French unions vow fight against Mittal deal

Paris: French trade unions accused President Francois Hollande of betrayal on Saturday after his government backed away from a threat to nationalise ArcelorMittal's Florange steelworks. The Socialist government said on Friday it had won promises from ArcelorMittal to avoid forced redundancies and inject 180 million euros to develop the Florange plant, meaning it would no longer have to take over the site.

Hollande came to office promising to create jobs and keep open the two furnaces at the site in northern France which ArcelorMittal says are not viable in a European steel sector suffering over-capacity. ArcelorMittal confirmed the details of the deal on Saturday, saying it would negotiate a voluntary redundancy deal with unions.

Workers are angry the furnaces will remain idled rather than reopened and expressed doubt over ArcelorMittal's promise to offer alternative posts or early retirement packages for the 630 workers affected. "We're on a war footing," Edouard Martin, head of union CFDT's Florange chapter, told the commercial i

"We've seen Mr (Lakshmi) Mittal's pledges in the past and what has become of them - nothing - so we're not going to let anything pass without a fight." Martin said the union had been a "nightmare" for former president Nicolas Sarkozy in the past over his jobs record, which analysts say was a factor in his election defeat in May, and could soon become one for Hollande.

ArcelorMittal rejects accusations it has broken promises in a country where it employs 20,000 over several sites. The group incurred union wrath in 2009 when it shuttered the nearby Gandrange steelworks and laid off about 500 workers. Sarkozy had pledged to keep that site open.

France's Prime Minister defended the Florange deal. "The Prime Minister will keep a close watch to ensure that promises made yesterday by the group are kept," Jean-Marc Ayrault said in a statement. "They are unconditional, and the government will use all legal means at its disposal in the event they are not respected."

Unions say revamping Florange will require about 400 million euros in funding from the European Union on top of ArcelorMittal's pledge - cash which has yet to be committed. Threats this week by Industry Minister Arnaud Montebourg of a state takeover of Florange were denounced as "scandalous" by France's main employers group Medef, which fears it will jeopardise foreign investment in France.

Hollande has tried to cultivate a worker-friendly image but his popularity has suffered as an economic slowdown pushes unemployment above 10 per cent. A survey by pollster IFOP showed 41 per cent of the French back him, one of the lowest scores for a president only six months into his term. "We complained about Nicolas Sarkozy, but Francois Hollande is not doing any better," CGT unionist Frederic Maris told BFM television. "For the future, we're expecting the worst."

French officials argue that Mittal promised to keep blast furnaces running beyond 2010 when his company merged with Arcelor in 2006. ArcelorMittal denies breaching commitments. Sources close to the group say Arcelor planned in 2003 - before its 2006 takeover by Mittal - to wind down inland blast furnaces in Europe, including the two in Florange, by 2010.