Turmoil Spurs US Plant Closures, EU Layoffs At ArcelorMittal
December 10th, 2008
By Alex MacDonald
In a sign of the severity of the economic downturn, ArcelorMittal (MT), the world’s largest steelmaker, announced plans to close two U.S. steel processing plants and lay off several hundred workers in the European Union.
ArcelorMittal plans to close its finished steel processing plant in Lackawanna, N.Y., by the end of April and plans to close its finished steel processing plant in Hennepin, Ill., sometime in the future, although no date was disclosed. The two closures will result in 545 job losses, 260 of which are located at the N.Y. plant and 285 of which are located at the Illinois plant.
Meanwhile, ArcelorMittal rolled out voluntary redundancy programs in Europe over the past week or so that would eliminate 3,550 mostly white-collar jobs through voluntary layoffs. The company is eyeing 6,000 job cuts in Europe out of 9,000 job cuts globally.
The closures and layoffs are in line with the company’s plans to cut 35% of its global steel production capacity during the fourth quarter and saving $1 billion annually by cutting 3% of its global workforce.
Both steel plants supply the auto market, where demand has slumped so dramatically that the U.S.’s three largest car manufacturers are now seeking federal government funds to avert bankruptcy.
The closures are part of ArcelorMittal’s global restructuring program to weather the economic downturn.
The decision to close ArcelorMittal Lackawanna was “purely an economic business decision based on the extraordinary economic conditions we face today,” the company said in a statement.
The Lackawanna plant has inherent disadvantages due to its location that lead to higher costs, longer customer lead times, and higher inventory levels than other ArcelorMittal finishing facilities in the US, the company said.
Meanwhile, at Hennepin, “the company had to make the tough decision to close the…facility, consolidate operations and move production to other ArcelorMittal facilities in the U.S.” in order to remain competitive.
ArcelorMittal now has announced plans to lay off 19% of its U.S. salaried workforce of 15,543 people and has announced more than half of its planned job cuts in Europe.
The United Steelworkers union and other relevant stakeholders were notified about the plant closures and job layoffs. They are now negotiating with the Luxembourg-based company to arrive at a compromise.
Jim Robinson, the director of USW’s District 7 said the union was aware that ArcelorMittal faced operational issues at the two plants but was surprised by the company’s decision to close the plants.
“They called us before they announced but we did not know this specifically” beforehand, he said.
Robinson dismissed views that ArcelorMittal has underinvested in the plants. “I don’t think the issue is lack of investment over time, I think it’s an issue of the company’s overall strategy.” He declined to elaborate further.
ArcelorMittal is one of many steelmakers globally that have announced production cuts and layoffs. U.S. Steel Corporation (X), the world’s tenth-largest steelmaker by volume, announced last week it would temporarily idle an iron ore mining facility and two steel works. The move will affect 3,500 employees.
Corus, Europe’s second largest steelmaker by volume and the European arm of India-based Tata Steel Ltd (500470.BY) has cut production by 30% and has shed about 500 jobs from the U.K.
In Europe, ArcelorMittal is seeking voluntary redundancies equal to 1,400 jobs in France, 800 in Belgium, 750 in Germany, and 600 in Spain. Most of them are white collar jobs. ArcelorMittal’s American depositary shares recently traded up 8.9% to $25.99 on the New York Stock Exchange.
Company Web site: http://www.arcelormittal.com
EU businesses expect 1 million job losses in 2009
Brussels – European Union businesses called Monday for a cut in interest rates amid predictions that the bloc’s economic slowdown could lead to more than 1 million jobs being lost in 2009.
BusinessEurope, which groups national business federations from 34 European countries, also called on governments to ensure a continued flow of credit and to approve structural reforms aimed at improving the continent’s competitiveness.
According to its latest Economic Outlook, EU gross domestic product (GDP) is predicted to grow by just 0.4 per cent in 2009, compared to 1.4 per cent this year, with exports, imports and private consumption levels all slowing.
Unemployment is predicted to increase from 7 per cent to 7.8 per cent, with the loss of 1.1 million jobs, compared to a net job creation of more than 2 million in 2008.
“The most fundamental preoccupation of the business community is obviously the way in which the impact of the financial market turmoil will play out,” the paper said.
“Even though a fully-fledged credit crunch has not yet appeared in Europe, uncertainty about the impact for companies and consumer markets has increased tremendously.”
SEMI Europe calls for investment to avoid mass job losses in semiconductor industry
December 10 2008
During the third SEMI Brussels forum, SEMI Europe declared that the decline in the European semiconductor industry could potentially put half a million European jobs at risk. SEMI Europe presented its White Paper to EU officials and urgently appealed for the EU and national policymakers to invest to support the European semiconductor industry citing the industries importance to the health and global competitiveness of the EU economy.
The equipment/materials producers and the semiconductor device manufacturers contribute around €29 billion to the EU economy and provide around 215,000 jobs. The European semiconductor industry is also a significant contributor to the GDP in EU countries such as France, Germany, Ireland, the Netherlands and the UK.
“If semiconductor manufacturers leave Europe, indigenous equipment & materials producers will face an uncertain future”, said Franz Richter, Chairman of the SEMI European Advisory Board. “The current economic crisis and rising unemployment underscore the urgent need to safeguard jobs in the European semiconductor industry. Supporting a robust and competitive semiconductor industry in Europe is critical to keeping jobs in Europe across all industries and supporting key European economies.”
The decline of the market share even during the increase in total volumes sold reflects that manufacturing is changing and moving away from Europe because of the unfavourable global level playing field conditions. The European equipment and materials manufacturers that supply the semiconductor industry with machinery and parts are for the most part small or medium-sized European businesses that heavily rely on the future European semiconductor industry to guarantee their own future and the 105,000 jobs they embody.
