October 3, 2016 / 4:35 PM / a year ago

UPDATE 1-France offers Alstom plant lifeline with high-speed train order- sources

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By Emmanuel Jarry

PARIS, Oct 3 (Reuters) - The French government will order high-speed trains from Alstom as part of a plan to plug a hole in the trainmaker's order books and keep production going at its historic Belfort plant, two sources close to the matter said on Monday.

The order of 16 passenger cars and 32 locomotives will be announced by industry minister Christophe Sirugue at Belfort on Tuesday, one of the sources told Reuters.

Eager to avoid a high-profile industrial shutdown seven months before a presidential election, the government had promised a plan in the face of a dearth of orders for the locomotives made at the Belfort plant, where Alstom's first steam engines were made in the 1880s.

"Alstom will receive an order from the state for 16 TGV (passenger cars) and 32 locomotives. Alstom considers this represents two years of work," one of the sources said.

Under the plan, 70 million euros ($78.5 million) are to be invested into the plant to transform it into a maintenance centre serving the European market and so that it can make electric buses in the future, the sources added.

Alstom, in which the state holds a 20 percent stake, announced plans last month to stop producing locomotives at Belfort and transfer it to another plant on the German border.

Some 400 jobs were to be transferred to other plants elsewhere in France, in a move that some lawmakers saw as a ploy to wrangle an order from the government after Alstom lost out on a contract for freight trains earlier this year.

Alstom CEO Henri Poupart-Lafarge had argued that the company had little choice but to wind down production at Belfort because of a hole in its order books after 2018 running until a new generation of TGVs hits production in 2022.

The site has not had a French order in a decade and foreign clients, on which Alstom has increasingly focused, often ask for trains to be built locally.

$1 = 0.8918 euros Writing by Leigh Thomas; Editing by Ingrid Melander

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