PARIS -- Steelmaking giant ArcelorMittal (IW 1000/35) announced on Thursday that it would shut down six cold-processing facilities in the Liege region of eastern Belgium hitting 1,300 jobs, because of weak European demand for steel.
ArcelorMittal, already embroiled in controversy in France over the closure of two blast furnaces and job losses, blamed in particular weak demand for cars and cutbacks in auto plants for the fall in demand for steel.
European demand was now 29% below the levels before the financial crisis broke in 2008, the company said.
But the Belgian prime minister said immediately that the decision was incomprehensible and that he sided with the workers.
The steel group said that it "recognizes that this proposal will be very difficult for the local community as it affects approximately 1,300 people. It is committed to finding a socially acceptable solution for all those affected."
In Davos, Switzerland, Belgian Prime Minister Elio Di Rupo said that he would tell the head of ArcelorMittal, Lakshmi Mittal, of Belgian authorities' "incomprehension" about the decision.
"I support the workers. That is the first message this afternoon when I meet Lakshmi Mittal," he said on his Twitter social network account from Davos where he is attending the World Economic Forum.
ArcelorMittal recalled that it had announced some cutbacks at its Liege facilities in October 2011 to deal with "structural over-capacity in Northern Europe."
The company said it had proposed a flexible work model which had been rejected by trades unions but which would have enabled the facilities to adapt to demand.
Since then the market has worsened with key automaking customers announcing major restructuring plans and cutbacks, the company said.
"As a result there is insufficient demand to support the running of these flexible facilities and no improvement is seen over the medium term," an Arcelor statement said.
The company said that despite the closure of the blast furnaces, the Liege facility had reported an underlying loss of more than 200 million euros (US$266.0 million)for the nine first months of 2012 and no improvement was in sight this year.
The statement said: "We deeply regret that the economic situation has further deteriorated to the extent that the proposal of further closures at Liege has become necessary.
"We recognize that this is a very difficult announcement for the employees at Liege, particularly coming so soon after the closure of the primary phase.
"We had hoped that that closure would be adequate in terms of adapting to the reduced demand but given the continued lack of orders and overall weakness in the European economy, it has become increasingly apparent that further action is required if we are to stem the continued losses that the plant is reporting and return it to a sustainable basis."
Copyright Agence France-Presse, 2013
