‘The combination of Saft and Total will enable Saft to become the Group’s spearhead in electricity storage’, said Patrick Pouyanné, Chairman and CEO of Total. ‘The acquisition of Saft is part of Total’s ambition to accelerate its development in the fields of renewable energy and electricity, initiated in 2011 with the acquisition of SunPower. Saft’s renowned technological know-how and unique expertise have allowed it to develop innovative and competitive solutions for its clients. It will notably allow us to complement our portfolio with electricity storage solutions, a key component of the future growth of renewable energy. This transaction will also enable Saft, its management and employees to benefit from Total’s technical, industrial, commercial and financial support. In addition, this transaction will enable Saft to successfully accelerate its development.’
This is yet more evidence of Total’s stated goal of shifting away from oil and gas production, especially when considered alongside their announcement in February that they don’t intend to reach FID on any projects this year. Here’s what I reckon is happening.
The recent protests in France, which have brought most transport to a standstill and left filling stations empty due to the refinery workers having walked out, are over labour reforms which are pretty minor by the measure of most developed countries (albeit less -publicised proposals would severely hamper the unions’ ability to incite industry-wide unrest, and would allow companies to consult with all employees, not just the unionised ones). The CGT union is the main force behind the strikes, and seems to be a throwback to the days when the Soviet Union was still going strong and a good half of the world’s idiots thought Communism was a viable system of government. Yet despite the CGT representing a small minority of the French population, they appear to have plenty of support:
The survey carried out on Thursday and Friday showed that 54 percent of French people interviewed were against the protests. The same number backed the protests in May. Only 45 percent currently support the protest movement, BVA said.
The poll showed 29 percent wanted the government to maintain the bill, which aims to make hiring and firing easier, in an attempt to get stubbornly high unemployment falling, with presidential elections a year away. The same percentage want the bill withdrawn, while 41 percent want a negotiated solution.
45% of the population support the protests, while only 29% support the bill. Unless those figures are really <15% and >80%, France as a country is fucked. The issue here is fairly obvious: French people think the primary purpose of a company is to employ French people. The provision of a useful service may come in at a distant second, but it is likely to be a mystery to most of them that a company’s owners expect a return on their capital invested.
Total clearly understands that investors expect a return on their investment which is why they’ve pulled out all the stops to maintain the dividend. But they are also aware that the general public will not allow them to shed jobs, and so have refrained from engaging in the sort of axe-swinging carried out by the rest of the industry. At some point, unless oil prices rise far higher than anyone is expecting, maintaining these two positions simultaneously will become impossible and one of them will have to give. And Total being a French national champion, have a guess – in a choice between investors or unionised employees – which is going to be handed the shitty end of the stick. Uh-huh.
At this point I’m going to repeat myself:
Patrick Pouyanne, being well-versed in French politics, is therefore attempting to position the company such that it is viewed as an integral part of a green, sustainable, responsible French societal landscape whereby what is good for Total is also good for France and the rest of the world. Then when the time comes for Total to beg the government for French taxpayers’ cash or state favours, as seemingly every other large French industry eventually does, it will be all the more easy to justify.
Patrick Pouyanne was first a politician, and later got parachuted into Total in a senior position. Bear in mind that he found himself CEO only because of Christophe de Margerie’s untimely death, and it’s not too hard to envisage a scenario whereby a centre-right government gains power in the elections next year and Pouyanne is made Minister of Energy. From there it’s simply a matter of throwing everything in the lap of a new CEO, bringing Total closer to the government bosom where jobs are protected, taxpayer cash is injected where required “for the good of France”, and the investors can go whistle.