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Weak Stainless Market Drives Outokumpu Production Cuts
11/11/2008 - Low order loads are prompting Outokumpu to initiate statutory negotiations on temporary layoffs at its Tornio plant in Finland.
Low order loads are prompting Outokumpu to initiate statutory negotiations on temporary layoffs at its Tornio plant in Finland.
According to Outokumpu, the layoffs would apply to selected production lines, maintenance and to some office work. Negotiations will focus on the full or part-time layoff of a total of 1500 employees. Layoffs would be carried out mainly by reducing shifts (depending on the production line and duties), and would continue for a maximum of three months. The statutory negotiations are expected to take two weeks.
"It is very unfortunate that we are forced to take these actions,” commented Outokumpu's CEO Juha Rantanen. “We are currently not able to offer full-time employment to all of our people.”
Outokumpu had noted the current weakness in stainless steel demand in the outlook of its third quarter interim report. The company currently expects its fourth-quarter delivery volumes to be at about the same level or slightly above the volumes in the third quarter, which is clearly below the company's full production capacity.
“The global economic turmoil has an impact on stainless steel demand, which means that our customers are not placing orders at a pace that would allow us to run production at full capacity,” continued Rantanen. “We are very committed to work with the employee representatives in order to minimize the impacts on our employees, their families and the local communities.”
Outokumpu Group employs 2300 at the Tornio Works in Finland, out of a world total of 8700 employees. The company's production sites in other countries are taking similar actions to adjust their operations to reflect customer order volumes. In Sweden several sites are already taking measures, for example by reducing shifts.
Outokumpu said that the future outlook it published in its third-quarter interim report stays unchanged. The company expects its underlying operational result in the fourth quarter of 2008 to be slightly positive. At current nickel prices, the company expects further nickel-related inventory losses of some EUR 50 to 100 million (including the impact of hedging) in the fourth quarter, which would turn Outokumpu's operating profit negative.
