November 19, 2008

U.S. Steel cuts 677 jobs, blames weaker demand

TORONTO

U.S. Steel says it is laying off 677 workers in Canada and the United States because of weakening customer demand, another sign of trouble for Canada’s blue-collar manufacturing sector.

United States Steel Corp. spokesman John Armstrong said the layoffs are effective immediately for 500 employees in the United States and 175 in Canada, where the company has 3,500 employees.

The layoffs will impact workers at the Pittsburgh-based company’s Hamilton and Lake Erie Works in Nanticoke, Ont.

The steel cuts are the latest to hit Canada’s manufacturing sector, where auto companies, lumber producers, textile makers and others have already shut down mills and cut thousands of jobs because of a high dollar, slumping demand from the United States market and a big decline in the car market.

The steel industry, which supplies the battered auto sector, is now being caught in that economic downdraft.

“The dramatic downturn in the economy has really negatively affected the overall business,” said U.S. Steel Canada spokesman Trevor Harris.

“We’ve adjusted production across all our operations to stay in line with our customers’ demand, and while we’ve made every effort to maintain employment levels at our operations, we now have to adjust our workforce to match our production levels.”

U.S. Steel bought the former Stelco Inc. last year for about $1 billion, adding the troubled Hamilton steelmaker to its North American operations.

Stelco had restructured its business under bankruptcy protection a few years earlier and put itself up for sale.

The slumping U.S. auto industry and battered housing, appliance and commercial building sectors have cut demand for steel used in construction, cars and trucks as well as fridges and stoves.

Other Canadian steelmakers, including the former Dofasco in Hamilton and Algoma Steel in Sault Ste. Marie, now owned by European and Indian companies, respectively, could also come under pressures to streamline operations, although their markets are a little different.

ArcelorMittal Dofasco spokesman Larry Meyer said his company isn’t planning any layoffs but is doing what it can to cut operating costs as it deals with a tougher business environment.

“We’ve been reducing the number of contractors that we’ve been using ... we reduced the amount of casual labour that we’ve been using, we have taken overtime right down to absolute minimum levels and we have a two-week Christmas shutdown planned,” Meyer said in an interview with The Canadian Press.

“We’re trying to do everything we can so that we don’t impact the employment stability of our permanent employees.”

Essar Steel Algoma last week reported a record quarter to the end of September, a feat that won’t likely be repeated in the short term as the northern Ontario steelmaker grapples with a worldwide economic slump.

Spokeswoman Brenda Stenta said Essar Steel Algoma is doing what it can to avoid layoffs, but “we recognize there is the potential for possible layoffs perhaps down the road.”

Canadian Press

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