ALO Alstom

By Inti Landauro and William Horobin 

PARIS -- French President François Hollande has ordered his government to prop up Alstom's Belfort factory after the high-speed train maker said it plans to shutter production at the emblematic site because of weak demand.

The sprawling Belfort industrial site near the German and Swiss borders has been regularly threatened by closure, making it a battleground for politicians hoping to show they have a solution to France's industrial decline.

Mr. Hollande said Alstom now needs contracts in France and pressured the company to concentrate on its home market after the government helped it make sales abroad.

"What I've done for Alstom abroad, Alstom should also do for France, but we have to provide orders," Mr. Hollande said.

An Alstom spokeswoman declined to comment on Mr. Hollande's comments.

By reviving the French government's interventionism, Mr. Hollande is launching an effort to outflank his rivals in the presidential 2017 election by positioning himself as a leading guardian of French industry.

Economy and Finance Minister Michel Sapin said the French president had told him to work with unions, elected officials and Alstom to encourage demand for trains.

"The president gave us one single goal: maintaining train activities at the Belfort site," Mr. Sapin said.

However, the government will have to tread carefully in helping Alstom as the European Commission prohibits direct or indirect state aid to private companies.

Many of Mr. Hollande's potential rivals in the 2017 election have built reputations as protectors of Alstom and the Belfort site, which became a home for French train makers fleeing the Alsace-Lorraine territory when it was annexed by Germany in 1871.

Mr. Hollande's potential rivals for the 2017 elections include former economy minister Arnaud Montebourg, a left-wing Socialist who led a high-profile battle in 2014 against General Electric's ultimately successful bid for Alstom's power turbine activities. The French government still holds 20% of voting rights in Alstom as part of the takeover deal.

Emmanuel Macron -- Mr. Montebourg's replacement who resigned last month to prepare his own run for president -- last year visited Belfort to pledge the government was striving to save jobs there. And former President Nicolas Sarkozy, a conservative who is also in the running in 2017, was finance minister when the state bailed out Alstom in 2004.

"When I heard Alstom's Belfort factory would close, it made me feel sick, sick for the workers I've seen so many times at Alstom and who we saved, " Mr. Sarkozy said last week.

Alstom intends to stop producing trains at Belfort by 2018 and transfer the activities to another site located in Reichshoffen, 200 kilometers north. Alstom said the current level of orders for locomotives for freight and high-speed trains made in Belfort doesn't justify keeping the factory open.

Two months ago, the French state-owned train operator SNCF picked an Alstom rival, Germany-based Vossloh, for a EUR140 million ($157 million) order for 44 freight locomotives starting in 2018. Alstom was counting on that order to keep the activity at Belfort going, the spokeswoman for the company said.

The train maker has pledged to find jobs for all its 470 employees at Belfort. A group of 80 workers will remain in Belfort to service French trains, and the others will be offered work at one of the company's 11 other sites in France.

The company declined to comment on the government pledge to find a solution to keep Belfort operating, she added.

Alstom has recently booked billions of euros of large orders to deliver trains in the U.S., South Africa, Italy and India. But most of those contracts stipulate the trains will be built in the countries where they are sold.

Write to Inti Landauro at inti.landauro@wsj.com and William Horobin at William.Horobin@wsj.com

(END) Dow Jones Newswires

September 12, 2016 13:45 ET (17:45 GMT)

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