AcelorMittal (NYSE: MT), the world's largest steelmaker, announced Tuesday it would keep an operating unit in Luxembourg shuttered indefinitely, the result of poor demand amid a weak housing market in Europe.
The unit, two work sites that smelted and cast steel rebar, crane rails and casted bars, had been shut down on a temporary basis since October.
The closure of the unit carries some psychological symbolism for AcelorMittal, which is headquartered in the country and employs 5,500 people -- more than 1.5 percent of the small nation's work force. In a statement the company said it planned to either redeploy all affected employees to other group sites in Luxembourg or to keep them via the internal redeployment cell.
Unfortunately the construction market has not recovered from the downturn that started at the end of 2008, and there is still no sign of a meaningful improvement, said Nico Reuter, an operational vice president for Acelor Mittal overseeing the two units.
As a responsible company we need to adapt to this reality to protect the interests of all our stakeholders, including employees. We have a strong commitment from both the unions and the government to use all social tools available, including the proven tripartite system, to avoid jobs losses and other social impacts from the proposed project.
Competition from various corners of the world is putting pressure on steelmaker margins, a situation that has been exacerbated by prospects for weak global growth.
This is the beginning of a number of shutdowns across Europe; Europe can simply no longer compete with the cheaper material being produced in other parts of the world, and consumption of standard-grade steel is also falling in Europe, an unnamed source in the British steel trade told Reuters.
There is only one solution: Steel mills have to shut down.
ArceloMittal ADRs fell 70 cents, or 3.3 percent, to $20.67.