ArcelorMittal has announced it would shut down two of its steel plants in the US, rendering more than 550 people jobless.
The two plants are in Lackawana in New York and at Hennepin in Illinois.
While the Lackawana facility has 260 full-time employee, the Hennepin steel plant has 285 people. A company spokesperson said the Lackawana steel plant would be closed by April 30. The exact date of closing down the Hennepin plant has not been announced yet.
The decision has been taken in view of the global economic meltdown that has hit the company's finances and substantial drop in demand of steel. ArcelorMittal had recently announced a cut its production in North America by 40 per cent.
"This is in-line with the temporary global production cuts of approximately 35 per cent announced as part of the company's third quarter earnings on November 5," a company spokesperson told IANS.
The decision to close ArcelorMittal Lackawanna is purely an economic business decision based on the extraordinary economic conditions we face today, the company said.
The Lackawanna operation has inherent disadvantages including the distance from its substrate supply and the distances from many of its end-use customers. All of these disadvantages lead to higher costs, longer customer lead times, and higher inventory levels than other ArcelorMittal finishing facilities in the USA, the company said.
As a result of the extraordinary economic conditions we are facing, ArcelorMittal has reviewed the rationale and viability of redundant operations across the US, the spokesperson said.
"Through this review, it has become evident that duplication exists in our pickler, tandem mill, batch anneals, temper mills and coating line operations. To remain cost competitive, the company had to make the tough decision to close the Hennepin facility, consolidate operations and move production to other ArcelorMittal facilities in the US," he said.
ArcelorMittal - owned by the London-based Lakshmi Mittal - employs more than 320,000 people in over 60 countries, including 18,000 at 17 US facilities, making it the world's largest steel company.