French Government Urges GE to Fulfill Job-Creation Goal -- 2nd Update
June 14 2018 - 9:52AM
Dow Jones News
(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 nathan.allen@dowjones.com
(END) Dow Jones Newswires
June 14, 2018 09:37 ET (13:37 GMT)
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