Chesterton Tribune

 

 

No profit sharing at ArcelorMittal USA

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By KEVIN NEVERS

ArcelorMittal’s $1-billion corporate profit in the first quarter was still not enough to trigger profit-sharing for the company’s employees.

That, from a blog posted by ArcelorMittal USA President and CEO John Brett on May 19.

As Brett explained, while the company’s global earnings were exceptional, ArcelorMittal USA’s own first-quarter EBIT (earnings before interest and taxes)--the metric used to determine profit-sharing--showed an actual loss of $14 million.

That loss Brett blamed on internal as well as external factors. “While we significantly improved our quarterly results over the same quarter one year ago, our USA business wasn’t fully able to capitalize on today’s high pricing environment,” he said in his post. “Some of this can be attributed to timing or market forces, but some of it lies within our control. Steel pricing was undoubtedly up, but so were the prices for nearly every commodity we purchased from external suppliers, meaning our margins remain under significant pressure.”

“We were too slow to retire our backlog,” Brett added, “as evidenced by our stagnant delivery performance. We also took a step back from our record 2016 internal quality performance resulting in less profitable non-prime sales.”

The key to maximizing ArcelorMittal USA’s potential, Brett emphasized, is the continuing implementation of the company’s “footprint plan,” which “includes ceasing operations of redundant assets and investing in our most efficient operations.”

“At the heart” of the footprint plan, Brett said, is the closure of the 84-inch hot strip mill at Indiana Harbor, as well as its No. 1 aluminizing line and its No. 5 galvanizing line. Those closures were all specified in the language of the company’s latest three-year contract with the United Steelworkers, negotiated and ratified last year.

Also under that contract’s language: no Steelworkers have been or will be pink-slipped by the shutterings. Impacted employees have been given the opportunity to transfer, after internal bidding, to any of ArcelorMittal USA’s other Northwest Indiana facilities or to its Riverdale, Ill., plant, while still maintaining their wage protections.

At the same time, Brett said, millions of dollars are being invested in ArcelorMittal USA’s other operations, including Indiana Harbor’s No. caster at No. 3 steel-producing and the 80-inch hot-strip mill. The latter “will essentially be a brand-new, world-class mill,” able to “offer a wide range of products for a variety of markets including automotive, pipe and tube, and yellow goods.”

“The footprint initiative required tough decisions at the leadership level that impacted other assets,” Brett noted, “as well as the dedication and trust of our most valuable asset, our employees, to support the transformation. . . . It’s important to remember our footprint initiative enables us to retain the same productive capability but with fewer assets. Should market opportunities present themselves, whether they be due to competitors taking production downtime or additional trade actions, we stand poised to fulfill increased demand.”

Going forward in 2017, Brett predicted that--while automotive is likely to remain robust--“the likelihood of another record year is waning. We expect modest growth in the construction, energy, and appliance markets, and we are prepared to respond to that growth, and to provide ‘Made in America’ steel for federally approved infrastructure or pipeline projects.”

While profit-sharing was not triggered in the first quarter, Brett did say that there were pay-outs to both represented and salaried workers per other variable-compensation mechanisms. “For example, represented employees received strong production incentives. Market conditions also enabled represented employees to receive the steel price-related bonus. Salaried employees qualified for payments from the management income and conversion cost improvement plans.”

 

Posted 5/25/2017

 

 
 
 
 

 

 

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