Further information on the Brussels forum is available here.
Spanish auto sector highly exposed to global crisis
December 11 2008
By Robert Hetz
Spain’s car industry, which became Europe’s third largest, thanks to a cheap workforce, has lost cost advantage and could shrink as companies slash costs at foreign plants and save politically-sensitive jobs at home.
As executives at multinational manufacturers weigh up Spain’s ageing factories, relatively high wage costs and weak competitiveness against their own domestic markets and cheaper alternatives, the country’s plants are clear targets as the credit crunch saps demand all over the world.
“The big decisions are being taken abroad, not here, and managers in London, Paris and Detroit prefer to close a plant here and not in their home market,” said the director of one Spanish parts plant, who asked not to be named.
Unlike Germany, France or Italy, Spain’s auto industry has no nationally-owned car maker and little control over decisions on the future of its 18 foreign-owned plants, which employ around 70,000 people.
And unlike the case of Britain, Spain’s plants are older and less productive, and the country lacks a more skilled workforce or much tradition of home-grown research and development.
Global car makers, also including Peugeot, Opel and Volkswagen, built most of their Spanish plants in the 1970s when Spain was a low-cost backwater, well placed to serve Northern European markets.
Since the 70s, Spain has lost its price advantage as living standards have caught up with the European average. In 2007, per capita income overtook that of Italy. At the same time, new competitors have emerged as low-cost manufacturing centres.
Spain’s auto-sector salaries averaged 22.83 euros ($29.64) an hour last year, above the European average and around three times the 6.93 euros in Poland and 8.83 euros in the Czech Republic, Europe’s new manufacturing hubs, alongside North Africa.
NORTH AFRICA PASSES SPAIN FOR RENAULT
Renault plans to make 200,000 cars at its plants in North Africa in 2010 and double that within a couple of years, overtaking production from its Spanish operations.
The global credit crunch has hurt demand for new cars across Europe, with new car registrations in November falling 36.8 percent in the UK, 18 percent in Germany, 30 percent in Italy and 50 percent in Spain.
With some 84 percent of cars built in Spanish plants for export, manufacturers are finding fewer financial or political reasons for remaining in the country as international competition rises.
Spanish plants are ideal candidates for the inevitable cuts across Europe, head of Ford Espana Jose Manuel Machado said, as salaries rise and productivity fails to rise at a similar rate.
Machado’s comments came before the U.S. company announced production cuts of 120,000 units at its Almussafes plant in Valencia, and the temporary layoff of 5,200 workers.
Job cuts are expected from most of the major manufacturers, with more than 60 filings listing potential layoffs by private companies made to the government, which may affect up to 40,000 workers, Spain’s main union UGT said.
As Spain’s unemployment rate soars to the highest in the European Union and the economy nears recession, the government is keen to keep the industry, which accounts for around 5 percent of gross domestic product, in the country.
Spain has earmarked 800 million euros for the sector as part of measures worth a total of around 50 billion euros to stimulate the economy.
But this aid may not be enough.
“It’s a good gesture from the government, but obviously the amount of money is insufficient. It would be less than 80 million euros per manufacturer,” said Jose Antonio Bueno of consultancy Europraxis.
The sharp fall in new car sales in Spain has also affected the manufacturers’ showrooms and spare parts centres throughout the country.
Concessions for new and second-hand cars and garages employ around 278,000 people in Spain, and 16,000 of those jobs are at risk, the association for the sector, Ganvam, estimates.
“Four years ago we sold two or three cars a day, but now its not even two a week,” said Adela Benito, who has worked in a Madrid-based Renault showroom for 20 years. (Reporting by Robert Hetz; Additional reporting by Tomas Gonzalez; Writing by Paul Day; Editing by Rupert Winchester)
Swedes want government bailout for Volvo
By Thorleifur Petursson
December 11, 2008
In a new survey just released, 68 percent of Swedes want to see the Swedish government bail out its beleaguered carmaker Volvo. Although Volvo is owned by US carmaker Ford, Swedes would like its government to temporarily take control of the nation’s iconic firm, as many residents fear Volvo may disappear entirely from Sweden in the near future.
The Local newspaper reports that support for government intervention is piling in from all sides of the political arena. Some 65 percent of those polled who support the bailout side with one of the governing Alliance parties, and 73 percent of all left bloc voters approve of a government bailout.
Peter Larsson of the Swedish Association of Graduate Engineers points out that Volvo’s current crisis is not minor. “One thing is certain, there are no dollars on their way over the Atlantic,” Larsson said, referring to the massive problems currently faced by the “Big Three” US carmakers – Ford, Chrysler, and (Saab-owner) General Motors.
Rolf Wolff, dean of the school of business at Gothenburg University, told The Local: “If Volvo Cars disappears as a base for industrial knowledge and skills, then Sweden will never again be a part of the auto industry. All the knowledge and skills would be lost, and with it all future associated development potential would be gone.”
Maud Olofsson, Sweden’s minister of trade and industry, has expressed doubts whether the government would be able to better manage Volvo than the car firm itself. For now, the issue has been placed on the political back burner, but the crisis at Volvo and Ford goes on.
This is just the tip of the iceburg. Seems no one is safe from the Financial Crisis. Not even EU members.
There are 27 member of the European Union.
EU members and when they joined.
1952 Belgium, France, Germany, Italy, Luxembourg, Netherlands
1973 Denmark, Ireland, United Kingdom
1986 Portugal, Spain
1995 Austria, Finland, Sweden
2004 Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia
2007 Bulgaria, Romania
Starting to remind me of the Corruption in the US where the Crisis started.