GE Faces $57M Bill for Failed French Jobs Pledge

GE Faces $57M Bill for Failed French Jobs Pledge

The French government plans to ask GE to pay for jobs the company had pledged to deliver in the Alstom acquisition more than four years ago, to the tune of approximately $57 million USD, according to reports by the Boston Business Journal, Bloomberg, and Seeking Alpha.

The fine was built into the French government’s signoff of GE’s 2015 purchase of Alstom’s power and grid division. As part of the contract, GE promised it would add 1,000 positions in France by the end of 2018 or pay the French government a fine of €50,000 (USD $57,000) for every job not generated.

While the French finance ministry has said GE had created 323 jobs as of the end of April 2018, unions and local officials contest the number, leaving the company facing a maximum fine of 50 million euros. Company officials and the French ministry are expected to meet soon and discuss the topic.

According to a GE spokesperson, the company is auditing the number of jobs created but has previously said the target of 1,000 jobs was tough to meet. The company has also said they will comply with contractual obligations.

John Flannery, who took over as CEO after Immelt and spent 14 months in the job, previously called the French Alstom deal a “disappointment.”

Demand for gas turbines collapsed not long after GE completed the approximate $10 billion takeover, as clean energy became more affordable. Orders for services later crumbled as well, in part because of upgrades that reduced outages and extended turbines’ life.

In the September 2014 acquisition, GE faced rival competitors Siemens and Mitsubishi, eventually persuading the French government with the promise of jobs and the protection of France’s national interests.

The funds will be earmarked for fostering businesses in the areas where jobs were supposed to have been created.

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