October 2, 2017 / 9:21 AM / a year ago

RPT-France's Macron backs up European vision with action on industry

(Repeats Sept 29 story without changes)

* Macron wants European tie-ups to confront global challenges

* Siemens-Alstom merger underlines desire to act, and fast

* Sees energy sector as ripe for cross-border co-operation

By Richard Lough

PARIS, Oct 2 (Reuters) - French President Emmanuel Macron has been quick to follow up his sweeping rhetorical call for European renewal with concrete action, backing two cross-border mergers that aim to boost Europe’s competitiveness in globalised industries.

The moves drew applause from supporters of deeper EU integration but criticism from trade unions alarmed by Macron’s apparent readiness to ditch France’s traditional industrial policy of shielding national assets from foreign competitors.

In a keynote speech on Tuesday, the 39-year-old president set out an ambitious vision for a “sovereign, united and democratic Europe” based on closer cooperation on defence, migration and finance.

Hours after the speech, Germany’s Siemens and French engineering group Alstom announced plans to merge their rail businesses, creating a pan-European champion better able to face down competition from China.

The politically sensitive deal was backed by the French government. It effectively hands Siemens the controlling hand, even if the merged company is headed by a French chief executive and headquartered in France.

A day later, France handed conditional control of one of its biggest shipyard, STX France, to Italian shipbuilder Fincantieri . Under the deal, the French state will lend one percent of its STX stock to the Italian company, allowing it to hold 51 percent.

Macron is “not only giving big statements but also putting actual action where his words are,” said Guntram Wolff, director of the Brussels-based think-tank Bruegel.

“I see Macron as really showing willingness to move forward with European integration.”

There are many parts of Macron’s European vision that he may struggle to implement, not least ideas for a euro zone budget and a separate euro zone finance minister, especially with the bloc still battling to overcome its economic and migrant crises.

Progress will be even tougher after Chancellor Angela Merkel’s narrow victory in Germany’s election that has left her facing coalition negotiations that will limit her room for manoeuvre on Europe.

Nonetheless, the Siemens-Alstom and STX-Fincantieri deals show Macron’s determination to use French industrial policy to pull EU member states closer together.


The moves are not without risks, however.

Angry trade unionists accuse Macron of ceding control of two long-cherished national assets. Riot police on horses pushed back protesting workers outside an Alstom plant in France’s northern factory belt on Friday, shortly before Finance Minister Bruno Le Maire arrived to talk with workers.

But Le Maire showed full backing for the decisions.

“We have to react. We have to unite to win market share, to be more competitive,” Le Maire said. “The future of French industry lies in European partnerships.”

In Tuesday’s speech, Macron highlighted the energy industry as one where more cross-border cooperation was needed to create a “true single market”, starting at home.

France’s energy market is dominated by state-controlled EDF , and Spanish utilities complain Paris is not allowing the construction of more power lines across the Pyrenees.

“For a long time we’ve heard nothing on this, because it was not necessarily in the interests of our companies,” Macron said of connections between Spain and France, potentially sending shivers down the spines of EDF executives.

“We will have a more efficient European energy market if, finally, we accelerate the development of these interconnectors.”

Europe’s fragmented telecommunications industry might also present opportunities, with the last notable transnational merger taking place in 2002 between Sweden’s Telia and Finland’s Sonera to form TeliaSonera.

In the years since, rumours have swirled about possible tie-ups between Spain’s Telefonica and Netherlands’ KPN and between France’s Orange and Deutsche Telekom, but none have materialized.

In a sign of the headwinds Macron could face as he pushes for deeper commercial cooperation, Orange’s Chief Executive Stephane Richard said he saw no opportunities for large pan-European telecoms mergers at present.

“I looked at all possibilities for a great European marriage, Franco-German or Franco-Spanish,” Richard told financial daily Les Echos in comments published late on Thursday.

“I do not see a project that creates value and is doable. Current political, economic and social conditions do not allow it.” (Additional reporting by Luke Baker, Mathieu Rosemain and Geert de Clercq; Editing by Gareth Jones)

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