Serbia buys US Steel plant for $1
BELGRADE, Serbia (AP) - January 31, 2012 (WPVI) -- The Serbian government on Tuesday bought a loss-making plant from U.S. Steel for the symbolic sum of $1 to avoid its closure and save the jobs of its 5,400 workers.
Prime Minister Mirko Cvetkovic formally signed the agreement with U.S. Steel Vice President of European Operations David J. Rintoul. Cvetkovic said the deal was a "forced move" that was the result of the global economic crisis.
"It is indeed with a heavy heart that we leave Serbia today," said Rintoul, whose company bought the plant in Smederevo, about 60 kilometers (37 miles) southeast of Belgrade, for $33 million (¬25 million) in 2003.
"We will miss the people of Serbia," he added.
Following the purchase in 2003, U.S. Steel poured millions into the plant, turning it into the Balkan country's single largest exporter. In 2010, it accounted for about 10 percent of Serbian exports with $35 million (¬27 million) in foreign sales.
But with the global economic downturn, the Smederevo plant started slowing down. In the first nine months of last year, it operated far below the annual capacity of 2.2 million tons and reported losses of $73 million (¬56 million).
U.S. Steel's management cited anemic economic growth - both globally and in southeastern Europe - as well as high raw material costs as the causes of the problem.
Cvetkovic said the plant's troubles "showed how serious the global economic crisis is and how big an influence it has on Serbia."
"We faced a difficult choice and we chose what we saw as a better option," Cvetkovic added, explaining that the purchase will result in the "reassigning" of costs in the state budget.
The Serbian plant's working week has already been cut to four days as global demand dropped for its low grade steel.
Cvetkovic said the government will now appoint a new general manager and seek to resell the plant.
Rintoul promised U.S. Steel will assist in the transition period.
U.S. Steel's other factory in the region, in Slovakia, has been more profitable because it makes higher-grade steel for the car industry.
serbia, employment, business/finance
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