In Luxembourg, Arcelor battle is personal, poignant
LUXEMBOURG, Feb 24 (Reuters) At a giant construction site on the outskirts of Luxembourg's capital, glass towers reach skywards alongside disused blast furnaces.
Workers are transforming an industrial wasteland into a new town that will be home to the Grand Duchy's first university.
But the blast furnaces of the decommissioned steel mill will not disappear during work on the Belval project. Instead, they will be preserved as a landmark for the town and a tribute to the role that steel has played in Luxembourg's history.
''It's a symbol of our past, present and future,'' said Denis Scuto, recalling how his father, a Sicilian immigrant, helped build the blast furnaces more than 30 years ago for Arbed, now part of the world's second biggest steelmaker Arcelor.
Luxembourg's emotional attachment to steel helps explain the strong opposition to Mittal Steel's billion bid to take over Arcelor.
The prime minister of the tiny country, squeezed in between France, Belgium and Germany, has toured European capitals to rally opposition to the bid, while parliament is debating a bill that would preserve Arcelor's defence options.
On Thursday, Arcelor said it would present a strategic plan to investors next week to beef up its defence against Mittal, the world's biggest steelmaker which is owned by Indian-born tycoon Lakshmi Mittal.
The bid battle has sent shockwaves across Europe, where a total of 94,000 jobs are at stake, but in Luxembourg, the billion-dollar row resonates in nearly every home.
Scuto, a history professor, said few countries have had a single company so intertwined with their history.
GOOD TIMES, BAD TIMES Arbed, which merged with France's Usinor and Spain's Aceralia to form Arcelor in 2002, once employed more than 25,000 workers, said Scuto. Although the figure has come down to 5,900, Arcelor remains the biggest private employer in Luxembourg, which has a population of 450,000.
Nearly everyone in Luxembourg has at least one relative who has worked for Arbed or is working for Arcelor.
''My two brothers worked there and my father left his farm to go to work for Arbed,'' said Jean-Pierre Sinner, vice president of the Conseil d'Etat, the highest administrative court.
''It was quite common for Arbed to give work to the sons of its employees,'' he said, adding that Arcelor gave him a number of cases to defend when he started out as a lawyer.
For many people, Sinner explained, Arbed was a symbol of Luxembourg's economic prosperity as well as a way of life. He said the company used to pay good wages.
''There is some kind of social romanticism towards Arcelor,'' Scuto said. ''My father keeps his Arbed hard hat displayed in his car.'' But the romance eventually began to lose its sparkle.
During the steel crisis of the mid-1970s, taxpayers were asked to pay a special tax of up to 10 per cent on their income, as well as extra value-added-tax, to save Arbed from bankruptcy and avoid massive unemployment.
''We grew up together, laughed together, and cried together,'' said John Castagnero, a Socialist member of parliament who sits on Arcelor's board as an employee representative. ''The whole population made huge efforts to save the company.'' Castagnero is a vocal opponent of Mittal's bid, arguing that the steelmaker's special relationship with its workers, in terms of benefits and board representation, is at stake.
WANING SUPPORT Luxembourg's hostility to Mittal's bid surprised many in the business community because, today, the Grand Duchy's economy is based more on financial services than on making steel. It has also won a reputation as an investor-friendly place.
However Lakshmi Mittal has not received a warm welcome.
After meeting with the billionaire to discuss the bid, Prime Minister Jean-Claude Juncker said Mittal would receive ''a hostile answer to a hostile offer.'' And parliament is reviewing a bill that would preserve the right of Arcelor's board to adopt defensive measures such as a rights issue without prior shareholder approval.
But beyond these signs of displeasure, people in Luxembourg acknowledge there is little else their government can do to fend off the bid because the state now only has a 5.6 per cent stake.
They point to Arcelor's recent restructuring plans and its hostile bid for Canadian peer Dofasco as evidence that the firm has become a global company, subject to market rules.
And some point out that Arcelor had already lost some of that deep-rooted traditional support because of a painful restructuring since the 1970s.
''I am not among those who sing the praises of Arcelor,'' said Alex Bodry, mayor of Dudelange, a city where Arcelor decided recently to shut down a cold rolling mill.
''Arcelor didn't do us any favours,'' said Bodry, who wants to revive his city, once home to Arbed's headquarters.
''I'd like to create a new modern district,'' he said, adding that the Belval regeneration project gave him hope that his town would be able to move on as well.
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