ArcelorMittal turned a $1 billion profit in the first quarter, but local steelworkers won't take home any extra profit-sharing bonuses.
Luxembourg-based ArcelorMittal is an international company with operations in the United States, Mexico, Canada, Europe and Brazil. While other segments of the global business were profitable, Chicago-based ArcelorMittal USA actually posted a loss of $14 million in the first quarter.
"Unfortunately, due to the above-cited factors, we were unable to trigger profit-sharing for our represented or salaried employees," ArcelorMittal President and CEO John Brett said in a blog.
"Our Q1 EBIT (Earnings Before Interest and Taxes), which is the metric for determining our profit-sharing as defined in the labor contract with the United Steelworkers, was a loss of approximately $14 million."
United Steelworkers union-represented ArcelorMittal workers do, however, get bonuses of 50 cents per hour for the first quarter after the average price of hot-rolled steel rose above $600 per ton during the first three months of the year.
"Both the represented and salaried work forces have other components of variable compensation that did pay out for Q1 2017," Brett said.
"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 incentive and conversion cost improvement plans."
ArcelorMittal has been trying to boost profitability in North America by reducing overhead, mainly by shrinking its footprint at ArcelorMittal Indiana Harbor in East Chicago, where some steelmaking operations are more than a century old.
"In addition to safety, we also made progress in the implementation of our footprint plan, an important aspect of our Action 2020 objectives, which includes ceasing operations of redundant assets and investing in our most efficient operations," Brett said. "Indiana Harbor is at the heart of this process, with the closure of its 84-inch hot strip mill, No. 1 aluminizing line and No. 5 galvanizing line."
ArcelorMittal USA, however, is investing millions of dollars into more viable operations, including Indiana Harbor’s No. 2 caster at No. 3 steel shop producing and 80-inch hot strip mill.
"In fact, Indiana Harbor’s 80-inch hot strip mill will essentially be a brand new, world-class mill, offering three walking beam furnaces, automated surface inspection system, best-in-class temperature control and inside storage," Brett said.
"The new 80-inch will 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, as well as the dedication and trust of our most valuable asset, our employees, to support the transformation."