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Weak Stainless Market Prompts Further Cuts for Outokumpu

02/05/2009 - Outokumpu initiates negotiations with personnel in several countries that are expected to result in temporary layoffs for over 2000 people and reduction of about 250 jobs.

In a continued response to very weak stainless steel demand, Outokumpu has initiated negotiations with personnel in several of its operating countries regarding temporary and permanent layoffs. The planned actions are expected to result in temporary layoffs for over 2000 people and reduction of about 250 jobs.
 
The action, which follows a previously announced reduction of 450 jobs in Sweden (December 2008) would bring the company’s total number of job reductions to 700 jobs.
 
The company said the moves are prompted by continuation of the very low order intake. In order to secure cost efficiency and to improve profitability Outokumpu said it would continue to cut production and address both fixed and variable costs. Total fixed cost-savings from all announced actions are estimated to be in the range of EUR 100 million in 2009.
 
 “The past weeks have shown that there is no marked improvement in stainless steel demand,” said CEO Juha Rantanen. “Unfortunately it is now evident that the measures we announced in December are not sufficient in this situation. We regret that these cost-saving actions affect our employees heavily. Our responsibility is to ensure our cost-efficiency and financial strength in this extremely challenging market environment.”
 
At Tornio Works, agreement was reached in December on a number of short-term measures to save costs and adjust to lower production volumes for a period that ends in mid-March 2009. Outokumpu said the cost savings will not be sufficient, however, under the continued low order load, and is now planning to temporarily cease its ferrochrome production (the Kemi mine and Ferrochrome Works), temporarily idle one of its meltshops, and reduce shifts at almost all steel production lines.
 
As a result of the new production cuts, the company will initiate new statutory negotiations on temporary layoffs at Tornio Works in Finland. The negotiations concern about 2000 people, including office and maintenance employees. The company said the layoffs, which would be either full or part-time depending on the production line and duties, would continue until the stainless steel market improves. The statutory negotiations are expected to take six weeks. Tornio Works in Finland employs 2300 people.
 
Outokumpu Stainless Tubular Products (OSTP), which produces welded stainless steel tubes, pipes and fittings, currently employs 1100 persons. The company is currently planning a total of 150 job reductions in Sweden (Nyby, Örnsköldsvik, Storfors and Molkom), Finland (Jakobstad, Tuusula and Veteli), Estonia and Canada due to the difficult market situation. In Finland the negotiations concern both temporary and permanent layoffs.
 
In the Outokumpu Group Sales & Marketing organization, planned adjustment actions will result in job reductions in most of the sales companies and service centers in different countries. The group is targeting a reduction of approximately 50 jobs with layoffs and voluntary arrangements. Additionally about 80 employees are planned to be temporarily laid-off. Negotiations will proceed according to local legislation in different countries. Approximately 1400 people are currently employed by Group Sales & Marketing.
 
In the UK, the company is planning to reduce approximately 90 jobs in the coming months as a result of reduced shifts in the Sheffield meltshop, cost-saving measures in Outokumpu's Alloy Steel Rods (ASR) and the sales company's integration of the former SoGePar activities into its Sheffield based operation. These reductions in the UK together with the previously announced closure of the Sheffield Special Strip plant will take the number of Outokumpu employees to approximately 600 people in the country.
 
Outokumpu previously (December 2008) initiated negotiations with personnel representatives targeting reductions of about 450 jobs in the company's Swedish production sites. These negotiations are still ongoing. Negotiations in Outokumpu's head office in Finland, which have finished, resulted in two weeks' temporary layoff of all employees. Additionally some 20 positions will be reduced.
 
Outokumpu said that it is prepared to take additional action to improve its profitability if the market situation continues to be difficult.
 
Outokumpu operates in some 30 countries and employs more than 8000 people.