Economy Nov 29, 2012
Whenever politicians over-emphasise national interest, their interest is most probably more than national, especially so when it comes to business matters. This holds true for politicians across the globe.
Two present cases in point would be GMR's in Maldives and ArcelorMittal's in France.
In GMR's case, it is clear now that the real reason behind the Mohammed Waheed Hassan government's move is to gain some political mileage in the elections that are due in 2013.
ArcelorMittal's case is more important as here the reason other than national interest is likely to be racial.
According to a report in The Hindu, at a meeting on Tuesday, President Francois Hollande heading the Socialist Party government has repeated the nationalisation threat to Laksmi Mittal, ArcelorMittal's Indian-born chairman.
Hollande "reaffirmed his commitment to ensuring the sustainability of employment on the site".
The site in question is in Florange, where Mittal had idled two blast furnaces last year as economic slowdown crippled the demand for steel.
Two months ago, the steel tycoon decided to shut them down, the result of which would amount to a loss of 629 jobs. Then the government, already drawing flak for a high 10 percent unemployment, did not want the plants to be shut down and asked ArcelorMittal to find buyers.
Buyers were found, but they wanted the whole site, including the profitable parts that Mittal wanted to retain.
Saturday is the deadline by which the government wants the company to thrash out a solution.
Analysts have pointed out that the threat to Mittal is a throw back to the 1960s, when the then French government unleashed a wave of nationalisation of private companies.
One could say the turn of events is natural considering that the French government is run by the Socialist Party.
But a closer look at Mittal's love affair with France is throwing up proof to suspect that it is not only Socialism, but also racism behind the move.
An article in the Business Standard today says Mittal is a household name in France but for all the wrong reasons.
Even after six years of his presence in the country, Mittal has not been able to shed his image of "big-bad mega-rich Indian" who is doing only bad for the economy there.
The problem lies not only with Mittal perhaps, because, according to the report, there are sections of the French media which still calls ArcelorMittal "the Indian company".
There is a thin thread of racism that connects this to French Industry Minister Arnaud Montebourg's recent tirades against Mittal.
According to the BS article, Mittal has been made scapegoat for the deeper economic troubles that France is facing, because job cuts have become rampant in an economy that is slowing down.
ArcelorMittal is not the first to cut jobs in France. Peugeot has announced 8,000 job cuts in France, Sanofi 900 and Carrefour 500-600.
Interestingly, Montebourg's reported reaction to Sanofi job cut rumours was just the opposite.
According to this report, he was quoted as saying in the French media that the company has every right to restructure.
In Mittal's case, the employees' union is cashing in on the government's stance. It helps when the government is led by the Socialist Party.
The unions call Mittal a "predator" and looks up to Montebourg as the man who will save them from Mittal's "claws", the BS report says.
Whatever the government and unions' stance is, there is a lot at stake for Mittal.
His steel empire has been hit by a decline in demand for steel due to the financial crisis and the subsequent economic slowdown.
ArcelorMittal has received setbacks from 2009 and it has severely curtailed production in Europe and America. It has plans for more cutbacks, according to The Hindu report.
"Europe is home to nearly 1,00,000 of the company's 2,60,000 employees. So the possibility of good news in France is difficult to envisage," the report said.
ArcelorMittal, with its head office in Luxembourg, is listed on 120 indices, including the French CAC 40, according to the BS report. Around 53 percent of its steel is produced in Europe.
With the deadline inching closer, Mittal will have to do a hard bargain with Socialism. Racism is likely to be a long haul.
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