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Steel Fallout Felt Throughout Europe

Tuesday, January 26, 2016

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Following in the footsteps of other European steelmakers in crisis, the world’s largest steel producer has said it is idling one of its plants in Spain.

ArcelorMittal announced Monday (Jan. 25) that it will close indefinitely the company’s Sestao plant in northern Spain, according to multiple media reports. Reuters, citing a company spokesman, said closing the plant will put 330 jobs at risk.

The closure comes on the heels of Tata Steel’s announcement that it will lay off 1,050 steelworkers, primarily at its Port Talbot plant in South Wales. According to an article published Saturday (Jan. 23) in the Telegraph, Tata’s Indian owners said it will cut 750 steel jobs at the 2½-mile-long mill; 200 support jobs; and 100 positions elsewhere.

© / tirc83

The Tata-owned Port Talbot plant in Wales announced last week it will lay off nearly 1,000 workers, while thousands of other steel jobs have been cut throughout Europe in the past 12 months.

In total, news sources say more than 5,000 steel jobs have been lost in Europe—most of them in the U.K.—within the past year. Industry leaders have blamed cheaper Chinese steel and a lack of protection of European products.

Blaming China, Politics

“Management has taken the decision in view of extremely adverse conditions ... (namely) falling steel prices caused by record imports from China at prices below production costs,” the ArcelorMittal spokesman told Reuters. “(It) will be idled from February. (The workers) will be temporarily laid off.”

Although significant, the news source says the layoffs are just a fraction of ArcelorMittal’s 9,500 employees in Spain alone. The company owns 12 Spanish operations and produces half of the country’s steel.

Still, with China producing half of the world’s 1.6 billion tons of steel and holding half of the world’s spare capacity, European steelmakers are reeling against a giant with which they cannot compete. Most of China’s steel industry is government-backed, with Beijing subsidizing production so that plants run at a loss, the Telegraph reported Monday (Jan. 25).

In addition to the specific layoff news, European steel trade associations were painting an even darker forecast of things to come. WV Stahl, a German steel trade group, and IG Metall released a study this week that the Telegraph said warned industry leaders that “political over-regulation and cheap imports” will take more plants out of the region.

According to the daily newspaper, the research said green initiatives have placed extra burdens on German steelmakers that prevented companies from buying new equipment that would keep them competitive.

WV Stahl president Hans Jürgen Kerkhoff said the expected European Emissions Trading System—at a cost of €10 billion—will force companies to pay a tariff based on how much pollution they produce while making steel.

© / Image_Source_

According to the Telegraph, The Port Talbot plant was Europe’s biggest steelworks and Wales’s largest employer by the time it was the Steel Company of Wales in the 1950s.

“Companies and jobs, which are exposed to international competition, should not be put at risk by disproportionate costs,” said Kerkhoff.

Meanwhile, Chinese mills are making out steel at a $34-per-ton loss, according to trade body UK Steel.

Port Talbot Pain

The inordinate price gaps have hit towns such as Port Talbot hard.

“I nearly fell to the floor when I heard the [latest] number,” Mark Mizen, owner of steelworker-frequented Bros Café next to the Port Talbot plant, told the Telegraph. “We thought it would be 200, not five times that. There were rumors for months about cuts, but the size is massive.

“At the end of the day, those 1,000 jobs are going to mean 10,000 jobs gone,” Mizen continued. “Everyone is going to make someone redundant as a result of the cuts. I don’t know what it’s going to mean for me—the landlord’s not going to cut my rent, is he? One thing’s for sure—if the plant goes, then Bros will go.”

His thoughts were echoed by plant workers and others throughout the Welsh community that the Telegraph said exists primarily because the mill is there.

“This is the only gig in town, the only big employer left,” said Gary Keogh, who has worked at the Tata-owned plant for 27 years. “It is the last integrated steel mill in the country, the last of the last, the last outpost.”

According to the Telegraph, The Port Talbot plant was Europe’s biggest steelworks and Wales’s largest employer by the time it was the Steel Company of Wales in the 1950s. Several generations later, Tata bought the plant for £6.2 billion in 2007.

Today, about a fifth of Port Talbot relies on the works for employment, even though the plant has fallen from 20,000 workers at its peak to 4,500 now depending on the number of contracts it has.

© / RicAguiar

Last year, Tata-owned mills in Scunthorpe and Lanarkshire lost 1,200 jobs. Thai-based SSI also shed 2,200 at its plant in Redcar. And just last week, Sheffield Forgemasters cut 100 steelworkers.

The newspaper also reports that the domino-effect of the steel industry is significant. A 2012 study by Cardiff University reported that Tata employees represented about 8 percent of Wales’s entire industrial and mining output, with the company supporting 10,000 jobs in other industries.

Spiraling Trend

Still, the layoffs in the past week are hardly the first.

Last year, Tata-owned mills in Scunthorpe and Lanarkshire lost 1,200 jobs, according to the Daily Mirror. Thai-based SSI also shed 2,200 at its plant in Redcar.

And just last week, one of the last remaining steelworks in Sheffield—Sheffield Forgemasters—cut 100 jobs in the shadow of the Port Talbot crisis.

The Daily Mirror reported that one in six of 30,000 U.K. steel jobs have disappeared within the past 12 months.


Tagged categories: Carbon Steel; Galvanized steel; Government; Layoffs; Stainless steel; Steel; Structural steel

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