In the distance two furnace chimneys are still smoking. For a few months more. In the foreground stands a vast empty hangar, rising from a wasteland of scattered joists and girders. A few welders are cutting up the last sections of an old rolling mill. Here in Rombas, as in the rest of the Orne valley, the factory buildings have been stripped of their metal frames, which have either been melted down like wrecked cars to produce new steel or reassembled in China and other distant countries.
Today’s visitor to the valleys of Lorraine would find it hard to picture the past glory of a region where the sky was filled with smoke and the flames from the steelworks turned the night red. Whole towns throbbed to the rhythm of the foundries. Life was lived on a daily pattern of three eight-hour shifts and armies of workers waited for the factory gates to open. In the course of a century Lorraine was transformed from fields and pastures to an industrial eldorado and back again to pasture land. Its dramatic history is engraved on the landscape. The 74,000 steelworkers who disappeared over a period of 30 years lived and worked in these scattered remnants of factories around Thionville, Hagondange and Longwy, the legacy of a bygone age.
At the beginning of the century Lorraine, the cradle of the French steel industry, was a rich region with a multitude of mines. The local iron ore, smelted in coal furnaces, produced most of the country’s steel. In a few years the farming valleys of the Fensch, the Orne and the Chiers were transformed into the country’s industrial heartland. The blast furnaces and rolling mills erected in the town centres shaped an urban landscape wholly conditioned by industry. Encouraged by the steel barons, waves of foreign immigrants settled in the area to work in the factories. It was an era of industrial paternalism in which the ironmasters owned everything: towns, shops and schools. People have forgotten how harsh the working conditions were and how low the wages. Memories have become blurred by idealised nostalgia for a time of full employment.
The instrument of production dismantled
Expansion came to a halt at the end of the 1960s. European steel production was moving into surplus and the European Coal and Steel Community (ECSC) was given the task of reducing capacity in the member states. Lack of investment by the ironmasters, who managed their assets like stockholders living off unearned income, began to make itself felt. As closure followed closure, the region was plunged into a series of crises. In the 1970s the situation was aggravated by the recession and competition on the steel market from East Asia and Brazil. The resulting debts were gradually taken over by the state, which assumed de facto control of the steel industry and began a policy of rationalisation that did not end until the merger of Usinor and Sacilor in 1987.
Lorraine was suffering from a combination of ills. Not only was its economy based exclusively on the steel industry, the region was something of an enclave and the local iron ore was of poor quality. The solution adopted was to import ore and coal from abroad, but the social cost was high. The creation of huge coastal steel plants at Fos-sur-Mer and Dunkirk, supplied by foreign raw materials that could be shipped directly to the point of production, only made matters worse. As policy shifted towards the production of high-quality steel, only Lorraine’s most modern steel plants were kept in operation.
The region staggered under an onslaught of closures and mergers. Hope was rekindled briefly with the socialist victory of 1981, but backsliding in 1983 and publication of the fifth steel plan the following year provoked an angry reaction. The dismantling of the steel industry brought serious conflicts, which in a number of cases forced management to drop plans for outright dismissals and agree to early retirement, redeployment and financial compensation (see following insert The Longwy Commune). Those dismissed outright were mainly immigrant workers.
By the early 1990s the mass redundancies were over. It was time to take stock. Lorraine had lost 200,000 jobs in coal and steel, including 50,000 miners. Nationalisation in 1981 had ensured the survival of an economically viable steel industry, but it had cost the state 100 billion francs ($16.6 billion) in funding for 40,000 early retirement packages. Jacques Chérèque, a former national leader of the pro-Socialist CFDT trade union federation, was in charge of industrial redeployment, first as a senior civil servant with regional responsibilities and subsequently as planning minister. Despite the cost, he defends the record of the Socialist governments. The pre-retirement scheme enabled us both to meet the need to cut jobs and to provide workers with a decent income. This extraordinary campaign of active investment helped to maintain social cohesion in Lorraine.
Bernard Campanova, a shop steward who belongs to the pro-Communist CGT federation, sees things rather differently. Today France produces 17-18 million tonnes of steel and consumes 23 million. The imported difference could have been produced in France. The prospects for developing our own steel industry existed at the time. He quotes the example of the steel girders now produced in Luxembourg by a subsidiary of Usinor. Arguing that priority should be given to French products, he claims the government of the time did not fully understand the issues. But he admits the pre-retirement scheme was welcomed by many people who had started work at the age of 12 or 13 and were still putting in 56 to 57 hours a week.
Today Usinor is keen to project the image of a group producing high-quality steel with highly-skilled workers. It employs 13,000 steelworkers in Lorraine and contracts out the unskilled work. It was privatised in 1995 and is doing very nicely. The liberal economist’s strategy of nationalising losses and privatising gains has been followed to the letter. Last year each worker brought the shareholders 25,000 francs (over $4,000) in profits.
