Steel giant’s restructuring galvanises opposition

Concerns over the future of the Walloon region of Belgium have been raised by steel giant ArcelorMittal’s decision to restructure its operation in Liège. Social partners are discussing the impact of the restructuring announced in January 2013. National and regional governments are trying to work out alternative solutions for the future of the plant. ArcelorMittal, meanwhile, is adamant itwill not sell the business, preferring to move assets to other countries.

Background

Management at Belgian steel giant ArcelorMittal have been wrestling with the problems of a global decline in demand for a number of years.

Figures from the World Steel Association have shown a slowdown in the demand for steel all over the world and especially in Europe. This is partly due to the on-going global economic crisis. Competition from emerging economies such as Brazil, China and India, where production costs are lower, has also been a factor in ArcelorMittal’s falling profits.

As a result, since 2003 ArcelorMittal has continued to restructure its activities all over Europe. The Belgian site in Liège closed two blast furnaces, one rolling mill and one steel works in 2003, with more than 1,700 jobs being lost (see ERM factsheet 2289 ). Five years later, the management announced its intention to cut 850 further jobs within administrative and commercial units (ERM factsheet 12288 ). In 2009, they closed a plant specialising in the stripping of stainless carbon that had 150 employees (ERM factsheet 13281 ).

Two years later, the company decided to stop production from two smelters and another 795 jobs were lost (ERM factsheet 19093 ).

More recently, in a direct reaction to the declining demand for steel, the management announced on 24 January 2013 that it would close 7 of its 12 manufacturing lines at its cold processing phase, with the aim of cutting 1,300 jobs (ERM factsheet 23213).

This latest move will mean the ArcelorMittal company, which employed more than 5,400 people in Belgium in 2003, will cut its workforce to just 800.

Shock at latest announcement

The restructuring in January 2013 came soon after an announcement in December 2012 that management was to develop an industrial plan for the plant. Part of this plan involved an investment of €138 million.

For unions and workers, it appeared they could finally escape from a never-ending process of restructuring under the terms of the so-called Renault Law which, in the late 1990s, established procedures for social dialogue in the event of mass redundancy or the closure of a company (BE0004309F). The announcement of further restructuring at ArcelorMittal just a month later came as a shock to the whole country, and especially to the region of Liège.

According to a study carried out by the Union of the Self-Employed (UCM) among 2,700 local companies, the restructuring of ArcelorMittal will have a huge impact on both employment and the local economy. The survey showed 46% of the companies that responded expected turnover to decrease for the next three years. Among those, 30% predicted losses of 20%.

The study also showed that 47% of companies interviewed did not intend to hire any new staff, even temporary workers, in the near future. In addition to the 1,300 layoffs at ArcelorMittal, it is thought that 6,300 other indirect jobs are under threat.

Reactions to the news

Despite ten years of restructuring and several redundancy announcements, unions never stopped believing in the viability of the Belgian steel industry. During the many rounds of job losses, unions continued to work closely with management to reduce the impact of the restructuring. They made efforts to reduce the number of compulsory job losses and negotiate sustainable conditions for those who were made redundant.

Unions involved in the bargaining process for white-collar workers included the National Federation of White-Collar Workers (CNE) and the Belgian Union of White-Collar Staff, Technicians and Managers (SETCA). Unions representing blue-collar workers were the Confederation of Christian Trade Unions – Metal (ACV-CSC METEA) and the Belgian General Labour Federation – Metalworkers (MWB-FGTB).

Over the past few months, a number of strikes and demonstrations have taken place over the restructuring plans. Strikers hoped to not only protest about the job losses, but to also trigger a reaction from the Walloon and federal governments as well as the European Commission.

In January 2013, a few days after the most recent restructuring announcement, a violent demonstration occurred in front of headquarters of the Walloon government when protesters clashed with police.

Regional Prime Minister of the Walloon government Rudy Demotte said that ‘No one should doubt our common determination. We are ready for a showdown and all routes will be studied by the taskforce whose mission is to find a new buyer for the plant.’

However, the management of ArcelorMittal has never shown any intention of selling the company. In February, a demonstration organised by ArcelorMittal workers from France and Luxembourg, as well as Belgium, took place in front the European Parliament building in Strasbourg. The aim of the demonstration was to alert European ministers to the situation in the steel industry.

