ArcelorMittal Hunedoara, part of the global steel manufacturing giant ArcelorMittal, has announced a significant scaling down of its operations at the Romanian steel plant. Starting from December 9, 2024, the mill will reduce its activity until the end of the year. This decision is a direct response to a lack of orders, which has made it economically unfeasible to continue full-scale production.
The reduction will directly affect approximately 600 employees who work at the Hunedoara plant. In an effort to mitigate the impact on workers, ArcelorMittal has decided to pay 75% of their base salaries during this period. This is a significant step in ensuring that employees continue to receive financial support during the downtime, though it does not fully replace their normal earnings.
The company's decision to scale back operations is not unprecedented. ArcelorMittal took similar steps in 2022, when the steel mill faced similar economic difficulties caused by low order volumes. This highlights an ongoing challenge for the company, which, despite being one of the world’s largest steel producers, struggles with fluctuations in demand that can affect production levels.
The Hunedoara steel plant, located in the western part of Romania, has been facing significant financial pressures. In the first nine months of 2024, the plant reported a net loss of RON 80 million (approximately EUR 16 million), a dramatic increase from previous losses. Additionally, the company's revenues during this period fell by 13% compared to the previous year, dropping to RON 420 million. This poor financial performance is a result of a combination of global market trends, local economic factors, and the plant's reduced output capacity.
In terms of market performance, the plant’s market capitalisation dropped by 3.45% year-on-year, further indicating the struggles faced by ArcelorMittal Hunedoara in maintaining its competitive edge. The reduction in activity comes at a time when the Romanian economy, particularly in industrial sectors like steel production, is experiencing a slowdown, further complicating the plant's efforts to recover.
ArcelorMittal Hunedoara is not the only unit in Romania facing difficulties. The multinational corporation, which owns several steel plants across the country, including in Iași and Roman, is grappling with similar challenges across its Romanian operations. Despite these setbacks, ArcelorMittal remains a major employer in Romania, with a workforce of around 127,000 employees worldwide. This large workforce, combined with the company's significant global presence, has allowed ArcelorMittal to maintain operations in multiple countries despite the regional downturns.
While the reduction in operations at Hunedoara is expected to be temporary, it highlights the vulnerability of the steel industry to global economic trends and market conditions. The lack of orders is a reflection of broader challenges within the steel sector, including fluctuating demand, changing market dynamics, and the rising costs of production materials and energy. The decision to cut back production at the Hunedoara plant also underscores the need for companies in the steel industry to adapt quickly to changing market conditions and explore ways to optimize operations during periods of reduced demand.
In the face of these challenges, the company is likely to continue its efforts to improve financial performance and reduce operational costs. However, the outcome of this reduction in activity and its longer-term effects on the local community in Hunedoara, which heavily relies on the steel plant for employment, will need to be closely monitored in the coming months.
