SSAB Reduces Costs and Personnel
The economic downturn appears to be affecting the aerospace market in more ways than sales. Vendors are now having to cut costs and labor in order to survive. One industry hit heavily by the recession is the steel sector. As a consequence of the severe downturn in the steel market and the uncertain prospects for 2009, SSAB is undertaking a cost savings program that is estimated to reduce operating costs by at least SEK 1 billion per year. As part of the program, SSAB intends to reduce its workforce by 1,300. The savings program will be implemented in 2009 and the full impact is expected to be felt in 2010.
“I regret that we must announce this reduction in personnel. But demand for steel has fallen sharply in the autumn and we must adapt our costs to the new conditions,” says SSAB’s CEO, Olof Faxander. “We are doing this to strengthen SSAB’s future competitiveness and will continue to develop the company’s successful niche strategy.” Our expectations regarding prices for the fourth quarter, as stated in the interim report for the third quarter, have not changed. But, as SSAB previously announced (November 19, 2008), demand for steel has fallen rapidly. Demand has fallen in all geographic markets and in all customer segments. This is particularly the case with regard to the transportation, building and infrastructure sectors. It is against this background that SSAB is now implementing measures which are intended to strengthen profitability and cash flow.
The cut-back in personnel affects in total 1,300 people throughout all divisions and subsidiaries . It is intended that the reduction will take place primarily through a reduction in the number of consultants and contractors and a reduction of approximately 1,100 employees in the Group.
In the Strip Products Division this affects approximately 450 persons and in the Plate Division approximately 350.
Operations in the North American Division are in part conducted using third party contractors, and a reduction will take place through a cut-back in the use of approximately 140 such contractors.