INTERVIEW: ArcelorMittal’s Europe austerity plan slammed by unions

The Spanish metalworkers’ trade union, UGT-MCA, does not believe that the steps being taken by global steelmaker ArcelorMittal to cut costs at its operations across Europe will improve the state of the steel industry.

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“In our opinion, all of ArcelorMittal’s Spanish sites have a future,” the head of UGT-MCA’s international division, Javier Urbina, told Steel First in a recent interview in Madrid, where the union has its headquarters.

A series of permanent and temporary closures over the past two years at various ArcelorMittal plants in Europe have worried trade unions. “There is always a fear that ArcelorMittal will cut more capacity in Spain,” Urbina said.

This fear, he added, was heightened by the steel producer’s recent announcement that it intended to cut costs significantly by the middle of this year.

The steelmaker and miner had set itself a target of net debt of around $17 billion by mid-2013, and said that capital expenditure and dividends would not be increased until this target was achieved.

“ArcelorMittal’s decisions are always financial and never industrial,” Urbina said.

Clear strategy
When approached for a response to Urbina’s comments, ArcelorMittal told Steel First that its industrial strategy in Europe was clear.

“We are concentrating production on our most competitive sites, which are often in coastal locations, while strengthening the downstream activities at our inland sites,” the company said.

Urbina, however, pointed to ArcelorMittal’s sites at Florange in France and Liège in Belgium for examples of what he described as the company’s “fast” and “inflexible” restructuring plan.

On October 1, 2012, ArcelorMittal announced that it would not restart hot steel production at its Florange works in Lorraine.

And on January 24 this year, it said that it would permanently close six finishing lines and a coke plant at Liège due to “further weakening of the European economy and the resultant low demand for its products”.

“It’s incredible that ArcelorMittal closed sites which boast some of the best technology in Europe,” Urbina told Steel First, referring to last year’s study of the Liège site by Syndex, a consultancy tied to the European Works Council and to trade unions.

In June 2012, a Syndex study of the Belgian steelworks prompted trade unions to renew their arguments that the manufacturer could afford to keep the site open. “There is a future for steel and Liège,” the study said.

‘Responding to challenges’
In response, ArcelorMittal explained to Steel First that, over the past four years, it has “had to respond to the challenges of the global financial crisis and the subsequent eurozone crisis”.

“This has included taking measures to adapt our operating footprint to the demands of the new reality,” it said.

“While the steps we have taken have been difficult for those concerned, they have been the right steps to protect our business, given the difficult operating challenges in Europe,” it added.

Lakshmi Mittal, the company’s ceo, has highlighted automotive steels, sheet piling, mechanical tube and heavy hot rolled coil as sectors where the company, the world’s largest steel producer, has a competitive edge.

“What [Lakshmi] Mittal doesn’t understand is that Europe needs capacities to remain, so that we have them in the future when demand finally picks up again,” Urbina suggested.

“Otherwise, we are going to have to rely on imports, which would be inefficient and counter-productive for European steel,” he said. “It is a sin to import when we’ve got all the resources we need right here in Europe.”

Steel demand in Europe in 2020, ArcelorMittal said, “will still be 15% below 2007 levels. We have enough existing capacity in Europe to meet any increase in demand in the medium term.”

Greater flexibility
While cutting costs and jobs is the most common method adopted to reduce costs in today’s economic climate, Urbina maintained that this was not the best way forward to safeguard the future of the steel industry in Spain and Europe.

“The key to improving business in Europe and Spain will not come through lowering employee salaries and/or working hours,” Urbina told Steel First.

“What the steel sector needs is greater flexibility and a real action plan. We want a plan that includes social dialogue [and] participation, and under which companies can feel safe and positive enough to carry on working in Europe,” he added.

Greater protection for employees was a crucial factor for the future of European and Spanish steel, Urbina said, adding that the reform of Spanish labour legislation in 2012 had been a “disaster” and had left workers with fewer rights than before.

European strategy
In July last year, EU Commissioner Antonio Tajani announced that a new working group focusing on the European steel sector will be established by the European Commission.

Tajani said that he will “invite the steel industry in order to hear their problems and then propose a European strategy to defend the industry”.

“UGT-MCA fully supports the efforts of Commissioner Tajani to devise a steel action plan,” Urbina said. “We need something to ensure that steel remains a strong industry within Europe.”

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