The layout of the towns in the old steel-mining valleys of the Fensch, the Orne and the Moselle is striking. Many are cut in half by acres of muddy ground. Others are arranged in circular fashion around useless landscaped areas or shopping centres. Landscape always reflects an economic reality. Here, superfluous supermarkets have taken the place of the factories that stood at the heart of the city. The huge steelworks that gave the region its specific structure have disappeared lock, stock and barrel.
The clean-up of the industrial wasteland began in 1986. It was done swiftly and with obvious haste. In less than ten years 95 % of the old steel plants were liquidated. The land and buildings ceded by Usinor to a specialised public-sector firm were valued, processed (i.e. razed to the ground and sometimes superficially cleared of pollutants) and quickly wooded over. Finally, they were sold to local authorities or, less frequently, to businesses (1). When work was finished, the use to which the sites were supposed to be put - termed as leisure facilities, natural grassland, small businesses or housing development - was often still undecided (2).
So why the great hurry to smooth out the landscape? Jean-Pierre Masseret, then a senator and mayor of Hayange (and currently secretary of state for war veterans), explains: If people get up every morning to the sight of empty, dilapidated factories, their morale goes down. Everything looks hopeless. It was psychologically important to get rid of some of the factories, to remove them from the sight of people who had worked in them for generations. Now they’re suggesting that demolition went too far. Objectively speaking, it was a mistake not to have considered preserving the industrial heritage.
On the German side of the border they have managed to preserve the traces of a century of toil. The steel complex at Völklingen, closed in 1986, is on Unesco’s world heritage list and is now open to the public. But at Hagondange they preferred entertainment to working-class culture. The factory was replaced in 1986 by a Smurf theme park, inaugurated with great pomp by Laurent Fabius and Jacques Delors, and hailed by the latter as a sign of the rebirth of Lorraine. Some sign. After swallowing up millions of francs in government aid, this particular financial disaster was sold off to a Belgian firm.
Despite the sanitised landscape (3), morale in Lorraine is pretty low. Although the unemployment rate of 11.5 % is more than one per cent lower than the national average, it takes no account of the 20,000 pre-retired steelworkers or the 52,000 people who have to cross the borders every day because they cannot find jobs in the region (4). The official unemployment figure is further distorted by the continuing decline in population (5). According to a member of the regional council chaired by Gérard Longuet, not only does Lorraine no longer attract workers from other parts of France, but large numbers of local people are leaving to look for work elsewhere.
With the outlook so bleak, people hang on to the past. In the cafés, faces light up at a mention of the region’s heyday. The industrial machine seemed indestructible. Together with the miners, the steelworkers were the standard bearers of the working class. On the very eve of the closures, no one would believe what was about to happen. Some trade unions were scared to speak out. Anyone who dared say a factory was going to close was branded a traitor, admits Jean-Louis Malys, a CFDT shop steward. In less than 20 years the instrument of production was liquidated. Despite the strikes, the struggles, the marches on Paris, a whole section of the working-class elite was reduced to the dole. The brutal change left a bitter taste and widespread disillusion. But during the wave of industrial unrest which swept the country in November and December 1995, mobilisation was weak throughout Lorraine, except at the railway marshalling yard in Woippy.
Looking for work across the border
Many people from Lorraine have been driven to seek jobs across the three borders to the north. Each day workers from Longwy, Thionville, Forbach and Sarreguemines, many of them the wives or children of unemployed steelworkers, cross over to Luxembourg, Germany or Belgium to work in banks or offices. The jobs they hold are often low-grade, but the wages are on average 30 % better than in France. Because of inadequate public transport, the cross-border workers pool cars and vans, meeting at the crack of dawn on improvised parking lots on the edge of town. But the well is running dry, and the cross-border immigrants from Lorraine are beginning to meet with hostility. We have become the Arabs of Luxembourg, complains Mrs Brandstaedt, who used to work as a cleaner in a bank.
In Lorraine such comparisons are particularly invidious. The local inhabitants are themselves the product of successive waves of immigration. In the post-war period their relations with the latest arrivals were good. The machinery of integration was well-oiled. As always, immigrant workers would spend a few years on miserable temporary housing estates until they had saved enough money to move out, leaving their place to the next wave. But as work got scarce, the system seized up and the working-class community was split. The last wave of immigrants from North Africa, who were the first victims of job cuts, remained crowded together on temporary estates and soon became the butt of racist gossip: sayings like they grow grass in their rooms to feed the goats.
