PARIS – France's government dismissed a call to nationalize the Saint-Nazaire shipyard on Saturday but said it was committed to the survival of the facility after a South Korean shareholder threatened to sell its stake.
The Korean company, STX Offshore & Shipbuilding <067250.KS>, has been hurt by a shipping industry downturn since the financial crisis and may also sell shipyards in Finland and China.
The French government came to Saint-Nazaire's rescue at the end of 2012, helping it win new contracts to stave off the threat of bankruptcy, including a 1 billion euro ($1.31 billion) contract to build the world's largest cruise liner.
It is faring better today but, since STX's announcement on Friday, unions have been calling for the state to nationalize the shipyard on France's Atlantic coast, one of Europe's largest and a symbol of French industrial prestige.
The government already holds 33 percent of STX France, the company that owns and operates the Saint-Nazaire site.
President Francois Hollande does not want another manufacturing failure on his hands as he struggles a year into his term to make good on a campaign pledge to pull French industry out of the doldrums.
In a joint statement, French industry and finance ministers dismissed talk that Saint-Nazaire and the jobs of its 2,000 employees were under threat and said the government would continue to support its development.
"STX France has strengthened its business in the past few months, thanks to winning big contracts, in particular on the export side," the ministers said. "Saint-Nazaire is therefore not threatened at all by the events in South Korea."
Saint-Nazaire will begin building a cruise ship in September for Royal Caribbean Cruise Line, to be delivered in 2016.
Industry Minister Arnaud Montebourg told French daily Le Monde that nationalizing the site would serve no purpose.
"The Saint-Nazaire shipyard needs more orders, not a new shareholder, because the site is working well," Montebourg said. "We met the conditions in December 2012 to land an order for a giant liner and we continue to work to ensure the long-term future of the site."
The yard built famous cruise liners such as the Queen Mary 2, commissioned in the early 2000s to sail between Europe and the United States.
(Reporting By Muriel Boselli; Editing by Tom Pfeiffer)