Severstal Cuts Back At 2 Plants in U.S.

Severstal is putting 800 workers on part-time shifts at two of its plants in Ohio until further notice due to the economic slowdown in the United States, a negotiator for the plant's labor union said Thursday.

"So far, we have agreed that 800 people will be working only two weeks a month, while the other 1,600 will be working all the time," John Saunders, contract coordinator for the United Steelworkers with West Virginia-based Severstal Wheeling, said by cell phone.

The union said the workers would be idled at Severstal Wheeling's facilities in Steubenville and Mingo Junction.

"Mr. Mordashov told us we [currently] have no orders," said Bob Crowe, a United Steelworkers representative at the Mingo Junction plant, which produces hot-roll bands used in construction and pipe-making. "We've only got work for three days. Nobody's buying anything — construction materials, cars or appliances."

Crowe said he and his colleagues saw the trouble coming six weeks ago.

"We switched to a special regime of work — one week on, one week off, because of the lack of contracts," he said by phone. "We strongly believe it won't last for long, and we'll get new orders soon."

Alexei Mordashov, majority owner of Severstal, the fourth-largest steelmaker in the United States, earlier this week pledged further investment in the country during a tour of the company's plants there.

"Despite all its ups and downs, we believe in the long run the United States will do very well,'' Mordashov said at a conference in Washington, Bloomberg reported. "We're going to invest further in our facilities."

Severstal's press office declined to comment on the layoffs Thursday.

Russian steelmakers have been increasing their presence on the U.S. market in recent years. Evraz has bought Oregon Steel Mills, Claymont Steel Holding and IPSCO, while Novolipetsk Steel is set to close deals on purchasing Beta Steel and John Maneely by year's end.

Evraz said Thursday that it had no plans to cut production or jobs at its U.S. plants.

"The products we make in the U.S. are in good demand, and the prices on them are also quite high," the company said in an e-mailed statement.

Novolipetsk Steel said it would be able to comment on its U.S. plants only after its acquisitions were finalized.

"This lay-off has very little to do with global liquidity or steel prices," said Rob Edwards, senior metals and mining analyst at Renaissance Capital. "The key difference between Severstal and [other Russian steel firms in the United States] is that Severstal has acquired assets that are in distress," Edwards said.

"The assets are being absorbed into an existing portfolio from which synergies can be extracted. This inevitably means job losses. It was expected. Wheeling Pitt as a standalone asset was not viable."

Severstal acquired West Virginia-based Esmark and its subsidiary Wheeling-Pittsburgh Steel this summer. It also runs WCI Steel in Ohio, Sparrows Point in Maryland, SeverCorr in Mississippi, Rouge Steel in Michigan and miner PBS Coal in Pennsylvania.