SSAB is reducing costs and personnel
December 08, 2008 9:15 CET 6 min read
As a consequence of the severe downturn in the steel market and the uncertain prospects for 2009, SSAB is undertaking a cost savings program that is estimated to reduce operating costs by at least SEK 1 billion per year. As part of the program, SSAB intends to reduce its workforce by 1,300. The savings program will be implemented in 2009 and the full impact is expected to 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," says 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."
Our expectations regarding prices for the fourth quarter, as stated in the interim report for the third quarter, have not changed. But, as SSAB previously announced (November 19, 2008), demand for steel has fallen rapidly. Demand has fallen in all geographic markets and in all customer segments. This is particularly the case with regard to the transportation, building and infrastructure sectors. It is against this background that SSAB is now implementing measures which are intended to strengthen profitability and cash flow.
The cut-back in personnel affects in total 1,300 people throughout all divisions and subsidiaries . It is intended that the reduction will take place primarily through a reduction in the number of consultants and contractors and a reduction of approximately 1,100 employees in the Group.
In the Strip Products Division this affects approximately 450 persons and in the Plate Division approximately 350.
Operations in the North American Division are in part conducted using third party contractors, and a reduction will take place through a cut-back in the use of approximately 140 such contractors.
As a consequence of the heavy downturn in the construction market and the restructuring of its own operations, the Plannja subsidiary intends to reduce its staff in Luleå, Sweden and Ålborg, Denmark. Some 120 employees in Luleå and just over 30 in Ålborg are affected since parts of production will be relocated to Järnforsen and Landsbro in Småland, Sweden. Coordination and logistics will therefore become more efficient, which in the long term will strengthen Plannja's competitiveness.
The Group’s wholesaler, Tibnor, in which SSAB holds an 85 per cent 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 already announced changes.
Negotiations with the labor unions in Sweden have commenced.
"We are actively working to mitigate the impact on the employees and the localities in which we conduct operations," says Olof Faxander.
Production is being actively adjusted to market conditions to avoid a build up of inventory. At present, one of the blast furnaces in Oxelösund is undergoing repair, while the other is operating as normal. The blast furnace in Luleå is operating at minimum capacity. The Group Executive Committee will continue regular reviews to determine how production will be adapted to future demand.
The savings program will be carried out in 2009 and the full impact is expected in 2010. The cost of the program, approximately SEK 550 million, will primarily impact results for the fourth quarter of 2008.
CEO Olof Faxander
Location, World Trade Center, Manhattan, 12 noon.
Stefan Enbom, Operations Manager Metallurgy, SSAB Strip Products Division,
Anders Berg, President Plannja
Location, Styrelserummet, head entrance SSAB Luleå, 13.00 CET
Contact: Heidi Wendt, tfn: +46 76-117 41 49
Ronnie Högberg, Operations Manager, Rolling and Coating, SSAB Strip Products Division
Location, Norra Annexet, SSAB Borlänge, 13.00 CET
Contact: Lena Sundin, tfn: +46 70-207 24 02
KG Ramström, Executive VP SSAB Plate Division
Location, Akvariet, head entrance SSAB in Oxelösund, 13.00 CET
Contact: Lena Westerlund, tfn: +46 70-272 94 40