Steelworkers strike against job cuts at Italy's Terni plant

Mon Jul 28, 2014 12:06pm EDT

* A plant worker goes on hunger strike

* Analyst says restructuring of Terni will help industry

* Italy's steel, industrial sector under pressure

By Silvia Antonioli and Maytaal Angel

LONDON, July 28 (Reuters) - Hundreds of workers downed tools on Monday at Italy's largest stainless steel plant in Terni in opposition to a restructuring plan, under which about 550 jobs would be cut and production halved.

Italian union FIOM said the strike started on Monday and that more protests would take place until the government intervenes to mediate with management of the Acciai Speciali Terni (AST) plant, owned by German steel group ThyssenKrupp , and push for a revision of the plan for the site in central Italy.

ThyssenKrupp earlier this month presented the plan to cut about a fifth of the Terni staff and 100 million euros ($135 million) in annual costs.

Failure to meet the cost-saving target would result in the closure in 2016 of one of the two furnaces at the site, each of which produces up to 600,000 tonnes of stainless steel a year.

"The situation is more dramatic and uncertain than ever," FIOM national secretary for the steel sector, Rosario Rappa, said.

"Once again we are in a difficult situation. It's not a plan that guarantees a future for the plant."

The decline of AST and of Italy's two other large steelmaking plants, Ilva and Lucchini, shows the difficulties that Italian industries are going through after years of economic contraction.

AST is one of the most modern stainless steel plants in Europe, yet has been posting losses for several years, which ThyssenKrupp blames mostly on the poor state of the market and structural oversupply.

The Bank of Italy cut its estimate for 2014 growth earlier this month to just 0.2 percent and warned that there was significant uncertainty about the outlook for the euro zone's third-largest economy.

A spokesman for AST declined to comment.

HUNGER STRIKE

Italy is Europe's second-largest steel producer after Germany.

The Terni site, about 100 km from Rome, is a big employer in the Umbria region and a major supplier of materials for the national and international car, construction and manufacturing industries.

The plant has changed hands twice in the past four years and is likely be put up for sale again in the medium term, union and industrial sources said.

Highlighting the desperation among employees of the plant, one of the workers has gone on a hunger strike this week in an attempt to persuade the government to intervene.

Workers fear that ThyssenKrupp lacks long-term commitment and may end up focusing on quick returns to the detriment of the plant's competitiveness in the market.

"In the industrial plan there is no mention of any investment at all. It looks like they are using us as a scapegoat, just so other companies in Europe can benefit from us cutting production," a worker at the plant said.

An industry analyst, however, said the plan is credible and could help AST to become economically viable.

"The proposal from the Terni chief executive is definitely a step in the right direction, but they need to find a compromise with the union. They need to cut. What she is planning is good for the industry, not only for Terni," he said.

ThyssenKrupp had to take back Terni from Outokumpu earlier this year as the Finnish company struggled to refinance. (editing by Jane Baird)