(Updates with Hollande comments in eighth paragraph.)
May 6 (Bloomberg) -- To understand why General Electric Co. says its proposed takeover of Alstom SA’s energy business can work, walk around Belfort, a city in eastern France that’s home to factories owned by both companies.
The adjacent facilities, a jumble of multi-story production and storage sheds, railroad sidings and loading docks, are hard to tell apart. The reason: over the years they’ve been owned by one or the other, so buildings across the site alternate between those marked GE and others carrying the Alstom logo.
Their cozy familiarity in Belfort -- a city of 50,000 about 40 miles from the point where Germany, Switzerland and France meet -- gives GE an edge over Siemens AG. The German company is considering a counteroffer to trump GE’s 12.4 billion-euro ($17 billion) bid for Alstom’s energy business, which makes turbines and other equipment for power plants and transmission networks.
“Many of the people who work for GE used to work for Alstom,” said Christophe Gombert, 36, an electrical engineer in Belfort at the French company for six years. “If GE buys us, we’ll kind of be returning to what we had before.”
Alstom was founded in 1928 as a venture between a GE affiliate and a Belfort company called Societe Alsacienne de Constructions Mecaniques. GE bought an Alstom gas-turbine division in 1999 and a power-conversion business 12 years later.
That’s not to say Alstom’s 2,600 workers are thrilled at the prospect of a purchase by an American industrial giant with a history of moving quickly to shut down unprofitable plants and shifting jobs to lower-wage areas.
“I like a third solution: The French state,” Gombert’s friend Geoffrey Denny, 33, said during lunch at Le Bosphore, a wood-paneled eatery popular with workers from the factories just across the train tracks.
French President Francois Hollande today said in an interview on RMC radio and BFM TV that the state buying an Alstom stake is “not envisaged” for now. He said the GE offer is “not sufficient, so it’s not acceptable.” Both the GE and Siemens offers need to be “improved on jobs,” he said.
While the government weighs in, employees of Alstom are studying what working for GE might entail.
For Denny, a mechanical engineer for Alstom for the past six years, despite GE’s reputation for a focus on profits, the companies aren’t as different as stereotypes of French versus American labor practices might suggest. Virtually everyone he knows at Alstom, he says, works more than the 35 hours weekly mandated by French law.
“It’s not that we work less than they do,” Denny said after a meal of grilled meats, French fries and salad. “But there’s a greater emphasis on financial results.”
Their colleagues at GE would confirm that. The company has introduced annual evaluations at the Belfort gas-turbine unit and has cut costs while speeding up production, but none of that is unique to American companies, said Pierre Braye, 44, who has been at the plant for 20 years, first for Alstom and now for GE.
“American management methods have been implemented in almost all big companies now,” Braye said. “I don’t think there would be any major difference for Alstom workers.”
One difference might be salaries. Several Alstom workers and union officials said GE generally pays better. The American company, which has 1,700 employees at its power unit in Belfort, declined to confirm any difference in salaries, but spokesman Laurent Wormser said in an e-mail that “if the workers at Alstom said that, it should be true.”
GE’s proposal would leave Alstom -- which also makes France’s TGV high-speed trains and other railway gear -- in charge of its transport business, which represents just over a quarter of revenue. Siemens is considering a plan under which it would trade its transport business, which makes Germany’s ICE high-speed trains, for Alstom’s energy assets, creating two strong and focused Europe-controlled companies.
“Choosing between GE and Siemens is like choosing between the plague and cholera,” said Didier Lesou, the head of the CFE-CGC, a union for mid-level managers at Alstom. “The lesser of two evils is General Electric. Siemens will certainly cut jobs” as it has greater overlap with Alstom’s businesses.
GE France spokesman Wormser declined to comment on workers’ view of the bids, while a Siemens representative wasn’t immediately available for comment. GE offers a “good deal,” in terms of jobs and headquarters, Alstom spokeswoman Virginie Hourdin said.
Some union leaders are calling for an all-French alternative, which would involve an alliance of Alstom’s energy business with power producer and grid operator Electricite de France SA and nuclear plant builder Areva SA.
They propose that the government take a stake in the transport business since much of Alstom’s train, subway and streetcar orders come from the French state or enterprises it controls.
“French know-how and French industrial champions shouldn’t be handed off to foreigners,” said Marc Fhal, a 23-year veteran of Alstom who repairs gas turbines in the Paris suburb of La Courneuve. “I don’t want to work tomorrow for GE or Siemens,” Fhal said while marching under a banner with red letters reading “Alstom: Yes to Nationalization” in the annual May Day parade in Paris last week.
With either bid, “there will be job cuts because of overlaps,” said Philippe Claude, a representative of the Force Ouvriere union who designs hydro generators at Alstom in Belfort. “Whatever the color of the employer, we need jobs, and we need to keep them in France.”
Claude did, though, note at least one possible bright spot: “All those layers that are the cancer of French companies, the middle-management bullies,” he said. “They will get the boot.”
Lionel Cochon, who works in sales for Alstom in Belfort, said there has been talk of little besides the GE deal in the office and on the streets for the past week. While he said he’s wary of GE, he’s ready to give the Americans a chance.
“If this gives us a bit of respite from the problems we’ve had in recent years, it won’t be a bad thing,” Cochon said, looking out over the paper-covered tables filled with diners at Le Bosphore. “I don’t think we can keep going the way we have.”