly three months have gone by when thanks to the liberality of those exclusively public funds, the group plans to slash 14% of its payroll in the region where it was originally founded, despite the region being its most important market. “That money cannot go to productive units that lose money”, Nexans top managers shamelessly argued in front of the workers.

Down in Chaunay the cry of scandal begins to sound even louder than the complaint about the loss of jobs. David Guillet, the group’s CGT - General Confederation of Trades - delegate demands by certified mail an appointment with the fund’s chief executive officer: “This fund,” he explains, “was originally meant to safeguard the positions of our industrial flagships and salvage jobs in France. It can in no way be used to restructure or relocate plants. Now, in the case of Nexans, there is a shade of doubt…”

In Paris, the trade union delegates that sit on the strategic orientation committee, which was supposed to see to it that the fund be used "for fair and coherent purposes," are indignant, to say the least: “we had no information at all on the social consequences of the plan!” one of them protests. “Having no real power in the FSI’s governance, we must make do with what information they are willing to give us. Obviously, the Nexans boss is using the FSI to shore up stockholders’ equity, but then afterwards the tune changes to: ’Keep moving; it’s none of your business!”

In its financial communications the group (which is quite flourishing) confesses to having one sole ambition, namely that “Nexans should become more profitable.” Which means that locally, for years, management has been deliberately keeping production down at its Chauny industrial site. “The group has three continuous copper castings in Europe and the one in Chauny is both the most efficient and the most productive”, Davis Quillet points out. “All the installations here run doubled, on two lines. This is not be found anywhere else! But Nexans’ top executives don’t care. They have decided that the plant’s productive capacity is in excess and that in any case, our activity does not produce enough added value.”

The FSI, which employs a small task force of crack finance specialists poached from traditional investment banks or funds, pleads that it will not interfere with Nexans’ industrial strategy. “I personally have no idea when the social plan was hatched,” its spokesman observed. “It is not up to us to set the company’s strategy or management. If we approached them saying that we want to play an important management role, they would not let us buy into their company. We can discuss the redeployment of workers, for instance, but it’s up to the company to decide.” To Jean-Luc Lanouilh, Chauny’s communist vice president of the Aisne departmental council, such irresponsibility is inacceptable. “The Nexans group is thriving, the dividends it hands out keep increasing. How could the FSI ever justify its indifference to the consequences of the industrial strategies of the groups in which it invests!”

Complete opacity for workers and their delegates, total transparency for the bosses and shareholders - private or … public !– that’s Nexans policy. In April it promised to “intensify its restructuring processes”, and last July as the FSI bought an interest in the fund, Frédéric Vincent, its chairman and managing director, indecently rejoiced that “the FSI is well aware of the challenges with which a global industrial group like ours is confronted.”

Interestingly - and a disturbing fact this is, being potentially indicative of a conflict of interest - the FSI knows Nexans’ strategy all the better since one of the members of the fund’s executive committee, Jérôme Gallot, president of CDC Entreprises, a capital-investment subsidiary of the Caisse des dépôts, has sat on the board of directors of the world‘s number one cable company since 2007. Since Nexans has set aside dozens of millions of euros for the planned restructuring and has just handed out close do 56 million euros to its shareholders, what has the FSI’s 60 million euros been used for? At Chauny as at Fumay, or on the other Nexans sites in France, workers are more and more convinced that the FSI is no different from other funds. Neither more nor less greedy than the rest, it does not even sneeze at stock-market-oriented layoffs, and never mind if it is the victims, as tax-payers, who have themselves put their money into the fund.

[1On 20 November 2008, at Montrichard (in the department of Loir et Cher), Nicolas Sarkozy gave details of the objectives of the Strategic Investment Fund: "Put the public money to work. I want to keep our factories in France. I want to stop this process of delocalization. The State is there as an investor, but naturally when the situation improves, it will sell its part. If necessary, it will take a profit, so much the better for the tax-payer! This is the primary vocation of the fund."


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