– No stranger to controversy –
Valls, who has consistently said he will not tolerate any form of insubordination among his ministers, has not yet reacted in person.
But his entourage said Sunday that Montebourg had crossed a line, and while it is as yet unclear whether he will remain in the government, it appears increasingly unlikely.
The 51-year-old left-wing minister is no stranger to controversy, having made headlines in the past for his outspoken criticism of ally Germany, which he has blamed for factory closures in France.
He was promoted to his current position in April in a government shake-up after the Socialist party suffered a drubbing at local elections, and has had to cosy up to finance minister Michel Sapin who supports the very austerity measures that he disagrees with.
As industrial renewal minister before his promotion, he had grabbed headlines by labelling the head of tyre giant Titan an “extremist” after the CEO criticised the French workforce as lazy.
He also became embroiled in a very public fight with steelmaker ArcelorMittal over the closure of a plant.
The latest reshuffle comes at a time when France is mired in stubbornly slow economic recovery, with high unemployment.
The central bank warned this month that Hollande had no hope of reaching his target of 1.0 percent growth for 2014.
The French economy has been stagnant for the past six months and the government was forced to halve its growth forecast to 0.5 percent for this year.
Both Hollande and Valls say the answer is their so-called Responsibility Pact that offers businesses tax breaks of some 40 billion euros ($55 billion) in exchange for a pledge by companies to create 500,000 jobs over three years.
Hollande plans to finance this with 50 billion euros in spending cuts, and the plan has angered those on the left of the party – including Montebourg – who argue that the focus should be on cutting taxes to boost consumer’s spending power.