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ArcelorMittal idling US mill, AK Steel likely to do same |
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administrator |
DATE |
2009-05-14 09:31:02 |
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ArcelorMittal idling US mill, AK Steel likely to do same
05. 13. 2009
By Steve James
* ArcelorMittal laying off almost 1,000 in Indiana
* AK Steel may idle Ashland ( ASH - news - people ), KY mill, 750 workers
* AK cites GM and Chrysler production cuts
* S&P steel stocks fall more than 8 percent
NEW YORK, (Reuters) - One major steelmaker announced nearly 1,000 layoffs in the U.S. Wednesday and another said it would likely idle a mill employing 750 workers because of an anticipated drop in demand when automakers cut production.
The moves by ArcelorMittal , the world's largest steel producer, and AK Steel , come as the steel industry is in a global slump with dwindling demand forcing production cuts, in some cases, of more than 50 percent.
"Today's latest layoffs in steel should be setting off alarm bells in Washington," said Tom Conway, the United Steelworkers union's (USW) international vice president.
"The employment recession in manufacturing and steel is deepening and we don't see a bottom. The auto and steel and construction industries are all connected. We need more government stimulus support of manufacturing."
On a day when the Dow Jones Industrial Average fell 2.1 percent, the S&P steel stocks fell 8.45 percent. AK Steel's stock closed down 12.37 percent at $11.41, on the New York Stock Exchange and ArcelorMittal's was off 6.94 percent, at $24.41.
"No one is expecting any signs of recovery anytime soon," said analyst Charles Bradford of Bradford Research "It sounds like the second quarter is going to be disastrous for a lot of these folk."
"It's very disappointing, but not surprising as we are seeing continuing deterioration of the industry," said Michelle Applebaum, an independent steel industry analyst in Chicago.
She noted steelmaker Nucor ( NUE - news - people ) just reported that every month since last September has been worse for business.
ArcelorMittal, which said recently it will continue its temporary global production cuts at a level of approximately 45 percent, said it will idle production on the west side of the company's Indiana Harbor facility in East Chicago, Indiana, until market conditions improve.
ArcelorMittal said it has notified the USW of the indefinite layoff of 978 employees at Indiana Harbor in accordance with government regulations. However, it will continue producing metal on the east side of the facility at blast furnace No. 7.
"The company is being forced to respond to the extraordinary economic environment we are facing," spokesman Adam Warrington said in an email to Reuters. "We look forward to many of our employees returning to work as soon as it is warranted by market conditions," he wrote.
Meanwhile AK Steel announced it will likely idle most of its Ashland Works in Kentucky late in July or early August. The idling will affect about 750 hourly and salaried employees, and is due to announcements by automakers General Motors ( GM - news - people ) and Chrysler of significant production curtailments this summer.
The company said the plant, which produces steel slabs, is likely to remain idled at least through the end of the year. The Ashland Works also employs about 290 workers at a coke plant which is scheduled to continue operating at a reduced level, the company said.
"Unfortunately, at these very depressed business levels, we do not have sufficient carbon steel orders to operate both of our blast furnace plants," said James Wainscott, AK Steel's chairman, president and CEO. The company will fill customer orders from its Middletown, Ohio, mill. (Editing by Carol Bishopric)
Copyright 2009 Reuters |
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