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SSAB to Reduce Costs, Personnel

12/09/2008 - SSAB announces plans to reduce its workforce by 1300 as part of a cost savings program that is estimated to reduce operating costs by at least SEK 1 billion per year.

SSAB announced plans to reduce its workforce by 1300 as part of a cost savings program that is estimated to reduce operating costs by at least SEK 1 billion per year. The company said the savings program would be implemented in 2009 with expectations that the full impact will be felt in 2010.
 
"I regret that we must announce this reduction in personnel. But demand for steel has fallen sharply in the autumn and we must adapt our costs to the new conditions," said SSAB's CEO, Olof Faxander. "We are doing this to strengthen SSAB's future competitiveness and will continue to develop the company’s successful niche strategy."
 
The company said the cutbacks are the result of the severe downturn in the steel market and uncertain outlook for 2009. Although it has not changed its 4th quarter price expectations since its third-quarter interim report, demand for steel has fallen rapidly in all geographic markets and all customer segments. The company said this was particularly true for the transportation, building and infrastructure sectors.
 
The cut-back in personnel will affect all the company’s divisions and subsidiaries. In addition to reducing the number of consultants and contractors, the company also expects to reduce approximately 1100 employees from within the Group, including about 450 in its Strip Products Division and approximately 350 in the Plate Division.
 
In its North American Division, the company carries out part of its operations using third-party contractors; the workforce reductions will affect approximately 140 such contractors.
 
In addition, the company’s Plannja subsidiary intends to reduce its staff by 120 in Luleå, Sweden and by just over 30 in Ålborg, Denmark, as parts of these facilities’ production will be relocated to Järnforsen and Landsbro in Småland, Sweden. The reduction will help to improve the company’s coordination and logistics, ultimately strengthening Plannja's competitiveness. The Group’s wholesaler, Tibnor (in which SSAB holds an 85% stake) intends to close the operations in Malmö, in southern Sweden, affecting some 50 employees.
 
In the rest of the operations, about 100 employees will be affected, including previously announced changes. The company has already commenced negotiations with the labor unions in Sweden.
 
"We are actively working to mitigate the impact on the employees and the localities in which we conduct operations," said Olof Faxander. He also said the Group’s Executive Committee would continue its regular reviews to determine how production will be adapted to future demand.
 
Meanwhile, the company is actively adjusting production according to market conditions to avoid a build-up of inventory. One of the company’s blast furnaces in Oxelösund is currently undergoing repair, while the other is operating as normal. The blast furnace in Luleå is operating at minimum capacity.
 
The company said its savings program will be carried out in 2009 with the full impact expected to be realized in 2010. The cost of the program, approximately SEK 550 million, will primarily impact results for the fourth quarter of 2008.