Government rescue effort falls short for big French steelworks
Paris — Looking out over the industrial town of Le Creusot, in central France, stands one of those commemorative statues that companies liked to put up to honor their 19th-century founders.
This one depicts Eugene Schneider, the industrial baron whose metalworking enterprise made Le Creusot into one of the strongholds of French industry. At the foot of the statue is a figure of a mother with her hand on her son's shoulder, gesturing respectfully up at Schneider.
Of late, the atmosphere in Le Creusot has been far from the confident, successful image portrayed by the Schneider statue. Workers from the metal factories of the Creusot-Loire Company, as Schneider's enterprise is now called, have been out on the streets demonstrating. The town is sunk in gloom.
After recording mounting losses that reached $212 million on sales of $1.5 billion last year, Creusot-Loire, one of France's largest industrial companies, has declared itself bankrupt and is in receivership.
Creusot-Loire's problems are nothing new. Since 1979, it has made a profit only one year. An ambitious acquisition program brought little but losses. Unlike other French steel companies, Creusot-Loire received no government compensation for losses on its domestic steel business. In the United States it lost more than $100 million after buying Phoenix Steel. Even its profitable nuclear plant subsidiary, Framatome, has been looking less rosy recently because of a slowdown in orders.
By last year, the group obviously needed severe rationalization. Its newly installed chairman, Didier Pineau-Valencienne, set about cutting back. He also needed to raise large amounts of money. Both aims seemed to have been achieved late last year when Creusot-Loire agreed to a $700 million rescue plan with the government and got rid of some of its worst lossmaking branches.
By this spring, however, it was evident that the rescue package had not been enough. Mr. Pineau-Valencienne insisted that the government should put up more money. Ministers said they would do so only if Creusot-Loire's private shareholders did the same and if state-owned banks were allowed to take a stake in the Schneider group, which owns Creusot-Loire.
When Schneider and Creusot-Loire refused the government's terms at the end of June, bankruptcy and receivership became inevitable. This has raised major questions about the relationship between the government and private industry in France.
For decades, big French private-sector companies have worked closely with the government. Creusot-Loire had tight links with successive administrations because of its ownership of Framatome, regarded as a ''sensitive'' national company, and because much of its big export business was affected by French diplomacy.
The Mitterrand administration, which nationalized a dozen big industrial groups in 1982, might have been expected to be ready to step in to bail out a major company like Creusot-Loire. But the government has recently decided to pull back from the industrial interventionism that marked its early years in power.
Pineau-Valencienne insisted recently that the company had ''done everything possible to avoid arriving at this abominable waste for which the government has deliberately taken the responsibility.'' But ministers lost no time in making plain their low opinion of the men running Creusot-Loire and of Schneider. The government spokesman, Roland Dumas, talked of ''a particularly cruel illustration of owners shirking their obligations.''
The industry minister, Laurent Fabius, added that it was not the taxpayers' job to make up for deficiencies of the owners. Having refused to finance Creusot-Loire on the company's own terms, the government is now trying to keep the crisis from getting any worse.
Buyers are being sought for the component parts of Creusot-Loire. Most of the likely purchasers are French nationalized companies.
Whatever happens, the Creusot-Loire failure looks certain to add to France's rising unemployment rate. Pineau-Valencienne says 5,000 to 10,000 people could lose their jobs. That would be up to one-third of Creusot-Loire's 30,000 work force. Were he alive today, Eugene Schneider might be looking less magisterial, as he surveyed Le Creusot.