Minister of Economy and Regional Development Nebojsa Ciric stated yesterday that the management of U.S. Steel's steel plant in Smederevo must join forces with the state of Serbia to prevent the closing of that plant and save 3,000 jobs.
Ciric reminded that that plant was registering losses and a reduced volume of activities in Serbia and Slovakia due to effects of the economic crisis. The Minister reminded that the U.S. company had acquired Smederevo-based Sartid in bankruptcy, adding that it had not been a classical privatization.
Due to a reduced market price of steel and low demand, the Smederevo plant has been working at 50% capacity over the last six months because one of its two blast furnaces is idled. U.S. Steel has registered multimillion losses in the previous three years, which is why it is seriously considering to halt the production. The US company has asked the Serbian government, competent ministries and local self-governments for assistance.
Because of the global economic crisis and a crisis in the steel market, one of the possibilities that Pittsburgh-based headquarters of U.S. Steel is now considering is to completely abandon its operations in the Balkans.
- The steel plant at Smederevo is running far below its annual capacity of 2.4 million tons. After producing 1.9 million tons in 2006, production dropped to 1.2 million tons in 2009 and 1.4 million tons last year. We are not satisfied with our poor financial results in Serbia, and we are evaluating all options to improve our situation - U.S. Steel CEO John P. Surma was cited as saying by Pittsburgh Post-Gazette.
Massive downsizing possible
U.S. Steel Serbia employs about 5,400 people, nearly 5,000 of whom are working at the plant in Smederevo. The unfavorable unfolding of the situation worries people at the local self-government because the closing of that company would reduce the city budget revenues by as much as 30%. Mayor Predrag Umicevic stresses that the city will do everything it can to help the company survive. Otherwise, as he says, the number of employees will be cut and the other blast furnace will be idled.
- That is also a big problem for the city of Smederevo and each individual employee, as well as for the state as a whole, because U.S. Steel is our largest exporter. We have already lowered the fee for the use of banks for business purposes, and we will also reduce the communal tax, which currently amounts to RSD 5 million, and local environmental taxes from 200 to 17 million dinars - says Umicevic.