People accuse the social services of giving priority to foreigners. Everyone has a story of his own to add to a fund of everyday racism. The effects are easy to feel. One café will not serve Arabs. The manager of a pizza restaurant refuses to employ North Africans. Second generation immigrants are a prime target, since they are seen as taking work away from young Frenchmen. Jean-Pierre Masseret, a member of the Socialist town council in Hayange, admits there is little he and his colleagues can do about it. The local people are of very mixed origin: Italian, Portuguese, Spanish, Ukrainian and Polish. They are all perfectly well integrated. Now these same people find it strange that others also come from other countries. We try to respond on a cultural and educational level, to change perceptions. But all our efforts founder on unemployment and the search for a scapegoat. At the last presidential election the candidate of the Front National polled as many votes in Hayange as the Socialist.
Industrial conversion really started in the mid-1980s. It was a difficult task, complicated by the fact that all the local infrastructure was geared to the steel industry. But no overall plan was drawn up, the only aim being to create jobs at any cost. The result was a fiasco.
Usinor encouraged newly redundant workers to set up small businesses. Many of them took the plunge, without any prior training, and invested all their redundancy pay. The Sodie company, a subsidiary of the group in charge of redeployment, helped with the paperwork and granted low-interest loans. Cafés, hairdressers, video-rental shops and garages mushroomed. But the economic situation was precarious and the factory closures dealt a swingeing blow to the service sector. Within months, if not weeks, most of these small businesses were bankrupt.
Plenty of subsidies but not many jobs
At the same time Lorraine started a campaign to attract labour-intensive industrial firms. The idea was simple. Offer investors government aid and EEC funds to set up in the region, impose minimal constraints and keep the unions well out of the way, especially when applications were examined. The Longwy European Development Zone was established in 1985. It covered the vast Longwy basin and two border regions in Belgium and Luxembourg, all three areas devastated by steel closures. Within the Development Zone all industrial projects were to receive subsidies of up to 34 % of total investment costs. Despite this massive injection of funds, the job creation targets, modest enough in themselves, were not achieved. Ten years on, only 40 % of the 5,500 jobs planned on the French side actually existed.
According to Marilyn Quaglia, a CFDT shop steward from Longwy, The authorities studied projects for the Longwy Development Zone firm by firm, without reference to any overall plan. They couldn’t afford to be too choosy at first, but it soon became clear that most applications were from foreign firms, mainly Asian, and were geared to metallurgy. After the difficulties associated with a single industry based on steel, they were now falling into the trap of a single metallurgical industry.
Industrialisation conversion nevertheless continued. Firms moved into the region to take advantage of generous public funding and the favourable geographical situation. Providing access to a market of 70 million consumers within a range of 200 miles, Lorraine became the front runner among the French regions in attracting foreign companies (6). Three main activities eventually emerged: car manufacturing, electronics and, on a smaller scale, plastics. None of them existed in the region in the early 1960s. They now provide 40,000 jobs and are still growing. But many of these jobs, created at great expense, are still shaky. Despite its fiercely liberal politics, the regional council admits that having acquired many production units but few decision-making centres, Lorraine is more exposed to relocation risks and to strategies decided elsewhere in the context of globalisation. Moreover, competition between different European regions drives down the level of guarantees that investors are required to provide in exchange for subsidies.
The 243 JVC employees at Villiers-la-Montagne discovered this to their cost. In 1988 JVC opened a factory there in buildings that had formerly belonged to Thomson and were purchased for a token franc. It received 30 million francs ($5m) in public money for a total investment of 80 million. Eight years later it decided to move production to Scotland, where it once again received a relocation subsidy, its wage bill was 30 % lower and it enjoyed far greater flexibility. Over drinks on the house, the management assured its employees that things would go just as badly in Scotland, since in any case the group intended to relocate to Malaysia (7). The factory finally ended up in China.
Nobody will buy expensive labour
The hunt for relocation subsidies requires considerable mobility. Some multinationals have found the magic formula in a low level of investment per job created, plus factories that are bolted together and easily dismantled. The products involved are generally of low quality and rapidly obsolescent. At the end of their useful life they are generally not replaced, since there are no local development centres to anticipate market trends. So the factory closes. The workers at the Panasonic video-recorder factory now see how the trick is done. Panasonic, like JVC, is a subsidiary of the Matsushita group. Invoking the need to adopt new technology, it has just decided to move production.
The transfer of public funds to the private sector in exchange for the creation of jobs was intended as a temporary exceptional measure. Even when they meet their commitments, these firms are turning it into one that is routinely acceptable. Not content to profit from wage labour, industrialists now demand as a matter of course that the state help them out. Gérard Longuet concedes the drawbacks of the ultra-liberal policy which he himself advocates. The balance of forces is strongly in favour of the investors, because it is we who are asking. We cannot do without the subsidy system if we want them to come here. But because such subsidies are now on offer throughout Europe, they no longer suffice to attract companies to the region. In Mr Longuet’s view, it is up to the workforce to provide the additional incentive. Globalisation is inevitable and we have to adapt to it. Our wage costs are far too high compared with our neighbours, especially Britain. Labour is a commodity like any other. If it is too expensive, nobody will buy it. What we lose in wages we have to make up for in flexibility.
