Arab News reported that Ittefaq Steel plans to lay off 1,800 workers as a result of a deepening glut in the Saudi steel market.

Mr Khaled Al Tuwairqi, VP of Al Tuwairqi Group was quoted as saying that “The Ittefaq Steel Products factory will be compelled to lay off 1,800 workers after 90 days if it cannot export its products by that time.”

He added that it has no option but to send 80% of its 2,145 workers on leave without salary for 3 months beginning on January 1st 2009.

Mr Al Tuwairqi further justified the decision citing the heavy losses steel companies have been suffering because of their inability to sell their accumulating stocks in the local market on the one hand and an existing ban on the export of steel. He said that the firm does not find the funds to pay salaries to its workers or continue production.

He said that the steel manufacturing industry in Saudi Arabia is currently passing through one of the worst stages in its history because of the recession. Its steel market first showed the signs of a downward spiral when 450,000 tonnes of steel was imported and the export of the local product were banned. More than 2 million tonnes of steel is lying idle in warehouses for want of buyers. He added that other companies are also facing the same situation and have been adopting announced or unannounced emergency measures to counter it.

Mr Muhammad Al Dowaish director of legal affairs at the ministry of Labor of Kuwait said that the move was within the limits of the labor law as Ittefaq would allow its workers to resume work when the financial situation improved.

(Sourced from Arab News)