January 26, 2009 / 1:47 PM / 11 years ago

Spain's Acerinox threatens job cuts on weak demand

MADRID, Jan 26 (Reuters) - Spain’s Acerinox (ACX.MC) said on Monday it might temporarily lay off workers at its Spanish factory if demand for its stainless steel did not pick up in the next two weeks.

Acerinox halted production at its Algeciras plant for 12 days over New Year — the first shutdown caused by demand weakness since the 1-million-tonnes-a-year factory opened in 1973.

Demand and production fell in the fourth quarter in line with steel and stainless steel producers all over the world, who are cutting jobs and output [nLQ295980].

“We are at a very early point in the process, the next two weeks are key,” a spokesman for the company said, referring to the need for short-term orders to avoid cutbacks. “If the situation continues for longer, we will do something, and that something could be a temporary layoff ... for between six and nine months.”

The factory, near the British colony of Gibraltar, employs 2,500 workers and along with factories in Kentucky and South Africa is one of the firm’s three main production centres.

Acerinox, one of the world’s biggest stainless steel producers, also closed its South African factory for 12 days over the New Year, but the spokesman said the company had no plans, as yet, for shutdowns outside Europe.

“At the moment, as far as I know, there is no concrete plan for either South Africa nor the United States. That’s the situation at the moment, but anything could be put on the table right now.”

Acerinox is still forging ahead with the development of a new factory in Malaysia and that should start production in 2011, he added.

Acerinox is the world’s second biggest producer of stainless steel, with output of 3.1 million tonnes a year.

(Reporting by Ben Harding and Robert Hetz, editing by Elizabeth Fullerton)

((ben.harding@reuters.com; +34 91 585 8530; Reuters Messaging: ben.harding.reuters.com@reuters.net)) Keywords: ACERINOX/

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