January 5, 2006

French shipyards that built Queen Mary II sold to Aker

French shipyards that built Queen Mary II sold to Aker

::nobreak::PRESIDENT CHIRAC’S commitment to economic patriotism suffered a buffeting yesterday when the French engineering group Alstom offloaded its loss-making shipyards to the Norwegian group Aker Yards.
Alstom’s share price initially surged 9.1 per cent as investors welcomed the company’s decision to concentrate on its core energy and rail divisions.
But the sale of France’s most famous shipyards, which built the Queen Mary II for Cunard, provoked anguished debate just four days after M Chirac had urged a patriotic renewal in his new year’s message.
“France deserved to keep its own great naval yards,” François Bayrou, head of the centre-right Union for the French Democracy party, said.
“This is a thunderclap,” France 3 television news said.
Under the deal, Alstom will effectively fund Aker to take a 75 per cent stake in the yards of les Chantiers de l’Atlantique in the west coast towns of St Nazaire and Lorient.
Although the Norwegian group will pay €50 million (£35 million) for the shares, Alstom has agreed to invest €350 million in the yards. Aker has an option to buy Alstom’s remaining 25 per cent stake in 2010 for up to €125 million.
The deal will make Aker the world’s fourth biggest ship-builder and give it a doorway into the lucrative market for super-sized cruise ships, such as the two being built at St Nazaire for the Italian line MSC Cruises at a cost of €1 billion. Karl Erik Kjelstad, Aker Yards’ chief executive, said: “We can create a unique position in the shipbuilding industry, ready to meet the everincreasing needs of tomorrow’s demanding cruise passengers.”
Analysts said that the sale of a shipbuilding division that lost €103 million in the fiscal year 2005 would help Alstom to complete a return to financial health. Two years ago the company was saved from bankruptcy by a €2.5 billion state bail-out. The European Commission agreed to the rescue package on condition that Alstom offloaded assets.
Thierry Breton, the French Finance Minister, who is seen as the most business-friendly member of M Chirac’s Government, said he was “delighted” at the agreement between Alstom and Aker. “This will give us probably the most efficient shipyards in the world,” he said. “That’s important for Europe, and therefore for France.”
However, Gérard Larcher, the Employment Minister, struck a different note as he sought to allay fears of job cuts among the 6,000 people employed either by Alstom or by sub-contractors at the yards.
He said that the Government, which has a 21.36 per cent stake in Alstom, would “examine the propositions”. “We want to be careful to make sure shipbuilding continues in our country,” he added.
Unions were divided over the deal. Louis Dronal, head of the shipbuilding branch of the hard-Left Confédération Générale du Travail, said: “We cannot allow this sort of capitalist manoeuvre which means a French shipyard is going to end up in foreign hands.”
The more moderate Confédération Française Démocratique du Travail welcomed the move, which it said would enable French shipyards to compete in the global market.
Deal spotlights Chirac’s dilemma
AS ALSTOM announced the sale of its shipyards to Aker Yards yesterday, President Chirac was exhorting his compatriots to “have confidence in ourselves”.
“France is a great nation and we have every reason to be proud of ourselves,” he said at his new year press conference. “The world is changing around us and there are so many challenges to meet. We have to stop making the mistake of only seeing the negative side of things and of spending our time in selfflagellation.”
The words were part of a strategy designed to allay the fears over globalisation that M Chirac believes were responsible for the “no” vote in the referendum last year on the European constitution. But there is scant evidence that the strategy is working.
On the one hand, his policy of economic patriotism has disorientated a business community that would like to see him espouse a more overtly liberal philosophy. On the other, M Chirac has so far failed to convince French voters that he can effectively protect them against the perceived evils of world capitalism.
The deal over Alstom’s shipyards underlines his difficulties. Although analysts say that it makes sense, it was portrayed in France as the loss of yet another part of the French identity.
France Info radio contrasted the yards’ glorious past with an uncertain future. “Workers there are wondering what is going to happen now, and they are bitter,” it said.
Instead of celebrating a move that is likely to strengthen Alstom, French politicians echoed these concerns. The Employment Minister, Gérard Larcher, for instance, tried to pacify public opinion by suggesting that the State could keep a say in the destiny of the Atlantic coast yards. He said that France would not allow its shipbuilding industry to disappear.
Ships that were pride of France
  • Les Chantiers de l’Atlantique were opened in 1861 and were originally named after John Scott, the Scottish engineer brought in to oversee construction of ships there.
  • In 1930 France’s first modern cruise liner, Lafayette, was launched from les Chantiers to carry passengers between Le Havre and New York. It was destroyed in a fire eight years later.
  • In 1959, the pride of the French navy, the aircraft carrier Foch, was built there. After 37 years at sea, it was sold to Brazil.
  • In 1960, General Charles de Gaulle launched the most celebrated French cruise liner of modern times, France, which was built at les Chantiers de l’Atlantique. In 1974, after becoming a symbol of French technological prowess, it was taken out of service, sold and renamed Norway. It is now the theme for a song by Michel Sardou, Ne m’appellez plus jamais France (Don’t ever call me France again).
  • In 2000, les Chantiers de l’Atlantique won the contract to build the Queen Mary II for Cunard. A total of 12,000 people worked at the yards.
  • Yesterday, with the workforce down to 6,000, the yards were sold to Aker Yards.

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