By DAVID ZIRINAssociated PressAssociated PressWASHINGTON (AP) — As steelmakers around the world scramble to keep their factories operating and make ends meet, they are facing a challenge from a rising number of smaller firms.
The companies say they are getting hit with higher production costs and a lack of skilled workers because of a shrinking labor force.
A global glut in steelmaking equipment and equipment parts has left many steelmakers facing the prospect of closing plants, putting a crimp in global demand for the metal.
Steelmakers like United States-based General Dynamics Corp. and Ford Motor Co. are among those in Europe, North America and Asia that are grappling with the downturn in demand.
The impact of the slump in demand is a growing concern for U.S. steelmakers that have invested heavily in the construction and manufacturing of the world-beating machines.
“There are fewer and fewer steelmakers to go to,” said Peter Riddell, an analyst at Macquarie Capital Markets in London.
“We’re not going to be able to maintain the pace we’re going to continue to invest.”
Steel prices are up about 40% over the past year, making the cost of steelmaking machinery nearly twice as much as it used to be.
At a time when prices are low, steel makers are worried that the cost is going up too.
A growing number of factories are being forced to close or be mothballed because of the downturn.
In recent weeks, General Dynamics and Ford announced they were shutting down the Cincinnati plant and laying off about 100 workers.
The company said it would invest $1 billion in the plant, but declined to detail how much.
General Dynamics is laying off more than 4,000 workers in Kentucky and Indiana.
Ford said it was also closing its Cincinnati production facility, while General Dynamics said it had announced layoffs in Michigan and Ohio.
Ford said it is closing its Ohio production plant.
Ford’s Cincinnati plant is the third-largest steel plant in the United States, with production of the machines used in aerospace, power generation and vehicles.
The plant has more than 100,000 square feet of space for welding, milling, casting and assembly, according to General Dynamics.
The plant has about 300 employees and is expected to be fully operational by the end of the year, General Dynamic said.
The steelmaker said it plans to cut 1,100 jobs.
The Pittsburgh plant is closing and the Toledo plant will be shut down by the middle of the next year.
In China, General Motors Co. said it will shutter two production plants in Shanghai and Zhengzhou, China, as part of its plan to reduce its workforce by more than 25%.
In India, Tata Steel Co. and its Indian partner Hindustan Steel Corp. are planning to cut more than 200 jobs, according, The Hindu newspaper.
In Brazil, the state-owned oil company Petrobras SA is closing a plant in Rio de Janeiro that is responsible for making oil products like jet fuel and other petroleum products.
The oil company said the plants will be decommissioned.
In India, steelmaking is one of the fastest-growing industries in the country, according for a new report from the World Economic Forum, an organization that advocates for economic growth and social inclusion.
The report says that India’s steel industry has expanded at more than 10% annually over the last decade.
India’s steel production jumped more than 2% in the past 12 months to 2.9 million tons, the report said.
The number of steelmakers in the U.K. rose to 3,400 from 2,000 last year.
The U.N. Food and Agriculture Organization says India accounts for about one-third of the global steel production.
In Japan, the biggest steelmakers are also struggling with the economic downturn.
General Electric Co. has announced it will cut more that 2,400 jobs at its Louisville, Kentucky, plant.
The Detroit-based company said earlier this year that it planned to cut up to 2,800 jobs.
GE is the second-largest producer of steel in the world, after Brazil’s Odebrecht AG.
The world’s second-biggest steelmaker also has its plant in Japan shut down, shutting down about 1,000 jobs.
In Germany, steelmaker Siemens AG said it expects to cut 2,600 jobs in the future and to reduce production at its German plant.
The company said in a statement that the layoffs would be made to meet “continuing workforce needs, which include a significant reduction in the size of the production team.”
The U.G. Chamber of Commerce in Washington said that while the steelmakers’ decisions are important, the U and U.Y. economies are still in a transition phase.
“We have seen the world move forward,” the group said.
“The next phase is the transition to a new economic paradigm, where steel is the core industry.”