ArcelorMittal to cut 1,000 jobs even in low-cost Poland

December 4th, 2008 - 11:53 am ICT by IANS  

Warsaw, Dec 4 (IANS) In what seems to be a deviation from its stated policy to cut only non-production jobs and also an indication of demand contraction worldwide, the world’s largest steel maker, the ArcelorMittal Group, has decided to cut 1,000 production employees from its plants in Poland, which have the lowest production costs among all group plants.”The job cuts have become necessary as demand has fallen sharply,” ArcelorMittal Poland president Gregor Muenstermanna said.

The company has submitted a request to the Labour Office here to cut jobs in its Dobrowa Gornicza plant, Muenstermanna said.

“The demand for steel from this plant has gone down by 10 percent in October alone,” he said.

Last week, however, the company had announced that it would slash up to 9,000 jobs across the globe, approximately three percent of its total workforce, but they would be all non-production jobs.

“The focus is primarily on non-production employees, in particular those in SG&A (selling, general and administrative) functions across the globe,” a company statement announcing the job cuts had said.

The job cuts would help achieve the company’s stated aim of reducing SG&A expenditure by $1 billion in response to the current economic situation, the statement had said.

The Polish job cuts are, however, those of production employees as the company is cutting production in the face of falling demand.

Moreover, the company is preparing itself for even tougher times to come when more jobs may have to go, Muenstermanna said.

“December is, as a rule, a very poor month; so we should be prepared for a further decrease in orders,” he added.

The job cuts are being seen as a worrying move also for another reason.

A Solidarity trade union leader Jerzy Goinski, told the Puls Biznesu financial daily here that the cuts were a worrying sign, considering that production costs in Poland were the lowest in the entire ArcelorMittal group.

That means global demand is so badly affected that ArcelorMittal is being forced to cut production jobs even in its lowest cost plants, a steel industry observer said.

ArcelorMittal Poland controls four plants in the country - Krakow, Dobrowa Gornicza, Sosnowiec and Swietochowiec. It has already shut down its two large furnaces in Krakow and Dabrowa Gornicza.

The Mittal group entered Poland in 2003 and has since then come to control some 70 percent of steel production in this country. It has invested more than four billion euros ($5.05 billion) in Poland and till June this year it was making handsome profits from its operations.

ArcelorMittal is the world’s largest steel maker with over 326,000 employees in more than 60 countries and has an industrial presence in over 20 countries spanning four continents. The company covers all of the key steel markets, from emerging to mature ones.

Incidentally, company chairman Lakshmi Mittal has reportedly lost more than 50 billion pounds ($73.7 billion) in the current financial meltdown although the loss is notional as it refers to the market value of the shares and other assets he owns.

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