GE faces potential fines for failing job creation promises made to France
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The French government has threatened to fine General Electric (GE) if it fails to create as many jobs as it had pledged to do during its takeover of a French company’s power business.
In 2014, US-based GE acquired Alstom’s power and electrical grid operations, including its gas turbine operations. It edged out a rival offer from Siemens and acquired the business under a $12.4bn (£10.9bn) agreement, which also committed GE to creating 1,000 net new jobs by the end of 2018.
However, according to the French Finance Ministry, GE had created just 323 net new jobs by the end of April 2018. John Flannery, CEO of GE, told Bruno Le Maire, the Finance Minister, that its earlier stated target is now “out of reach” due to challenging market conditions.
GE has been struggling. Only months after closing its deal to acquire Alstom, GE announced cuts of 6,500 European jobs in power supply and a further 12,000 jobs in December 2017. Today, it announced a further 1,200 job cuts in Switzerland.
A spokesperson for the French government said that if GE does not end up creating 1,000 jobs at Alstom, it should be fined for each job it pledged and failed to create. Under the acquisition deal, GE was threatened with a fine of €50,000 (£44,000) for each job it promised but failed to create. If GE continues to struggle with its power generation business and fails to create a significant number more jobs at Alstom, it could face fines of tens of millions of euros.
According to La Maire, GE must, “Take all necessary measures to comply to the best of its abilities” with the terms of its deal.
“Sanctions must set an example. €50,000 should be applied by the end of the year if GE does not stick to its commitments,” said Benjamin Griveaux, a government spokesperson, speaking on French national television and reported by Reuters. “When you make commitments to the government, you respect them.”
If the end of the year comes and GE’s pledge remains unfulfilled, the business-friendly government of Emmanuel Macron will be forced to make a decision as to whether or take the unprecedented step of fining GE under the conditions agreed on by the previous, left-of-centre government.