The French, Mittal, and Intangible Assets

Arcelor Mittal announced in October that it planned to close two of the furnaces at its Steel Plant in Florange due to lack of demand in the steel industry. It was a business decision - and I suspect a very difficult decision to make, given that Florange is a traditional steel town and that over 2,000 workers would be affected by any closure - but it was, I believe, a good, reasonable, and well-founded decision given all the circumstances.

The reaction of the French Government has been neither businesslike nor reasonable, nor very sensible.

Arcelor Mittal gave the French Government a grace period of 60 days to look for a new owner for the two idled furnaces. The French government has apparently received two offers - but only for the entire Florange site. Mr Mittal, very reasonably, has refused to sell the entire operation, for which he paid £21.8bn when he took over Arcelor in 2006, and which employs a total of 20,000 workers. In response, the French Government is looking to seize and nationalize the whole of the site should Mr Mittal refuse to accede to its demands.

As if that were not more than enough, Arnaud Montebourg, French Minister for Industrial Recovery, told French business daily 'Les Echos' that Arcelor Mittal was no longer welcome in France, and accused the steelmaker of "lying" and "disrespecting" the country. The problem, he said, "isn't the furnaces in Florange, it's Mittal"

According to the BBC, the Mittal family said they were "extremely shocked" by these comments. I don't blame them. I'm extremely shocked myself.

I'm shocked by the inability of the French Government to recognise that a business must cut its losses if it is to remain a viable business and able to continue to employ some, albeit not all, of its workforce.

I'm shocked that any Government anywhere could fail to foresee the effects of its actions on future foreign investment.

I'm shocked that a Government Minister should feel it appropriate to make rude (and possibly defamatory) comments to a newspaper - and never mind what Minister, what Government, and what newspaper.

What shocks me most of all, though, is the fact that in its desire to seize a tangible asset - which may or may not yield the billions of Euros that it hopes to get from it - the French Government has not taken into account the intangible assets they will lose by doing so.

Lakshmi Mittal and his family will always be welcome in Britain whether they decide to invest their money in Britain or not. Hardworking, decent people are 'intangible assets', and money has nothing to do with that.