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European Union Scraps Plan to Trim Steel Production

November 8, 1994

BRUSSELS, Belgium (AP) _ European Union industry ministers on Tuesday formally dropped a 2-year-old rescue plan for the trade bloc’s money-losing steel industry.

″The plan is finished,″ said EU Competition Commissioner Karel Van Miert.

Ministers withdrew an offer to steelmakers of 1 billion European currency units, or $1.17 billion, in loans to pre-finance plant closures. The loans were to compensate producers for cutting production capacity to reduce the EU’s vast steel surpluses.

But producers failed to make the needed cuts, and ministers responded by withdrawing the loan offers, officials said.

Clearly annoyed that two years of trying to coax steelmakers with generous compensation and loans failed to get promises of production cuts from steelmakers, Van Miert said ″the door will be closed,″ when producers seek money in the future.

″From now on, the steel sector will be treated like any other,″ he said. ″When it’s in trouble, it will have to solve its problems by itself.″

The dozen EU governments agreed last year that to become profitable, the industry must cut its capacity to produce hot-rolled steel by between 19 and 25 million tons.

However, steel makers made firm commitments to cut just 11 million tons.

EU official Norbert Schwaiger said none of the ministers protested the suggestion Tuesday to drop the rescue plan, but that several expressed bitterness towards private steelmakers, saying they had not tried hard enough to cut production.

The ministers decided, however, to retain a $302 million fund to compensate workers laid off in the drive for efficiency.

The restructuring plan envisaged the loss of up to 50,000 jobs from the sector which last year employed 370,000 throughout the EU.