Brazil's Vale cuts 2.1 percent of work force
Alan ClendenningVale, the world's largest iron ore producer, has cut 2.1 percent of its work force because of slumping global demand for the raw ingredient used to make steel, the company confirmed Wednesday.
Companhia Vale Rio Doce SA said the cuts amount to 1,300 jobs from its global work force of about 62,000. An additional 5,500 workers are being idled with pay to slow production, and 1,200 are being retrained for new assignments.
The details in a statement from the Brazilian company came five weeks after executives announced a 9 percent ore production cut because of falling global demand, primarily from China.
Vale said the ore mining sector is in a "serious crisis due to the reduction in orders from steel mills. Vale is working to avoid layoffs or to make the fewest layoffs possible."
The company's American depository shares in New York slumped 3.9 percent Wednesday, down $0.41 to $10.14.
Dilma Rousseff, chief of staff to President Luiz Inacio Lula da Silva, acknowledged Brazilian exporters like Vale are being squeezed by much lower global demand for everything from steel to soy. But she denied that the company's decision to let workers go indicated Brazil might be headed for a recession.
"We're in a process of deceleration, but this doesn't mean that Brazil is going to enter into a recession or a deep crisis," Rousseff told lawmakers in the capital, Brasilia.
Brazil was booming until the global meltdown sent shock waves through Latin America's largest country and economy in October.
Economic growth is expected to hit about 5.2 percent this year, but analysts predict it will slow to about 2.8 percent in 2009.
Auto makers and other big manufacturers also are making selective layoffs but generally sending larger numbers of workers home with pay so they can idle plants but keep employees ready to restart operations if the global economy rebounds.
Labor laws make it expensive for companies to fire workers in Brazil.
(This version CORRECTS date throughout to Wednesday.)