Controversy over Arcelor plant closures

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In January 2003, the Arbed steel group announced a restructuring plan that involves the closure of six smelting furnaces in Europe by 2010, including two Cockerill Sambre sites in Liège, Belgium. Several thousand jobs, both direct and indirect, will be affected in Liège. The Walloon regional government, a minority shareholder in Arcelor, considers the situation to be unacceptable, while the Belgian trade unions are outraged.

On 24 January 2003, Arcelor, the world's largest steel producer, unveiled the content of a restructuring plan that will involve the closure of six smelting furnaces in Europe between now and 2010. These include two furnaces belonging to the Arcelor subsidiary Cockerill Sambre in Liège, eastern Wallonia (to be closed over 2005-6), as well as sites in Florange in the east of France, and Bremen and Eisenhüttenstadt in Germany. These closures affect Arcelor’s main area of activity, the production of flat carbon steel.

In the case of Cockerill Sambre, the entire 'hot phase'- ie the transformation of ore into cast iron and then into steel, and hot rolling - will be closed down by 2006. In Liège, this activity employs about 1,700 workers out of a total Cockerill Sambre workforce of 5,800. Arcelor has, however, promised to retain cold rolling in the Liège area.

The Arcelor chief executive Guy Dollé justified the gradual rundown of the six smelting furnaces on the grounds that it aims to 'guarantee the competitive position' of the group. Arcelor wants to concentrate future investment on rebuilding smelting furnaces producing flat carbon products in the best-performing sites, that is to say those near the coast. The decision had been based on the conclusions of an in-depth study which, Mr Dollé stated, took account of market shifts in prices and volumes, cost increases, the amount of investment required and environmental problems. Arcelor management has promised to work with the social partners in putting in place 'transitional measures for each employee concerned', and 'to manage the reconversion of the industrial sites in a professional manner'.

When Cockerill Sambre was repurchased by Usinor in 1998 (BE9812158N), the French iron and steel group promised the Walloon regional authorities that it would modernise the two smelting furnaces in Liège, and this undertaking was confirmed in early 2002 when Arcelor was formed out of a merger between Usinor and the Arbed (Luxembourg) and Aceralia (Spain) groups (LU0201191F). The Walloon region still holds a 4.25% stake in Arcelor. When the restructuring plan was announced, Arcelor reminded the Walloon region of the existence of a provision that partly releases it from its undertaking to rebuild the smelting furnaces in Liège through a compensatory payment of EUR 19.3 million.

The decision announced on 24 January has whipped up a huge political and social storm in Wallonia. A few hours after the plan was made public, the Walloon regional government announced that it intended to take Arcelor to court for non-compliance with the agreements between the Walloon region and Usinor/Arcelor. 'The strategic choice that Arcelor is heading towards is unacceptable … There has been a departure from the spirit of the agreement, and this has resulted in legal action,' stated Serge Kubla, the Walloon Minister of the Economy. Mr Kubla believes that payment of the EUR 19.3 million compensation does not release Arcelor from its commitments, as the agreement provides for an assessment at the end of 2006 – and not before – as to whether the conditions for rebuilding Liège’s two smelting furnaces (an estimated investment of EUR 50 million) have been met. 'In legal terms', Mr Kubla stated, 'we are now in a position to take Arcelor on.'

Jean-Claude Van Cauwenberghe, the Minister-President of the Walloon government, takes the view that Walloon region has a duty to fight the decision to the bitter end: 'There is still a period of three years during which it will still be possible for a positive decision to be reached.' On 30 January, his government announced that it was determined to bring Arcelor management back to the negotiating table. The Walloon region has decided to retain three firms of lawyers and the Déminor company (specialists in shareholder disputes) to examine the case and advise the region. The region has also called on the expertise of the former Cockerill Sambre boss, Jean Gandois. On 10 February, Mr Van Cauwenberghe was due to meet with Arcelor management again, on this occasion accompanied by the Belgian Prime Minister, Guy Verhofstadt. Mr Van Cauwenberghe also met the French Prime Minister, Jean-Pierre Raffarin, on 23 January with a view to obtaining his support.

The trade union reaction has been scathing, but workers at Cockerill Sambre have so far restricted their protest actions to temporary stoppages and demonstrations. 'Arcelor must reverse its decision,' stated Paul Liakos, the official at the Confederation of Christian Trade Unions (Confédération des Syndicats Chrétiens/Algemeen Christelijk Vakverbond, CSC/ACV) with responsibility for metalworkers in Liège. The Belgian General Federation of Labour (La Fédération Générale du Travail de Belgique/Algemeen Belgisch Vakverbond, FGTB/ABVV) has announced that it is suspending its involvement in 'Plan Delta' at Cockerill Sambre. This plan is designed to achieve a raft of savings needed to place the production costs of continental iron and steel production (including Liège) on a par with those of the more profitable coastal production sites. FGTB/ABVV estimates that, as a result of the closures, almost 10,000 jobs will go in the Liège region at Cockerill Sambre, among subcontractors and in local firms.

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