ArcelorMittal 'Freezes' European Job Cuts

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - The world's largest steel manufacturer, ArcelorMittal (NYSE:MT) (Luxembourg, Luxembourg), has announced a freeze on job cuts and restructuring at its European steel operations until June.

The company said it will wait until the European Commission (E.C.) launches its action plan to revive Europe's struggling steel industry in June. The company has come under pressure in recent weeks from the European Union's Industry Commissioner, Antonio Tajani, to postpone its European restructuring at plants in France and Belgium.

In a statement read by Tajani, he said "there will be no more job cuts" by ArcelorMittal at its European facilities, which employ 98,000 people. Speaking at the conclusion of a third meeting of European steel companies and government representatives seeking to boost the region's steel industry, Tajani said: "Without steel, there is no Europe."

He added: "Florange and Liège will not be closed. There will be a capacity reduction will however include a plan of investment of €180 million ($237.4 million) for Florange and about €140 million ($184.6 million) for Liège. Both sites have become highly specialised in high quality products for industries such as automotive or packaging. The staff Florange and Liège will be affected by the reduction in capacity and there will be the possibility to be reassigned to other sites of the ArcelorMittal Group. Finally, ArcelorMittal also took the commitment that there will be no further restructuring plans in Europe pending the approval of the European Steel Plan."

In its own statement, the company stated: "No new restructuring plan is envisaged other than what is already announced and being implemented. In the event that the European situation further deteriorates we would engage with the European Commission."

Earlier this month, ArcelorMittal posted its first annual loss of $3.73 billion for 2012, compared to a net profit of $2.26 billion in 2011. "We started 2012 with optimism, but the European crisis made things worse," CEO and founder Lakshmi Mittal explained. "2012 was a very difficult year for the steel industry, particularly in Europe where demand for steel fell a further 8.8%."

The company expects steel demand in Europe to drop another 1% in 2013. To date, it has fallen by around one third against its pre-recession levels. ArcelorMittal announced plans to shut two of its blast furnaces in Liège, Belgium, in late 2011. Most recently, it announced that it was to permanently close the coke mill and six finishing lines at the site, with potential job losses of 1,300 workers. The company said that Liège made a loss of $265.62 million for the first nine months of 2012. It has also idled blast furnaces at Florange in France. However, with its latest statement, those decisions are being postponed until the E.C.'s steel plan is published in June. The company has 25 of its 63 blast furnaces in Europe and of those only 16 are operating due to weak demand.

Earlier this month, fellow steel and engineering firm ThyssenKrupp AG (Essen, Germany), announced plans to cut 2,000 employees in its European unit by 2015 to save $674 million in its steel division. For additional information, see February 13, 2013, article - Germany's Steelmaker ThyssenKrupp Plans to Lay Off 2,000 to Cut Costs.

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