Huachipato, the largest steel mill in Chileturned off its furnace early Monday morning to end 74 years of operations, hit by the fierce competition from imported steel from China.
“It was a dignified and emblematic end to an entire era in the history of Chilean steel and it is a testament to the fact that our workers never gave up,” said Jean Paul Sauré, general manager of Huachipato in a message released by the company, confirming the shutdown of Blast Furnace 2, where the process to make non-recycled steel began.
The shutdown of the furnace began at 2:30 a.m. local time (05:30 GMT), Fernando Orellana, president of the company’s union 2, confirmed to AFP. “It’s a dark and sad day for all Huachipato workers,” Orellana said.
The closure affects 2,700 workers – both direct and contracted – and another 20,000 people who are linked to this company, one of the main economic engines of Talcahuano, a city located 500 km south of Santiago.
Founded in 1950, the company decided to close down, overwhelmed by competition from Chinese steel, which is flooding the world markets and arriving in Chile at a 40% lower price.
Huachipato tried to survive. In recent years it has specialized in special products for copper mining, a metal of which Chile is the world’s leading producer, and at the beginning of the year it demanded the imposition of surcharges on imports of Chinese steel.
In April, the state Anti-Distortion Commission approved additional tariffs of 25% to 33% after verifying “unfair” competition from the Asian giant. But the measure was not enough to address losses of 700 million dollars accumulated since 2019.
“This is a difficult and sad time for everyone. The conditions of the global steel market force us to make this difficult decision, and we are convinced that we did everything possible to avoid it, even enduring huge losses for many years,” said the company manager.
Over the past two decades, China has increased its share of the global steel market from 15% to 54%. In Latin America, imports grew by a record 44% in 2023, to exceed 10 million tons, according to the Latin American Steel Association.
Huachipato produced 800,000 tons of steel per year.
In anticipation of the closure, plant workers signed an exit plan that includes additional benefits of 30% above the mandatory severance pay. However, the agreement did not include outsourced workers, nearly half of the total employees.
“It’s terrible to be left without a job overnight. Where am I going to find work at this age?” asks Roberto Hernandez, a 54-year-old outsourced assembly worker.
According to union estimates, more than half of the dismissed workers are over 50 years old.
The government met with unions on Monday and announced a plan to strengthen the industry to boost employment in the region.
There are 32 measures to “reduce the labor and productive impact” of the closure of Huachipato, including “support and assistance to Huachipato supplier companies at risk,” announced the Ministry of Economy.
According to a study by the Catholic University of the Most Holy Conception, the closure of Huachipato will affect 1,090 small and medium-sized businesses and will reduce the income of the municipality of Talcahuano.
Another study by the Biobío Labor Observatory estimates that unemployment will rise by 2.5 percentage points, reaching 11% in the region.
Huachipato promoted the creation of the “Huachipato” football club – current champion of the Chilean tournament – as well as several social and cultural associations that still operate in the city. He also built thousands of houses for workers.
Source: Ambito
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