Crushed by Chinese competition, Huachipato, Chile’s largest steel mill, will shut down its furnace on Monday (16) after 74 years, and an entire city will lose its economic engine, a “terrible” blow for thousands of workers who will be left without a job.
At the same time, the country will stop producing non-recycled steel. The measure affects 2,700 direct and outsourced workers linked to the steel mill.
“We’ve done everything”
Huachipato produced 800,000 tons of steel a year and mainly supplied mining, the engine of the Chilean economy.
Founded in 1950, the company decided to close down, crushed by competition from Chinese steel, which is flooding global markets and arriving in Chile 40% cheaper.
It tried to survive by demanding surcharges on Chinese imports, which were approved in April by an Anti-Distortion Commission that found “unfair competition” from the Asian giant.
But the measure was not enough to address the losses of 700 million dollars (3.8 billion reais at the current exchange rate) accumulated since 2019.
“This decision hurts us deeply. But we are convinced that we have done everything in our power,” said Huachipato manager Julio Bertrand in August, when announcing the end of operations.
China has increased its share of the world steel market in the last two decades, from 15% to 54%, according to the Latin American Steel Association.
In Latin America, imports grew by a record 44% in 2023, exceeding 10 million tons.
Difficult to re-enter the market
On the brink of closure, which begins on Monday with the shutdown of Blast Furnace 2, the plant’s workers have sealed a beneficial exit plan, which in any case doesn’t ease their unease.
“I’ve been with the company for 47 years and it never occurred to me that I’d be one of those helping to close it down,” says Héctor Medina, president of Union 1. ‘It’s been such a regular source of work, so intense and so fair,’ he adds.
The agreement with the employees includes an additional payment of around 30% on mandatory severance pay, as well as other benefits. But it does not include outsourced workers, who will be left unprotected.
“It’s terrible to be out of work overnight,” laments Roberto Hernández, an outsourced worker. “Where am I going to find work at this age?” asks this 54-year-old assembly worker.
The unions estimate that more than half of the laid-off workers are over 50.
A study by the Catholic University of Santísima Concepción estimated that the closure of Huachipato will affect 1,090 small and medium-sized businesses.
Another study by the Biobío Labor Observatory projects that unemployment will rise by 2.5 percentage points to 11% in the region.
“These are people who have spent their whole lives here, working. They don’t know how to do anything else. And when they go out into the world, into reality, they won’t know how to do anything else,” laments 58-year-old mechanic Hugo Mendoza.
On Monday, the government will announce a plan to strengthen industry and increase employment in the region.
The company, meanwhile, has stated that it will maintain “non-steel” operations, such as the extraction and sale of limestone, one of the materials from which steel is made, and that it is studying developing other production initiatives in the future.
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