Gen Electric (NYSE:GE)
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6 Months : From May 2018 to Nov 2018
(Adds details of penalty and job-creation plans.)
By Nathan Allen
France's economy minister on Thursday urged General Electric Co. (GE) to take measures to honor its commitments after the U.S. company said it will miss job-creation targets related to its purchase of Alstom SA's (ALO.FR) energy assets in 2015.
As of the end of April, GE had only created 323 of the 1,000 net jobs it pledged to create by the end of 2018, the economy ministry said in a statement, following a meeting between Economy Minister Bruno Le Maire and GE Chief Executive John Flannery.
GE took control of the assets in 2015 in a deal valued at around $17 billion, following a prolonged bidding war with rival Siemens AG (SIE.XE) and a drawn-out approval process. France was initially reluctant to let one of its industrial champions fall into foreign control and attached stringent conditions to its approval, including the job-creation targets.
Under the terms of the agreement GE must pay a penalty of 50,000 euros ($58,820) for each job missed from the target.
Since the deal closed, a global slowdown in the construction of new gas and coal-fired power plants has weighed on demand for the large turbines that the company produces, leading to heavy layoffs. In 2017 GE said it would cut 12,000 jobs from its global power business, with the majority coming from Europe. Siemens also announced a round of 6,100 layoffs at its power-and-gas unit.
"Mr. Le Maire has taken note of these elements and deeply regrets this situation," the ministry said, citing the importance of GE's commitments to the French government.
"He asked John Flannery that the GE Group take all the necessary measures to comply with [the commitments] as well as possible," the statement said.
Mr. Le Maire and Mr. Flannery will meet to discuss the matter in the fall.
GE said it continues to work with the minister's office on the commitments made as a result of the Alstom Power and Grid deal.
The company has previously said it plans to recruit around 100 people by the end of the year at its wind-turbine blade plant in Cherbourg, and said the French government's decision to reopen negotiations on tariffs had delayed its plans for more hires at its Nantes and St. Nazaire offshore-turbine sites.
Write to Nathan Allen at firstname.lastname@example.org
(END) Dow Jones Newswires
June 14, 2018 09:37 ET (13:37 GMT)
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