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Creusot-Loire Industrie (CLE)

Le Creusot had been one of the chief armaments-producing centers of Europe. Since the days of Marie Antoinette there have been factories at Creusot. Indeed the residence of Eugene Schneider, one of the show places of France, was remodeled from a glass factory which dated back to the time of the unfortunate queen. Originally the Creusot works were owned by the monarchs of France and the profits went into the royal pockets. But for over a century the Schneider family, which came originally from Lorraine, owned them.

At the beginning of hostilities in 1914, the Schneider Establishments, on account of their importance. extensive experience in metallurgy and in artillery construction. were the foremost producers of steel in France, and the leading manufacturers of the various materials and ammunition which became more and more necessary as the war progressed.

Among the various models of guns which. have been in service on all fronts. those of Schneider design have played a highly important part during the war for Liberty. In service simultaneously in the French. American. Belgian. Serbian. Roumanian. Italian and Russian Armies. they have valiantly surmounted the most severe trials: such as. for instance. being moved over shell-torn ground and through seas of mud. or being subjected to intensive firing without cleaningup and proper up-keep. or being handled by inexperienced personnel.

Creusot-Loire was created in 1970 by the merger of three steel and engineering groups. In 1980 Harvard-educated Didier Pineau-Valencienne took over as chairman and sought to streamline the company's operations. To no avail. In 1983 the group racked up record losses of $200 million.

In December 1984 the Paris commercial court ordered the liquidation of Creusot-Loire, France's largest privately owned engineering conglomerate. The group's companies, had run up debts of more than $633 million. The failure was the biggest industrial bankruptcy in French history. There were big repercussions in the country and outside from the bankruptcy of the Creusot-Loire company (of the Schneider group). The government was unable to effectively resist the strategy of the private shareholders, who resolved to free their capital from the unprofitable investment sphere.

The assets of Creusot-Loire, which was rightly considered the pride of national basic engineering, came under the hammer, and French industry was deprived of a component essential for full-fledged development. Under the court-approved plan, the French Government-owned steel group Usinor took over Creusot- Loire's metallurgy and armaments divisions. Fromatome, a state-owned builder of nuclear reactors, acquired Creusot-Loire's energy and boiler-making businesses.

By the mid-1980s Creusot-Loire was floundering while Renault Vehicules Industriels [Renault Industrial Vehicles] had seen mounting losses (2.2 billion francs for 1983). There is no connection between the two situations. And yet, both enterprises were in the same military equipment sector. Even more, both groups are cooperating in the production of the VAB [armored attack vehicle] for which Creusot-Loire was building the armor in its Saint Chamond facility while the power plant system was the responsibility of Renault Vehicules Industriels (the engines are produced especially in Limoges).

Military orders always yield good profits. By 1984, some 2,100 VABs had been delivered to the French Army and 900 of them have been exported. The VAB program continued. Thus, for the French Army it was only half complete. But the Army orders had been dropping in Limoges. For this plant half of whose activity is for the military sector, the drop in orders for tank engines (the next generation of which may be equipped with high-pressure motors) involved reduced production reflected by a slide of 25 percent in the plant's total operations.

This was a tough turn for Renault Vehicules Industriels which had seen its profits drop in a sector that continued to be one of the few which are still profitable for it at the moment. Renault could use a broader market. Accordingly, some asked why not consolidate the specialized mechanical division of Creusot-Loire and the military equipment division of Renault Vehicules Industriels into a structure that would specialize in wheeled armored vehicles (while the tractor-treaded vehicles would continue to remain under the jurisdiction of the armed forces workshop). This consolidation would be all the more attractive as the wheeled armored vehicles are slated for future developments considering more positive demand abroad for such equipment (which is notably more mobile and more autonomous than tractor-treaded vehicles).

Creusot-Loire had naturally no incentive to follow this line of action in the immediate future. Renault Vehicules Industriels admitted having many reasons for entertaining contacts with the group in trouble but notes that presently no negotiation in view of a possible restructuring is under way. But it would not be reluctant in this case to assume its leadership. But it seemed to be a fact already that if Creusot-Loire were to be broken up, its specialized mechanical division would not remain without a buyer in a structure still to be defined. This division has too much experience in sector that all governments cultivate, and military equipment generated too much profit to be relinquished.

In the early 1990s GIAT entered into an agreement with two of its principal French competitors, Creusot-Loire and Renault Whicules Industriels (RVI), to create a jointly owned company to manage current and future tracked and wheeled vehicle programs.



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