Steel production channeled to most efficient plants

With flights of wild ducks and screaming gulls gliding over the misty winter marches surrounding the Cote d'Azur's Europort South, the smoking ultramodern steel mills of France's most ambitious industrial project of the 1960s are beginning to signal a gradual upturn in the country's recession-bogged steel industry.

Solmer and Usinor, the two steel factories that constitute a vital section of Europe's second largest port complex after Rotterdam, are now producing 80 percent of their 3.5-million-ton annual capacity, a vast improvement over the mere 1.6 million tons produced in 1975 when the world economic slump hit the French steel industry head-on.

On a national basis, France has managed to increase its steel production by 18 percent over the past two years. It now stands at 23 million tons or 3.2 percent of the world's total steel production.

But these figures are still a far cry from France's overrall production capacity of 32 million tons. Between 1974 and 1978 French steelmakers were forced to reduce output by 15 percent because of the recession.

The Fost factories however, are producing more steel than elsewhere in France. More conventional steel mills are only working at 66 percent capacity. "With the best and latest techniques in steel production in the world," observed Antoine Robert of the French Chamber of Commerce for Steel, "the government is paying particular attention to the Fos complex."

Seeking to streamline its foundering, debtridden steel industry in an attempt to make it more competitive in the face of cheaper third- world steel, the government is in the process of closing all of France's antiquated and nonprofitable factories.

Instead, it will retain modern steel mills such as those at Fos and Dunkirk, as well as a number of efficiently equipped shops in eastern and northern France as the backbone of the industry.

This has meant laying off substantial portions of the industry's massive labor force. The hardest-hit regions have been in the Lorraine of eastern France and in the north where the French steel industry was first developed in the mid-19th century.

More than 30,000 workers have lost their jobs over the past six years. By 1981 steel companies expect to reduce their total work force to 100,000 as compared with 157,629 in 1974. Such drastic measures have obviously caused severe social discontent. Strikes have become the norm of the French steel industry. The most recently hit area was the Lorraine town of Denain, where workers have been on strike since the beginning of December. Company officials have announced the layoffs of almost 5,500 workers at the Usinor mills, which represents practically the entire town's only source of industrial employment.

"This has obviously been a grave shock for many workers who traditionally relied on the security of their paternalist factories," said Mr. Robert. "Suddenly this very security which had been an established fact of life among their fathers and grandfathers has gone."

Another problem is that workers in eastern France do not tend to be a very mobile people. They attach great importance to their homes, friends, vegetable gardens, fishing streams, and hunting grounds.

"Despite industrialization," explained one analyst, "both steel and textile workers in eastern France may work in factories but have never really left the soil. As a result they still strongly harbor conservative peasant mentalities. American-type job and location mobility are unheard of in this part of the country."

As a result of harsh trade-union criticism and demonstrations, the government has promised new jobs for the stricken areas. Peugeot, for example, has agreed to provide 2,500 replacement jobs by establishing a new gear-box factory in Denain.

Originally, France's Europort South, which stretches 70 kilometers (44 miles) along the Mediterranean coast between Fos and Marseilles, was meant to serve as the launching pad for an efficient and highly competitive steel industry. It was to enable steelmakers to gain a new lease on life far removed from the problems that beset them in the old established steel areas like Lorraine.

The new steel plants, with an equally efficient docks system for the import of raw materials and the export of finished products, were to act as a magnet to attract other industry and soak up unemployment. Planners forecast en estimated 100,000 new jobs.

In 1968 Edouard Rastoin, then president for the regional expansion committee for the Provence-Cote d'Azur area, confidently acclaimed that "steel is the supreme hope of our region."

But things did not quite work out that way. The spark for this great industrial wonder never came. The present rise of good fortune can only be regarded as a gentle simmer at the cost of France's other steel regions.

In 1965, when France's sixth industrial development plan was being prepared, experts asserted that the country would require 31.5 million tons for the home market alone in 1975. The government therefore decided that it had to extend facilities for the production of flat-rolled steel.

Fos was chosen as the site for this new coastal development despite economic surveys that favored the already industrialized hinterland of the Normandy ports of Le Havre and Dunkirk. Organization for Economic Cooperation and Development analysts also warned of the viability of the project.

The government went ahead, but only at severe financial loss. Total investment topped 10 billion francs ($2.5 billion) by 1975 instead of a previously estimated 6 billion francs ($1.5 billion). The first Solmer blast furnace was lit in 1974.

But the recession hit the French steel industry so severely in 1975 that Solmer lost 1.9 billion francs ($470 million). Ubine Aciers, the other steel factory which produces special and stainless steel at Fos, suffered similar problems but on a smaller scale.

The situation at Fos has now vastly improved. The Europort facilities are constantly expanding, and its steel plants can only benefit from a further restructuring of the industry on a national scale.

Overall, the French steel industry experienced a 38.4 billion franc ($9.6 billion) turnover in 1978. This was aided by a 4.8 percent increase in deliveries and a 7.8 percent rise in prices. However, this has not enabled the industry to move out of the red yet.

In 1977 the government promised France's major steel companies -- Usinor, Sacilor, Sollac, Solmer, and Siderurgique Chatillon Neuves-Maisons -- a new financial restructuring program.

These measures, which have progressively gone into action, were also responsible for the recent improvement of the industry's financial situation. Comparable measures also have been taken by the government to help smaller and more specialized steel companies.