Jacques Chérèque, who chairs an association for the industrial development of the Pompey and Pont-à-Mousson basins, plays down the importance of bounty hunters, whom he calls a few black sheep. He prefers to stress the fabric of small and medium-sized businesses that has been built up and the long-term investments made in Lorraine by foreign firms. It is true that some groups have opted to establish fuller operations offering greater stability, though without neglecting the competition for financial subsidies.
The South Korean firm, Daewoo, is a case in point. In Lorraine it has a factory assembling TV sets which is supplied by a cathode-ray tube production unit set up in the region, itself soon to be supplied by a local Daewoo glass factory (8). These heavy capital investments (around $200,000 per job in the case of the glass factory), some of which are proving slow to materialise, suggest a degree of permanence. The combined operation, rounded off by a research and development centre, should be employing some 3,000 people by the year 2000.
Despite keeping its job-creation promises so far, Daewoo has a bad reputation at the workface. It is criticised for its employment practices and its tense relations with trade unions. The company was also very slow to bring its machinery into line with safety norms. On 1 May 1997, following the death of an employee, the management of the Mont-Saint-Martin factory was found guilty of manslaughter by deliberate failure to comply with a safety regulation and placed under judicial supervision (9). At the same factory the company now refuses to employ young people from difficult neighbourhoods. There was trouble a few years ago when, despite warnings from the unions, the bulk of its workforce was drawn from such areas and young workers with little respect for discipline were supervised by foremen scarcely older than themselves, few in number and not trained for the job.
Where the unions do manage to establish a presence, they encounter a very peculiar conception of industrial relations. Mrs Quaglia quotes the case of an interpreter who refused to translate part of the wage negotiations to the director for fear of offending him. She had simply been asked to say that the factory would be less cost-effective without well-motivated workers. At Daewoo, the cult of the boss is strictly enforced. Last year the company’s Lorraine workers were given a self-glorifying autobiography by Daewoo’s founding chairman, Kim Woo-Choong, as a Christmas present. Modestly entitled The Elite Entrepreneur, it contains a parable about a landowner and an agricultural labourer which shows employees how much respect they are entitled to expect from the management. While the landowner is described as dynamic, rising to challenges and brimming with will-power, the labourer is work-shy and resents having to perform tasks that others are not obliged to carry out.
After ten years of industrial conversion, the main aim is still to rebuild the stock of jobs that were lost through liquidation of the basic industries. Jean-Louis Malys is confident that the situation in the steel industry is now normal. Stabilisation of the workforce and the triumphant announcement by Sollac, a subsidiary of Usinor, that it is taking on 370 young workers seem to confirm this. Nevertheless, the number of full-time job equivalents is still being cut, says Mr Bernard Campanova. And, as Mr Chérèque points out, the people who are suffering are the generation after the steel-workers. This region now has more jobs and more new types of employment. It also has more and more people receiving the minimum social security handout.
Over-dependence on the car industry
The economic and social balance sheet of the Lorraine region shows a varied picture. On the one hand, the concentration of technological expertise established at Nancy, with its university faculties and specialised schools of engineering, has helped create an environment conducive to investment. Lorraine is France’s most dynamic region in terms of job creation, the number of new projects and sums invested. But the industrial fabric is still fragile, as shown by the recent announcement of the closure of the JVC and Panasonic factories and the Longwy rolling mill. The region is handicapped by its weak network of small and medium-sized businesses and remains dependent on the strategic decisions of major industrial groups, particular in the car industry. The most ambitious investment project of the last two years (involving 2.5 billion francs ($400m) and the direct or indirect creation of 2000 jobs) is a joint venture by Mercedes and Swatch for the production of the Smart mini-car. But doubts are already being voiced about the potential commercial outlets. Twenty thousand jobs depend on a sector which is a major outlet for the steel industry. As Mr Campanova points out, The imminent restructuring in the car industry will weaken Usinor Sacilor’s position by putting pressure on suppliers’ prices.
In the steel industry’s last stronghold in the Fensch valley, Mr Masseret is a worried man. Hayange still possesses a wholly interdependent complex of coke factory, steelworks and blast furnaces. When one of the components ceases to function, the others will follow. The coke factory is already 12 years old. The day it stops it won’t be replaced. We shall have to finish with the steel industry once and for all and blot it out of our memories.
For Baron Ernest-Antoine Seillière de Laborde, heir to the ironmasters and current vice-chairman of the Confederation of French Industry (CNPF), it already belongs to the past. His investments no longer have anything to do with steel. And judging by the 1.3 billion francs net profit ($200m) declared last year by the holding company of which he is the chairman, he is not to be counted among the victims of the closures.