Tuesday morning, the 168 remaining employees of DMI in Vaux, a small town near Montluçon in the Department of Allier, smack-dab in the middle of France, rigged about ten gas cylinders throughout the factory they’d been occupying and threatened to blow it up—unless their demands were met. Another day in the decline of the private sector à la Française.
Formerly named Brealu, the foundry manufactured cast-aluminum intake manifolds, suspension arms, steering pump housings, and other automotive components. Among its customers: Renault, German heavy-truck maker MAN, US automotive component supplier BorgWarner, and French conglomerate Alstom. Hobbling along on its last leg, the foundry was acquired by Diversified Machine Inc. (DMI), a worldwide automotive component supplier, which itself was acquired by US private equity firm Platinum Equity. Along the way, 40% of the employees at DMI in Vaux were axed.
“We specialize in acquiring operationally complex businesses, finding undiscovered opportunity, and creating value,” Platinum Equity says on its website. But it doesn’t always work out.
The DMI operations in Vaux ran aground in France’s private-sector crisis. French automakers, already mired in a morose industry, were unable to compete with foreign brands. While Hyundai, Kia, and some German brands experienced major sales gains in France last year, Renault’s sales collapsed by 20%. So Renault, which had been buying about half of DMI’s production, slashed its orders. And on June 25, 2012, Platinum Equity had had enough. It sent DMI to the Tribunal of Commerce in Montluçon to seek bankruptcy protection.
The Tribunal granted protection for six month, in the hope that an acquirer could be found in the interim. If not, the Tribunal would seal DMI’s fate on February 21. Liquidation!
“We are once again facing an unbearable human and economic tragedy over the loss of manufacturing jobs in our region,” wrote National Assembly member Bernard Lesterlin at the time, a Socialist in whose district DMI was. He talked with members of the board, questioned Productive Recovery Minister Arnaud Montebourg “on this painful issue,” and promised a meeting with “all local stakeholders” in order to save the remaining 171 jobs.
Then a potential buyer emerged: Gianpiero Colla. He’d been acquiring tottering automotive component makers. Hope! He’d make an offer, he’d save the jobs.
But on January 18, he announced that he would not be able to put together an offer unless the customers of DMI, particularly Renault, guaranteed that they would purchase sufficient quantities. Enraged, the remaining 170 employees clamored to get the government involved. To induce Renault to commit to more purchases, they decided, ironically, to stop all shipments to all customers.
Then on Monday, February 4, Colla announced that he wouldn’t make an offer; he hadn’t been able to get Renault to guarantee sufficient purchases. The deal was off. The company would be liquidated on February 21.
Tuesday morning, the employees, now down to 168, placed about ten gas cylinders inside the plant and rigged them in a way as to turn them into bombs. The entrance to the factory was blocked by barricades of old tires and a burning pile of pallets. Angry men milled around. Photos of the gas-cylinder contraptions circulated. Some officers of the Gendarmerie, discretely deployed at a distance, did nothing.
“We all have worked for the company on average for 30 years, we saw it evolve, it’s our baby,” said Gabriel Gavin of DMI’s union, the CFTC. “If our jobs disappear, the plant will disappear with us.”
A large handwritten sign explained the deal: “DMI Platinum killed us. Renault, MAN, BorgWarner finished us off. They must pay 50,000 €/P.” In other words, the desperate workers threatened to blow up the factory unless they were paid €50,000 per person.
“We want the American fund Platinum, which put us into this situation, to come back to the negotiating table,” demanded Didier Verrier, secretary of the company’s union committee. “But not for nothing. We won’t discuss anything less than €50,000 per person.”
Extortion. Not exactly a helpful message for the private sector just when investments in factories and jobs were needed more than anything else. That the Gendarmerie refused to intervene sent another message: this type of extortion is tolerated. And investors were once again scratching their heads.
OK, the workers were just trying to get everyone to focus on the issue—namely their jobs or €50,000 per person. It worked. Wednesday morning, National Assembly member Lesterlin showed up at the factory. Instead of telling the gendarmerie to arrest the workers and remove the bombs, he told the workers that the negotiations between Renault and Colla had not been broken off, after all. And a meeting was scheduled for next week at the Ministry of Productive Recovery with Colla and representatives of DMI’s customers.
Whatever success or payout this might lead to, it won’t heal the French automakers so that they can build cars that the French want to buy in larger numbers. It is a discouragement for investors, another nail in the coffin of the private sector. And Renault, well, it now has another reason to shop for its components in China where much of the world’s component industry has landed.
It put the Socialist government in a quandary. While it promised to side with workers, it is also worried about their “radicalization” and has instructed police intelligence services to spy on them. Not exactly a campaign promise. Read….French Government Fears ‘Social Implosions Or Explosions’
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.