Steel makers cut jobs, curb costs

Steel makers in particular are feeling the pinch. Mid-cap Highveld Steel and Vanadium said when releasing first-quarter results last week that it would embark on a labour restructuring programme as orders remained at low levels and steel prices kept going down.

The Witbank-based company has already drastically reduced output, with the production of cast blocks now 18.3% below output at the end of last year, plate output reduced by 32%, coils down 60.5% and sections output 75.2%.

With no sign when demand will improve and prices stabilise, Highveld will now also resort to job cuts, with as many as 300 on the line.

Highveld's larger peer, ArcelorMittal SA, is also in the doldrums, but while the group last year cut back on contract work it has not yet opted for job cuts.

Mittal spokesman Sven Lünsche said last week the group was targeting a benchmark maximum production cost of US$300 a ton at its operations globally. The group wants to remain profitable over the next few years, but also to position itself to take advantage of the upswing when global markets turn.

Local operations are still well off this target. Cost of production was at between $340 and $420 a ton, Lunsche said, and the group was looking at a wide range of measures to cut costs. These could include shortening its work week.

“It is a steep target and we are looking at achieving it later in the year. The sooner you get there, the better,” Lunsche said.

Mittal has also cut production and output was at 60% to 65% total capacity.

Jobs are also on the line at struggling heavy duty equipment manufacturer Bell Equipment. The Richards' Bay-based company in March appealed to the Industrial Development Corporation for a R220m loan. Bell has already laid off 800 contract workers and cut production at its plants in Germany and Richards Bay, and has now also announced that it would embark on a voluntary retrenchment programme to ease production expenses.

Bell group strategy and public affairs director Guy Harris last week said Bell aims to cut its wage bill 40%.

Source: Business Day

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