* Hollande seeks to showcase industrial muscle at Florange
* Plan could expose weakness of planned law to stem closures
* Govt risks embarrassment if rescue pledge falls flat
By Catherine Bremer
PARIS, Oct 3 A quest by President Francois
Hollande to show he can halt industrial closures by rescuing two
mothballed blast furnaces in northeast France risks backfiring,
with industry experts doubting any buyer will come forward.
Hollande latched onto the furnaces during his election
campaign, holding them up as symbolic of industrial decline and
is now using them as a test bed for a planned law that would
force firms to sell troubled plants rather than close them.
With joblessness at over 10 percent and his ratings in
free-fall, Hollande persuaded steel giant ArcelorMittal
to grant him a two-month window to find a buyer for
the furnaces at Florange - near the German border - before
Yet industry sources and trade union officials say it is
highly unlikely a buyer will be found for the two economically
unviable furnaces that sit within a steel plant ArcelorMittal
has no intention of selling alongside them.
Losing the fight over Florange would be an embarrassment for
Hollande and cast new doubts over his campaign promises to
embark on a massive "re-industrialisation" of France and to
restore its declining global competitiveness.
The decades-old furnaces are the most costly of the 25
ArcelorMittal operates in Europe. It has already idled nine due
to low demand that is also hitting rivals like Germany's
ThyssenKrupp and Italy's privately-owned Riva Group.
"I doubt we'll see a queue of bidders for the furnaces as
they would face the same problems of sluggish demand and
crippling oversupply in the region," said Metal Bulletin
Research steel consultant Kashaan Kamal.
For all his promises to halt the decline in industry, since
Hollande came to power in May a slew of companies, including
carmaker PSA Peugeot and drugmaker Sanofi,
have announced mass layoffs.
The region where Florange sits is politically sensitive due
to a long history of being fought over by France and Germany for
its coal and steel resources.
Past competition for such resources and a desire to prevent
further wars between the two countries led to the creation of
the European Coal and Steel Community in 1951, which laid the
foundation for today's European Union.
Even if a competitor could find a reason to buy the
furnaces, others question the logic of running them inside the
bigger steel plant ArcelorMittal will still be operating without
having their own steel-rolling facilities nearby.
"There is every reason to be sceptical about the likelihood
of the government finding a buyer," Philippe Chalmin, a steel
expert at Paris-Dauphine University, told the daily La Croix.
"It's hard to imagine any of the big European steel
companies wanting to increase their capacity."
The outcome of what Industry Minister Arnaud Montebourg has
called a "tug-of-war" over Florange is being watched closely by
industry leaders after the government promised a law before the
end of the year to stem industrial closures.
National CFDT union leader Francois Chereque said on Tuesday
he could not see how a law forcing companies to sell troubled
facilities against their will would be constitutional.
"The Florange plant is an interesting test case for the law
the Socialists want to pass," said one steel industry source.
"I'd be surprised if they can find a buyer. And if they
could find one, does that mean that in the future nobody can
close a part of a plant that is unprofitable?"
While ArcelorMittal will try to save the 629 jobs affected
by an early retirement plan at the Florange site, which employs
2,750 people, and to move workers elsewhere, employees whose
family histories were built on steel are up in arms.
On Tuesday, a few dozen protested outside a meeting where
unions told management they would not discuss a shutdown plan,
despite the company's desire to start a process that could take
"We know perfectly well that there will not be a buyer,"
Walter Broccoli, the local FO union leader, told Reuters.
ArcelorMittal says there is no threat to the rest of the
Florange plant, which supplies nearby factories making cars,
dumper trucks and packaging.
Rather than bring large volumes of iron ore down from the
north coast 400 km (250 miles) away to feed the Florange
furnaces, it can feed its hot strip and cold-rolling mills more
cheaply with slab made at its plant near the port of Dunkirk.
(Additional reporting by Gilbert Reilhac in Strasbourg and
Silvia Antonioli in London; Editing by Andrew Osborn)