Mittal Steel N.V. chairman Lakshmi Mittal has outlined a plan to cut up to 45,000 jobs over five years after its merger with International Steel Group Inc., but steel analysts, union officials and managers say nearly all of those job cuts will be overseas.
John Mang III, plant manager and vice president at ISG’s Burns Harbor plant, which employs about 3,700, said Northwest Indiana and U.S. operations already are tightly run.
The three plants locally employ 10,300 workers, with about 5,000 at Mittal’s Ispat Inland plant in East Chicago and 1,600 at ISG-Indiana Harbor.
“I can say knowing the North American operations that the work force is fairly lean,’’ Mang said. “We are always looking for improving our man-hour efficiencies though technologies and attrition.”
Mang anticipates most of the job cuts will occur at third-world country plants that Mittal owns across the globe.
“They’re very old and not modernized,” Mang said. “They’re building casters and equipment there that lead me to believe the equipment is very archaic.”
Mittal said in his conference call on Wednesday that the number of workers in some of the plants like Kazakhstan is high with thousands of employees at one plant. Mittal acquired many of these operations from governments and in some cases job cuts were outlined when his company bought the plant from the government.
“I do believe where all of those numbers come is from the lack of modern technology,’’ Mang said. “They don’t have modern equipment. They’re just catching up to the modern.”
However, he did say there is likely some overlapping when the two companies come together.
New York-based steel analyst Charles Bradford speculates nearly all of the job cuts will come from Mittal’s overseas operations. “You can’t cut 40,000 people here because they don’t even have that many employees,’’ he said.
Mittal employs between 150,000 and 155,000 and he hopes to bring the work force down to 110,000 by 2010. ISG employs 15,000.
“If you do the math and look at how much production they have outside the U.S. and how many people they have outside the U.S., there’s way too many people,’’ Bradford said.
Bradford said the company will likely cut some managers in the United States, but also says job cuts could come from attrition.
“You don’t need separate management at the two Indiana Harbor plants,’’ Bradford said. “But it’s always possible they could have a number of people getting close to retirement. You may not be eliminating people. They could be retiring.”
ISG spokesman Charles Glazer said Mittal’s comments on Wednesday were in reference to the overseas operations.
Ispat Inland’s president and CEO Lou Schorsch said during a conference call to analysts on Thursday that the company plans to spend $60 million to improve the No. 7 blast furnace at the East Chicago plant. Ispat Inland relined the blast furnace in 2003, but this year will add a fourth stove to North America’s largest blast furnace. The additional stove will increase the wind on the furnace, spokesman Dave Allen said.
On Wednesday, Ispat Inland had reported a record net income of $258.7 million in 2004 — the most money the company has made including the years it was owned by Inland Steel Co.
Schorsch said the company captured iron and steel operations production records, which he credits to the reline of the No. 7 blast furnace in 2003.
Schorsch said the fourth quarter numbers were less than third quarter because of the seasonably low demand and a surge in imports. Ispat Inland’s fourth quarter net income of $41.7 million was down from the third quarter net income of $119.9 million.
Meanwhile, Tom Hargrove, president of United Steelworkers of America Local 1010, said he’s anticipating profit-sharing checks for employees, but doesn’t know how much the check will be yet. He said negotiations are continuing with the company for a new contract at Ispat Inland.
He also said that Ispat Inland’s work force can be trimmed slightly with attrition. “I think the man-hour per ton in Europe is quite high,’’ Hargrove said. “And, we’re pretty low. I think we’re in good shape here and we’re very efficient throughout all of the facilities.”
Hargrove envisions any jobs that would be slashed at Ispat Inland would be non-union workers.
“I don’t want to see anyone lose their jobs, but we don’t represent those folks,” Hargrove said.
