Slowdown effect: JSW halves workforce in US

Hit hard by the global economic crisis, Sajjan Jindal-led JSW Steel has almost halved its workforce at its US steel mills to remain competitive in the current scenario.     

"We have cut jobs by 40-50 per cent at our units in the US in the last two quarters to bring the workforce in line with the capacity utilisation of the mills," JSW Steel Joint Managing Director M V S Seshagiri Rao told PTI.      

The mills altogether employed 950 workers in 2007 when the Texas-based mills were bought at $810 million. The mills can produce 1.2 million tonnes of plates and 0.5 million tonnes of pipes annually and are currently running at only 10-15 per cent of their capacity.      

"Almost all the steel mills in the US are running at much lower production capacity due to the slump in steel demand on account of the economic crisis. We are running our mills at 10-15 per cent of their production capacity," he said.      

Globally steel majors like ArcelorMittal and Corus have come out with programmes to cut their production capacity and jobs aimed at bringing down the operational cost amid slump in demand for their products.      

Even as it has trimmed production and workforce in the US, JSW Steel said it will revive the output with the possible rise in demand for steel in the coming months.

"We are optimistic for things to improve in the coming quarters with the stimuli measures taken by the US administration. We will increase the capacity utilisation in line with the revival in steel demand," Rao said.      

Citing the distressed US economy, the steel major has also deferred its plans to increase its pipe-making capacity by five lakh tonnes.      

On Monday, the company said it has no intentions to sell its Texas-based mills to cut its mounting losses, amid the slump in steel demand.      

"We have no plans to sell our US pipes and plate-making plants. Looking at our forward integration, it is a right strategic fit for the company in the long run," Rao said.      

Even as the US-based mills of JSW Steel are operating below capacity, its domestic plants registered a 60 per cent surge in output at 4.56 lakh tonnes in April compared to the same period last year.      

Hit by the inventory write-downs and demand contraction, JSW Steel posted a loss of Rs 39.93 crore in the fourth quarter ended March 31, 2009. The company had posted a loss in the third quarter financial results as well.