ArcelorMittal, the world’s largest steelmaker, unveiled plans on Thursday to slash up to 9,000 more jobs, saving $1 billion a year in response to a global economic downturn.
The company said it would launch a voluntary redundancy scheme for largely white collar staff to make the cuts, which could affect about 3 percent of its workforce.
It warned on Tuesday that it might lay off 16 percent of its U.S. workforce, or around 2,400 people, as it cut steel output there by 40 percent.
“The global economic reality means that it is only sensible to adopt such measures,” Bernard Fontana, a member of ArcelorMittal’s management committee, said in a statement.
ArcelorMittal, which has a global workforce of over 326,000 in more than 60 countries, has called a meeting of the European works council in Luxembourg on Thursday to present the plans.
Investor concerns about the impact of a dramatic downturn in steel demand on the industry have been building for months. The company’s shares hit a four-year low of 12.93 euros a week ago and five-year credit default swaps in the company, a sign of how likely the market believes it will default on debt, have risen above 900 basis points from below 100 at the start of the year.
A rapid slowdown in sales by carmakers, key users of steel, the Chinese economy cooling to single-digit growth, and tougher times for Russia all bode ill for the sector, which has closed furnaces, slashed production and extended holiday breaks.
ArcelorMittal shares rose steadily on Thursday and were 3.5 percent higher at 19.4450 euros by 8:00 a.m. EST. The DJ Stoxx European basic resources index was up 3.1 percent.
The Luxembourg-based company announced earlier this month that it would cut worldwide production by 35 percent, up from a previous target of 15 percent. It also said it would pause its growth strategy and seek deeper cost cuts.
The company could not give a geographical breakdown of the planned 9,000 job cuts, nor an envisaged timescale.
Michael Shillaker, analyst at Credit Suisse, described the industry’s massive production cuts as unparalleled. “There can’t be anyone out there who isn’t impressed,” he said, adding they should be temporary as long as the downturn did not become a depression.
“Arguably by Q2 we could see steel prices rebound … and in 12 to 18 months we could be talking about capacity constraints again.”
Earlier on Thursday, the company said it was considering output cuts and short-time working in December at its German plants in Hamburg, Bremen, Duisburg and Eisenhuettenstadt.
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