Severstal blaming market for layoffs

The steelmaker is unsure how long the layoffs will last.

STAFF/WIRE REPORT

MORGANTOWN, W.Va. (AP) — Faced with a steel market slowdown and light order books, Severstal North America Inc. said Thursday it is continuing temporary layoffs that began in December.

The layoffs are occurring at various times in various locations but will affect operations in Warren; Wheeling, W.Va.; Sparrows Point, Md.; and Dearborn, Mich.

Severstal said last month that it was shutting down production at the Warren mill, which used to be known as WCI Steel. Union officials said about half of the 1,200 workers would be laid off until perhaps June.

Vice President Melvin Baggett would not say how many workers throughout the company will be affected, noting the layoff count varies weekly depending on production needs.

“It’s not like we’re targeting X percentage of the work force,” Baggett said. “We don’t know where the economy is going. We’re trying to be as optimistic as possible.”

Nor would Baggett say how long the layoffs might last for fear of creating false expectations.

Baggett said the decline in customer orders started in mid-September. Cutting costs now will “ensure that Severstal, its employees and the community are well-placed to benefit when the market begins to stabilize,” the company said in a statement.

Severstal North America is a subsidiary of Russia’s OAO Severstal, which reported 2007 sales of $15.2 billion and a profit of $1.97 billion.

Baggett would not comment on what the slowdown means for a promised $250 million capital investment in U.S. operations, including Wheeling. Severstal completed its acquisition of the former Wheeling-Pittsburgh Steel from Esmark Inc. last summer, promising to invest in its hot strip mill. Executives said then that the mill should be running at full capacity, possibly with slabs from Sparrows Point.

“We sincerely want to spend the money we initially committed to these facilities, but we’re having to be really careful at this point in time,” Baggett said, adding when and whether the investment occurs may depend on how quickly the market turns around.

“We didn’t buy these facilities to shut them down.”