After announcing it would temporarily halt production at its steel shop, sintering and coking units at its Cubatao mill due to weak market conditions, Usiminas once again made it clear it would be “very hard” for the company to secure the 4,000 jobs it has at the mill.
In addition to the scrutiny Usiminas has been facing, Brazil’s development bank BNDES, from which Usiminas borrowed money, asked the company’s CEO, Romel Erwin, and Marcelo Gasparino Silva, president of Usiminas administration council, to explain the massive dismissals, even despite the obtaining of money from the bank in the past few years.
At a meeting with the bank, Erwin maintained the company’s position in proceeding with the massive layoffs.
“It’s very hard [to avoid the dismissals]. When we talk about job positions, we need to associate them with production volume. The domestic market is diminishing even more and we need to export more. The government may even help, but it would be hard to solve this situation,” the executive said at the meeting.
Usiminas borrowed from BNDES more than BRL 2 billion between 2001 and 2006 to expand the Cubatao, in the state of Sao Paulo, and the Ipatinga mills, the latter in the state of Minas Gerais. However, despite the investments to expand the mills, it halted “primary activities” at the Cubatao mill, in addition to other measures o it already adopted.
From 2006 until 2013, Usiminas is said to have borrowed BRL 3.7 billion from BNDES.