Slovakian regional governor offers U.S. Steel €1 for steelworks

The head of the self-governing region of Košice in eastern Slovakia has offered to buy a local steelworks from the local subsidiary of owner U.S. Steel for €1 and temporarily take control ahead of the planned mass layoff of 2,500 workers by 2021.

Local officials are concerned about the future of the company, which is the region's biggest employer.

“Through temporary entrance in U.S. Steel Košice, we want to avoid the consequences of negative developments at the plant, in particular the layoffs of employees,” said Anna Činčárová, a regional government spokesperson.

Košice officials have said that they cannot remain inactive.

“We are concerned about keeping the company’s competitiveness, its survival and preserving the employment in the region,” said Governor Rastislav Trnka.

Trnka said that he has already held meetings with the steelworks' management, where he was informed about the current situation there, and the future vision.

U.S. Steel Košice’s CEO James Bruno said that the works' biggest problem at present is the environmental taxes imposed by the European Union, which he says discriminate against European producers by giving a competitive advantage to external producers.

Trnka also raised the topic of the debt, which amounts to €1-billion, which the regional government considers to be the main reason for the steelworks’ stagnation, as well as lagging sales and the subsequent reduction in workforce.

Košice officials have said they are keen to prevent a repeat of the situation that occurred at a former U.S. Steel plant in Serbia in 2012. Following a drop in demand, caused by a lack of investment in the plant itself, the owners began dismissing its workers and eventually fell into debt.

The plant's management has said that the final decision will be made by the Head Office in Pittsburgh, Pennsylvania.

Lukáš Lipovský, an analyst at the Slovakian arm of trading firm XTB says it is unlikely that U.S. Steel will accept the offer, despite the drop in demand which is being felt across the sector as a result of the steel tariffs imposed by Washington DC as part of the US-China trade war.

“On the other hand," Lipovský added, "the American company may be trying to sell its plant in Košice in case demand keeps dropping.”

Some of the employees at the plant has complained that the offer made by Trnka was a "bad joke" and the steelworks' trade union representative refused to comment.

Slovakia's Ministry of Economy claimed that Trnka has gone rogue, making the offer to his region's biggest employer for self-promotion.

“It’s absurd and irresponsible towards a serious employer but, most importantly, towards the thousands of employees in the plant,” said Ministry spokesperson Maroš Stano.

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