ArcelorMittal Halts Production At Cleveland Steel Plant, Plans To Layoff

New York, NY (AHN) - The raw material demand is declining with the rising inflation, slowdown in economy and global credit crunch, leading to a negative impact on the production of steel.

ArcelorMittal (NYSE: MT) is probably the first victim of financial crisis in steel industry as it has temporarily halted the output at its plant in Cleveland.

But it doesn't end at idling two blast furnaces at the plant for ArcelorMittal, the company is expected to offer voluntary layoffs with partial pay starting next week, according to the Cleveland newspaper.

The company may layoff as many as 400 employees, Mark Granakis, president of the United Steelworkers Local 979 in Cleveland, told the newspaper.

The plant has around 1,450 union members. The Luxembourg-based company, a leading producer of steel, has around 320,000 employees in more than 60 countries.

Recently the company had indicated that it planned to slashed down steel output by as much as 15 percent in the plants across the world after construction and automobile industry are suffering from the on-going slowdown.

The company said in a statement that it is "taking prudent and responsible steps to adapt supply to demand in the light of present market conditions."

In Cleveland plant, the company is expected to keep jobs related to maintenance and finishing work on existing inventory, the reports said.

Early October, the company reaffirmed its third quarter guidance in excess of $8.5 billion during a meeting with investors and expects operating income to be higher in the second half of 2008 compared to the record first half of 2008.

In 2007, the steelmaker had reported full-year revenue of $105.2 billion and crude steel production of 116 million tonnes, representing around 10 per cent of world steel output.

ArcelorMittal is expected to report its third quarter and nine-month results on Nov. 5.