US conglomerate General Electric (GE) is being threatened with a €34 million lawsuit if it fails to create 1,000 jobs in France by the end of 2018.
Job creation was one of the terms set by the French socialist government of former President Francois Hollande in 2014 as a precondition to authorising a €12.4 billion takeover of Alstom’s power and electrical grid businesses by GE. Siemens was also competing for a takeover of Alstom’s electricity generation business and the promise of job creation was among the criteria that tilted the balance for the US company.
At the time, GE committed to creating jobs, but soon afterwards it announced plans to cut 6,500 power jobs in Europe, which ticked up to 12,000 jobs in December 2017.
Since the deal, GE has only created 323 jobs in Franc thus far. GE boss John Flannery informed the French government last week that the company will no longer abide by its 2014 commitments. Labour Minister Murial Penicaud said the French government intends to invoke a clause that was included in the contract and forces GE to pay €50,000 for every job GE failed to create, which amounts to €34 million in total.
French President Emmanuel Macron has campaigned on a pro-business platform, but his government has made clear it will hold GE to its contractual obligations despite the company’s claim that it is facing adverse market conditions.