Unions said a company which closed a plant but did not want to sell it was a company not playing by the rules of free competition in force in Europe.

The unions had the opportunity to discuss the issue in February 2013 with European Commissioners Antonio Tajani, László Andor and Connie Hedegaard during the Third High-Level Roundtable on the Future of the European Steel Industry. However, the European industrial plan proposed during the fourth roundtable in May was rejected by Belgian unions and by the Walloon Minister for the Economy, Jean-Claude Marcourt, because they did not feel it offered any solutions to the current issues.

Political debate

In November 2012, unions requested that both the Walloon and federal governments looked closely at the future of the steel industry. As a result, bipartite discussions took place in December 2012 between the management of ArcelorMittal and the Walloon government.

It was decided that they should set up a joint social fund of €40 million dedicated to the creation of firms and jobs in the region. One of the main aims was to find jobs for people made redundant over the past few years.

When the restructuring announcement was made a month later, unions and the Walloon government created a taskforce to evaluate the crisis at ArcelorMittal and to propose possible solutions for the future sustainability of the steel industry. The taskforce is composed of the high profile investment bank Degroof and strategy consultancy Roland Berger.

This was the first time the Walloon government had taken a firm position by declaring that it would do everything possible to save the steel industry. It said it was willing to create new legal tools to meet its objectives.

Minister Marcourt called on Lakshmi Mittal, the UK-based Indian steel magnate who is the Chair and CEO of ArcelorMittal, to prove his intention to invest in Wallonia. Marcourt said:

if it is your intention to accept your social responsibilities, then give the (industrial) tools to someone who can succeed where you failed; otherwise be aware that we will use everything that we can to make you give in.

However, it is not clear how the government can put pressure on the company. The Walloon Parliament has debated the possibility of the government temporarily managing the firm, and potential ways to force Mittal to sell the company.

The Belgian Prime Minister Elio Di Rupo, in a joint statement (in French) with the Walloon government, backed the fight to keep the plant open and he announced the creation of a taskforce within the Belgian Federal Parliament. He also proposed an investigation into changes to the Renault Law to give more time to find a new buyer, even though ArcelorMittal has given no sign that it wishes to sell the company.

Selling the business has been far from the minds of management. The company has been busy moving equipment out and asked the local authorities to knock down two buildings at the plant. Tools, equipment and stock have been shipped to Brazil and India.

According to the Walloon Union of Enterprises (UWE), the company gains in two ways from its current initiative, firstly because the cost of production is lower in other countries, and secondly because Europe always needs steel and the unions say European firms will have no other choice than to buy from overseas, so the Mittal companies will not lose their market by moving production elsewhere. The unions add that, by keeping its Belgian plants, the company hopes to prevent competitors moving into Europe.

This is not acceptable for the two governments. This is why Jean-Claude Marcourt is putting together a regional decree to provide a legal tool that allows public authorities to take control of companies deliberately abandoned by their owners or management.

However, employers’ organisations have come out strongly against this plan.

Last chance to keep jobs in Liège?

On 17 July 2013, the company ArcelorMittal launched a new call urging unions to accept the new industrial plan proposed for Liège. According to the management, this is an improved version of the proposal made on 24 January 2013 that is based on negotiations and discussions they had with all stakeholders. The key elements are:

  • the hot-dip galvanising line number five will no longer be closed and will have an annual minimum load guarantee;
  • line number four will not be dismantled, making it available if the market improves.

This means that the site of Flemalle will not be closed. The scheduled closure of the other manufacturing lines announced on 24 January will also be suspended. The company has furthermore confirmed its commitment to an investment programme of €138 million.

Although some unions have declined all recent invitations to enter discussions, the CEO of ArcelorMittal Liège hopes to sign an agreement based on this proposal in the coming weeks.

Commentary

Many workers believe that the current situation could have been avoided. Indeed, they consider that the regional and national governments could have been more proactive and acted earlier. However, over the past few months the authorities have shown their willingness to search for sustainable solutions for the problems at the plant, for the workers and the region.

The idea of bringing in temporary management for the company has even been considered. The unions have warned that it will be important to find a buyer who is an industrialist and not a financial speculator.

However, it is perhaps too early to speak about a new owner. Indeed, the last proposal of ArcelorMittal could change the outcome.

Michel Ajzen, Institut des Sciences du Travail-UCL

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