May 7, 2015 11:12 AM
France looks to reboot nuclear industry champion Areva
The Associated Press
PARIS (AP) France is bidding to retain its influence in the global nuclear industry by having its champion company, Areva, embark on a painful plan of job cuts and savings.
Areva, the world's biggest nuclear reactor builder and partially state-owned by France, said Thursday it is entering talks with unions about cutting 18 percent of labor costs around the world through 2017.
That could mean cutting as many as 6,000 jobs out of a total 45,000 employees, the bulk of them in France.
France has a lot at stake as it is more reliant on nuclear energy than any other country and it has a big presence on the global market.
The industry is also a big employer, hiring 220,000 people in France.
Areva has been hit hard by a global pullback from nuclear energy since the 2011 Fukushima accident. After the disaster in Japan, France's neighbor Germany announced it would phase out all nuclear energy. And even France is moving toward reducing its reliance on atomic power.
The company has also struggled to roll out a new generation of reactors that had been planned from before Fukushima.
It lost 1 billion euros ($1.1 billion) last year alone on three major projects in Finland and France.
Areva's problems came to a head in March, when it reported a loss for 2014 of 4.8 billion euros ($5.3 billion) more than its entire market value.
Faced with the prospect of losing a lead role in the global nuclear industry, the French government, which owns 29 percent of Areva, said it would be closely involved in finding solutions.
The French government initially indicated that overhauling Areva would mean no job cuts and suggested the company could merge with utility Electricite de France.
It proved to be wishful thinking: Areva said Thursday it would cut jobs, salaries and work time.
Areva's human resource director told reporters that the plan currently under discussion could mean up to 6,000 job cuts worldwide, including up to 4,000 in France. The first stage in job reduction talks a long process in France will be held in May and June. It hopes to reduce costs through as many voluntary departures as possible.
The plan also includes reducing investments and overhead costs and boosting productivity.
"Areva must begin immediately with its competiveness plan," CEO Philippe Knoche said. "It is urgent to take the necessary measures to adapt the costs of our business to the reality of its markets."
He insisted that safety remains the top priority amid the cutbacks.
Analysts said that Areva is dealing with a more troubling situation than most companies in the industry, but that its problems are linked to the broader uncertainty around the future of nuclear energy. Demand for nuclear fuel has diminished, along with uranium prices, because of Japan's decision to idle its reactors and other political fallout from Fukishima.
Meanwhile, in France, Areva unions are resisting the job cuts and suggestions that Electricite de France buy part of Areva, saying France's expertise and leading role in the industry could be threatened.