(Bloomberg) -- The French government has raised political pressure on Alstom SA over jobs after summoning the head of the partially state-owned company to explain why it’s planning to halt production of high-speed TGV trains in the east of the country.
Finance Minister Michel Sapin and Industry Minister Christophe Sirugue asked Alstom Chief Executive Officer Henri Poupart-Lafarge to explain “the motivations behind the decision,” they said in a statement on Thursday following a meeting. The ministers expressed their “incomprehension” at the move, declaring it sudden and unilateral.
Alstom, 20 percent owned by the government, is being urged to hold talks with labor unions and the state ahead of any final decision. A spokesman for the Saint-Ouen-based company declined to comment. The shares fell 1.3 percent to 24.21 euros at 1:44 p.m. in Paris, bringing the drop to 14 percent since the start of the year.
The manufacturer on Wednesday unveiled a plan to halt production and engineering at the plant in Belfort due to a drop in orders. It’s offering about 400 workers the possibility of job transfers to another location, according to a spokeswoman. The historic site, where the country’s first high-speed passenger trains were developed in the 1970s, is among a dozen run by the company in France and specializes in freight locomotives and TGVs.
Alstom had warned politicians that the Belfort plant would halt its activities a year ago, according to Jean-Pierre Audoux, a representative for the French Federation of Railroad Industries.
“It is not something that suddenly lands on Earth like a meteorite,” he said by phone.
Alstom’s plan to close Belfort “casts a shadow over prospects in France,” Kepler analyst William Mackie wrote in a note. “However, investors should take heart from management’s willingness to address such a thorny issue, moving to resolve domestic overcapacities.”
Alstom may cut jobs in plants in Ornans and Reichshoffen, in eastern France, and Valenciennes, in the north of the country, Philippe Pilot, a union representative at Alstom for Force Ouvriere, said. Labor groups plan to make Alstom a talking point during next year’s presidential election campaigns, according to Andre Fages, a representative for the CFE-CGC union.
Alstom is focusing on transport after selling most of its energy assets to General Electric Co. last year. The company reported in July an “exceptionally low level” of first-quarter orders due to a temporary gap in contract awards. The CEO, who plans to concentrate on emerging markets, said projects for the extension of the Dubai metro and for regional trains for Italy had not yet been booked.