EC ministers approve planned steel job cuts

A PLAN drawn up by the European Commission to slash over- production in Europe's ailing steel industry at the cost of an estimated 50,000 jobs was approved by EC industry ministers last night. But the crucial question of who should make the cuts is left to the industry itself.

Tim Sainsbury, the UK industry minister, refused to rule out further job losses at British Steel. Though the EC plan should, he said, not require the company to undergo further restructuring, he added: 'I am not saying there won't be any job cuts nor that there definitely will be.'

Ministers and Commission officials alike stressed repeatedly that the projected losses were inevitable.

They noted that the plan contains a compensation package drawn from the Community budget that, when added to funds already agreed, amounts to about pounds 500m for job creation.

'Everyone knows that the situation in the industry today is untenable, but you cannot reduce overcapacity by introducing quotas, you can only do it by giving industry the framework on which to make its own decisions. This we have done,' Martin Bangemann, the commissioner for industry, said.

'This should send a positive signal to the steel sector; it is only by keeping it competitive that we can guarantee jobs hereafter,' Karel van Miert, the competition commissioner, said.

Sir Leon Brittan, responsible for trade, said the UK's example was telling: 'I come from a country that tried to keep jobs open in impossible circumstances. The result was that a lot more jobs were lost than had been envisaged at the beginning,' he said.

The Commission plans to reduce crude steel production by 30 million tonnes and finished products by 20 million tonnes, to restore competitiveness.

The industry, canvassed by Brussels, has agreed to reductions of 25.8 million tonnes of crude and 17.9 million tonnes of rolled product but must cut still further. The EC's special steel envoy, Fernand Braun, will begin a second European tour with a view to having a definitive plan, approved by ministers, in place by 30 September. The cuts will be implemented by 1994, although on Spanish insistence it was agreed that this might be extended to 1995 in special circumstances.

Action will be taken to curb Eastern European imports, deemed by the industry to be partly responsible for plunging prices.

Yesterday's decision sets the stage for a political row to break out as steel producers try to put their house in order. The shape of things was clearly indicated by Spain's refusal to relinquish its plans for a new plant in the north, Italy's determination to win approval for further state aid to its Ilva plant - already Europe's most subsidised plant - and Germany's insistence that Ekostahl in the former East Germany is a special case.

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