labels: Steel, World economy
ArcelorMittal to idle Cleveland plant; lay off 700 workers news
09 March 2009

The world's larghest steel maker ArcelorMittal has has said that it will stop production at its Cleveland plant in the US by May, where about 700 workers would be laid off indefinitely, keeping only a skeleton staff of around 250 until the market for steel improves.

Keeping in line with the warning issued in November of massive lay-offs at its US operations, (See: ArcelorMittal warns of massive layoffs at US plants) 400 workers had already been laid off in November from a workforce strength of 1,440, when it idled its two blast furnaces.

Since the Federal law in the US requires a company to give 60 days notice for termination of employment, the 700 workers who will be laid off, will have another 60 days to retain their jobs and look for other employment, although that prospect looks bleak considering the massive unemployment in the US.

The company said that it will retain about 250 workers in order to carry out routine mandatory work such as fire watch, maintain the water treatment, boiler and environmental systems and the rest of the hourly workers may also be out of work until such time ArcelorMittal restarts at least one of its two idled furnaces.

In a written statement, the Luxemburg-based steel maker said, "This was a difficult decision to make, but the company is being forced to respond to the extraordinary economic environment we are facing. We will be carefully monitoring the situation, and we look forward to many of our employees returning to work as soon as it is warranted by market conditions."

The workers union president of Local 979, Mark Granakis said, he had expected the company to cut more workers this month or next, "but I never thought there was going to be this severe a reduction."

granakis said, "I realise the economy's hurting. I do not think they're laying people off because they want to, but it is hard. "

He said that over and above to the state unemployment compensation, some of the steelworkers would also be entitled to supplementary pay from the union and the company said that it wanted the workers to return back to work when market conditions improve and will work with the union to ease the impact on the workers and their families.

In September, ArcelorMittal had averted a strike at its US plants and reached a four-year wage agreement with the United Steelworkers union representing 14,000 production, maintenance and clerical employees of the company. (See: ArcelorMittal averts strike at US plants; reaches agreement with USW)

The company, which employs over 15,000 hourly workers in the US, had reduced steel production in North America by 40 per cent in November amid declining sales on account of weaker demand from industries such as automotive, construction, and retail appliances.

With the US Big Three auto makers, Ford, General Motors and Chrysler in financial doldrums due to a slump in the US car market and adding to the woes, the demand for steel is also weak in the appliance industry wuth appliance manufacturer Whirlpool Corp. doubling its planned layoffs to around 5,000 people in response to weaker demand.

Steel prices have dropped over 70 per cent since their all time high this summer, and global steel producers are implementing production cuts to realign supply and demand that will help stabilise prices.

Additionally, the Chinese economy has also slowed down considerably to single-digit growth; the Russian economy also appears to be in for tough times.
In addition to cutbacks in the US, ArcelorMittal has laid off or stopped production in France, Belgium, Brazil and Hungary, while in South Africa it terminated 2,000 temporary workers to save cost amid decline in sales.

Last month, the company reported its first ever loss of $2.6 billion in the last quarter as it wrote down the value of assets, inventories and raw-material contracts amid plunging demand for steel globally. (See: ArcelorMittal reports first ever loss of $2.63 billion)

Its net loss was $2.63 billion, compared with net income of $2.44 billion a year earlier, after taking one-off writedown charges of $ 4.4 billion, which also included $900 million related to job losses.

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ArcelorMittal to idle Cleveland plant; lay off 700 workers