ArcelorMittal to lay-off 16 per cent of US workers

28 November 2008

The world's largest steel company, ArcelorMittal, has told its steel workers union that it could lay off almost 16 per cent of its entire US hourly workforce on account of weaker global demand for its steel products.

ArcelorMittal told the United Steel Workers union and that there cold potentially be an ''indefinite layoff" of over 60 per cent of its workforce at Burns Harbor, totalling 2,444 employees, from the second half of January 2009. The steel maker has around 4,000 hourly and salaried workers at the 4.7 million tonnes per year steel plant in Indiana.

Around two weeks earlier, US Steel, the other large steel maker, has said that it would lay off 675 unionised workers, or two per cent of its staff, because of slackening demand for its steel products.

Steel production is being cut back on account of weaker demand from industries such as automotive, construction, and retail appliances. As the US Big Three auto makers, Ford, General Motors and Chrysler, try to talk the US government into shelling out $25 billion, they seem more likely to be headed for a bankruptcy. Appliance manufacturer Whirlpool Corp. has also doubled its planned layoffs to around 5,000 people in response to weaker demand.

ArcelorMittal has reduced steel production in North America by 40 per cent, and is now mulling a 35 per cent cut in its global production for the fourth quarter. Redundancy programs, voluntary lay offs, and extended holidays with reduced pay are all part of its plans to reduce labour costs, said reports. The company employs over 15,000 hourly workers in the US, and around 326,000 globally.

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