The statement was charmingly headlined, “ArcelorMittal Launches Voluntary Separation programmes”.
The detail was more realistic: the world’s biggest steel company is cutting 9,000 jobs, or 3% of its work force over the next few months to save $US1 billion.
It’s more evidence the world steel market in contracting rather sharply, even more so than indicated at yesterday’s BHP Billiton AGM in Melbourne. CEO Marius Kloppers said the Chinese steel industry was down 17% year on year. Arcelor has ordered production cuts this quarter of 30% to 35% in some of its mills and it should be said the BHP boss is a bit optimistic.
“The focus is primarily on non-production employees, in particular those in SG&A functions across the globe. These programmes may involve up to 9,000 employees, approximately 3% of the total global work force” Arcelor said. Before the announcement the steel giant employed 326,000 people in 60 countries.
Sales and administration jobs will be the first to go with production cuts limited. The cuts are part of a five-year plan to reduce costs by between $US4 and $US5 billion over the next five years, and to slash debt by $US10 billion by the end of next year.
The steelmaker said in its November 5 third quarter profit statement that it was cutting output by more than 30% because of falling demand from building, construction, whitegoods and carmakers.
The company sees output in the US market of flat carbon steel down 35% over the next few months and 30% in Europe. It’s looking for pre-tax earnings to fall 48% this quarter to around $US2.5 billion.
It doesn’t buy as much iron ore from Australia as the Japanese, Chinese and Korean mills do, but it is a customer. It buys coking coal from here and pulverised coal from Macarthur Coal in Queensland, the world’s leading producer.