Nicolas Léonard: The announcement of the reorganisation of ArcelorMittal Luxembourg and the loss of 578 jobs sent shockwaves through the unions. I imagine the atmosphere must be tense at the company’s various sites?

Roland Bastian: I must say that the communication of this plan was carried out as we had foreseen. The national management informed the board of directors of ArcelorMittal Luxembourg, which is the holding company that oversees all employees and workers in Luxembourg. Then we met with the employee delegations, as is expected in these situations. We are obviously aware that this reorganisation has consequences, and that downsizing is serious. So, we wanted to go to our employees to communicate, to avoid rumours. I realise that many people have questions about their future, and that this is difficult for them. We are trying to manage it as best we can and have asked managers to be in the field.

Have you given yourself a deadline to complete this restructuring?

The process must now move forward with the social partners and the government, and this first phase must be as short as possible. But it is illusory to set a deadline. If we can influence certain things, we cannot influence everything.

Can you confirm the number of early retirements, retirements... etc that were made public by minister of labour Dan Kersch (LSAP)?

These numbers come from our company. But it’s just a model, estimates. So those numbers were never discussed, so they were never validated. We’ll see what the reality is down the road.

You mentioned the uncertainties experienced by staff. What assurances can you can give them?

We have quality steel mills and rolling mills in Luxembourg. We will not close any sites.

“There was no alternative to what we did”

The unions regret that you did not heed their warnings, which they evoked some months ago. What do you say?

The number of departures we require were not plucked from thin air. It is the result of a long analysis that lasted several months. First of all, we had to estimate the scale of the economic problem, which was complex in a changing situation. It was therefore not possible to move forward in stages, by making an announcement at one time, another one a little later. There was no alternative to what we did.

Will your reorganisation plan cover all of the company’s departments?

Yes.

Why announce these departures but also 123 recruitments?

It is quite simple: we will obviously discuss early retirement plans with the social partners. Then we run the risk of people leaving whose actual jobs will remain. So, we will have to replace them.

What were the challenges your sector faced before the health crisis?

There were several. First of all, overproduction at a global level. The annual production of steel in the world is 2.2 billion tonnes, but demand is for 1.7 billion tonnes. So, 500 million tonnes too much is being produced. This makes it difficult to have profitable margins. And only the best can be competitive. Then there is the 25% U.S. tax on steel products, starting with the first tonne imported, which is about two years old. 10% of Luxembourg’s production went to the USA and was heavily taxed. Another effect: part of what was entering the USA was no longer required and was partly redirected to Europe.

But there was a European response…

Yes, but since the tax did not apply to imports of the first tonne, but everything that was in surplus to the average imported in the previous three years, it had no effect. On the contrary, Europe even increased import quotas in July, in the midst of the crisis: the market was falling, but imports were increasing.

An attitude that is difficult to understand: the US is imposing tarrifs but the EU remains very flexible…

It’s a different approach. Europe wants to respect what the World Trade Organization advocates. But it has led to a lack of support for our sector.

These were not your only challenges…

No, we must also talk about the cost of carbon. In Europe, we have the emissions trading system and our position is to say that we agree with that. It is important to work on reducing carbon emissions, and ArcelorMittal is very active in this field and wants to produce carbon-neutral steel by 2050. But this will exist only in Europe.

“We are asking…for a level playing field”

Are you saying that not everyone is playing by the same rules?

And we are asking, through Eurofer, the European association of steel producers, for a level playing field at this level. We would have to apply an import tax equivalent to the carbon tax imposed by the Europeans.

One other problem is the price of raw materials…

In China and elsewhere, the steel industry has resumed its activity, the covid crisis has passed. So raw materials, like scrap metal and ore, are going up. At the same time, it’s hard to impose our selling prices… So, we have a scissor effect and our margins are still shrinking.

Then the health crisis dealt another blow to your sector.

Construction, which consumes a lot of long products like the ones we produce here in Luxembourg, has fallen by 25%. And the recovery will be long-term. It is difficult to estimate when we will reach pre-crisis levels. Telework will also have an impact. Of course, it will not be applied in the same way as during the “lockdown”, but it will affect the construction of office space. Finally, the car industry, which uses flat products, is also down.

Why mention the unhealthy demand for flat steel when you do not produce them in Luxembourg?

Our seat, our headquarters, is here in Luxembourg. And so the repercussions of the global situation have an impact at local level. The flat steel segment is suffering, and we have administrative staff at our headquarters in Luxembourg who are dedicated to this segment. So, it is also part of the reorganisation of the teams, even if no flat steel leaves our factories here in Luxembourg.

“We want to improve the whole company from an economic perspective”

But an economic and industrial recovery will take place?

Yes, but our outlook shows that we will not reach the levels we used to enjoy.

So, the only solution is to reduce the number of people?

This is one element among others. It is obvious that this human, social aspect is very visible, painful and sensitive, especially in Luxembourg, where the steel industry is part of the country’s history. But it’s not just that: we want to improve the whole company from an economic perspective, by improving our cost management, processes, product marketing... And if we do this work well, in its entirety, on several axes, by the end of this crisis we will have a stronger steel industry with a future ahead of it.

Does the steel industry still have a future in Luxembourg?

We want the steel industry to have a future in Luxembourg. We believe in it, if we take the necessary steps now. We have an industrial plan and a strategic vision in Luxembourg, with new ideas that will have to be implemented. We remain more convinced than ever that we must make a double bet on quality--because with low-end products we cannot defend ourselves--and innovation.

The interview was first published in French by Paperjam and has been translated and edited by Delano.