Alcatel-Lucent may be the giant failure that France needs to succeed

Oct 21, 2013
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With the exception of Thomson Reuters’ Global Innovation report, not many institutions would put Alcatel-Lucent in their “top 100″ of anything these days. A Google search for the name brings up countless financial blogs wavering on whether the company will close down this quarter or next quarter, and the recent announcement of a 15,000 employee-layoff plan (about 20% of the company’s staff as of the end of 2012) is just the latest nail in the coffin.

Let me quickly say that I think Alcatel-Lucent is an amazing company, that represents the extents of French innovation in the technology space; it also represents the extremes of France’s problems with commercialization of R&D, as well as, once again, inflexible labor environments. The company, which announced just 900 of its 15,000 layoffs in France, was met last Tuesday with more than 1,500 hundred French employees protesting in Paris.

On the one hand, you’ve got Hervé Lassalle, the CFDT delegate, one of France’s largest labor unions which represents Alcatel-Lucent employees, saying that the employees will “try to extract concessions from [CEO Michel] Combes in talks starting this month.” On the other hand, you have the CEO saying the following:

“This company could disappear.”

That’s a quote from Combes speaking publicly on Europe 1 radio last week. Do you see a difference in tone?

Combes has warned that the company’s 6th restructuring plan since 2006 – yes, the company has restructured & laid off employees 6 times in 7 years – will likely be the last; saying he’s confident that restructuring will work would be a stretch, given the previous statement.

France needs a crushing failure

Looking at the monumental disconnect between what the CEO is saying about the company, and what the CFDT is hoping to “extract” from the company, it looks like the last nail in Alcatel-Lucent’s coffin will not be that it “missed key technological shifts,” as the CEO said, nor that investors have lost confidence in the stock: it will be the obstinence of labor unions and their inability to realize that large companies – those seeming unkillable, infinitely replenishing grandes entreprises - can die.

Alcatel-Lucent’s bankruptcy/solvency/failure would show that, despite what all discourse in France would suggest, it is not the Government & the grandes entreprises who are at the will of the syndicats, but the syndicats who are at the will of companies. Because, should Alcatel-Lucent die, that would mean that labor unions were unable to uphold their one promise to their clients/users/customers (employees) – that they would make sure that employees remained employed.

France needs a Hierarchy reboot

When you don’t work in France, it’s hard to put your finger on exactly what is holding France back: the banks, or the ‘overbearing’ government, you might say. But anyone who digs down deep enough realizes that, today, the entire country is run by labor unions. The taxi industry recently fought and won their push for the 15-minute law because they threatened to block traffic with their taxis in a protest. Titan International CEO Maurice Taylor refused to buy a Goodyear factory in France because he didn’t want French employees and the burden that goes with hiring in France.

The same way that money rules the United States, Labor Unions rule France.

If Labor Unions had less power over the government, it could loosen labor laws.

If Alcatel-Lucent can die, then Labor Unions lose their power – it’s as simple as that.