By Gilbert Reilhac and Emmanuel Jarry
BELFORT, France/PARIS Oct 4 The French
government on Tuesday ordered 21 high speed TGV trains, most of
which may never run on a suitable fast track, in a pre-election
bid to preserve jobs at an historic locomotive plant.
Six months ahead of an election in which unemployment and a
sagging economy are key issues, President Francois Hollande is
fighting a rearguard action to win a second term, promising he
can bring down a rising jobless rate that is above 10 percent.
The orders for trainmaker group Alstom, which is
20 percent government owned, are worth as much as 630 million
euros ($704 million), a source told Reuters.
Alstom - whose chequered history has symbolised French
industrial decline for years - put Hollande's pledge to the test
last month, saying it would transfer 400 of the 480 jobs at its
Belfort site in eastern France to another plant, ending over a
century of manufacturing there due to a lack of orders.
Despite the relatively small number of jobs involved
--joblessness in France rose by 50,000 in August -- opposition
politicians seized on Belfort's symbolic significance and
ministers quickly promised action.
Industry Minister Christophe Sirugue outlined the response
in Belfort, a city of 50,000 people where Alstom started
building steam engines in the late 19th century, saying the
government would place a direct order for 15 high-speed TGV
trains to run on lines in the south of the country.
There are plans to upgrade southern routes to accommodate
TGV speeds, but there are also doubts about when, and even
whether, this will happen. French senators last month called for
a 15 year freeze on financing for new TGV lines.
On top of the 15, state rail operator SNCF is confirming a
long-awaited order for six more TGVs for a future high-speed
link between Paris and the Italian cities of Milan and Turin.
Approval for that upgrade came in 2015 but work on it has yet to
start in earnest.
Sirugue also promised a 70 million euro investment by Alstom
to help transform the factory into a European train maintenance
hub and plans for a research centre on electrification, as well
as confirmation of twenty orders for locomotives designed for
recovering broken down trains and another 30 intercity trains.
Finance Minister Michel Sapin told Reuters he did not expect
any state aid problems with European competition authorities,
while Laurent Berger, leader of the CFDT labour union said the
move was vital to protect jobs and would see Belfort through a
But others accuse the government of waking up late to the
issue for largely electoral reasons, and say putting expensive
high-speed rolling stock onto a traditional rail system will
also increase SNCF's operating costs.
"You're buying a Ferrari to drive up and down a country lane
for 10 years," economist Nicolas Bouzou said on BFM TV.
ALSTOM'S PRESIDENTIAL PAST
Governments of both right and left in France have intervened
to protect industrial champions from globalisation and Alstom
has already touched the careers of a number of next year's
potential presidential candidates.
When more than 12 years ago Alstom was struggling, Germany's
Siemens wanted to buy its power turbines division,
but Nicolas Sarkozy, then the finance and economy minister and
later French president, organised a 2004 state bailout.
Sarkozy hopes to represent the centre-right Les Republicains
and its allies again in 2017's presidential poll.
Then, in 2014, Alstom was back in trouble as orders dropped.
This time the successful buyer of the power business was
U.S.-based General Electric, putting Hollande and his
then economy minister Arnaud Montebourg - also a candidate for
next year's presidential elections - in the firing line.
Alstom's latest bombshell, on Sept. 7, came just months
after Montebourg's replacement, Emmanuel Macron, promised to
protect the Belfort workforce.
Macron resigned from his post this summer to prepare for his
own potential presidential campaign.
($1 = 0.8953 euros)
(Additional reporting by Dominique Vidalon, Leigh Thomas and
Gilles Guillaume; Writing by Brian Love; Editing by Andrew
Callus and Alexander Smith)