ArcelorMittal, the world’s biggest steelmaker, will cut 9,000 administrative and office jobs in a drive to save $1 billion (£650 million).

The steel giant yesterday began a voluntary severance programme for the cuts, which will be made across all operations. The job losses amount to about 3 per cent of ArcelorMittal’s workforce and come as the global steel industry is attempting to cut costs.

Bernard Fontana, ArcelorMittal’s vice-president responsible for human resources, said: “This has been a very difficult decision for the company to take as all of our employees are extremely important to us. Sadly, however, the global economic reality means that it is only sensible to adopt such measures.”

Earlier this month the company doubled production cuts that it had begun in October in response to the rapidly contracting automotive and construction sectors.

ArcelorMittal is scaling back production by a third – the most sweeping reduction imposed by any steelmaker in a series of scalebacks that have hit the industry.

Along with seeking to save $1 billion on its administrative staff costs, ArcelorMittal is also cutting capital expenditure by $1 billion to $4.5 billion next year. It is also diverting $4.5 billion from its working capital to pay down debt. Its working capital will increase as the company reduces its inventory.

Lakshmi Mittal, chief executive, has said that the level of destocking in the global steel industry is unprecedented.

Most of the car industry has implemented temporary shutdowns and shorter working weeks, vastly reducing demand for steel used in vehicle shells and components. Construction has also slowed drastically in many areas.

All the big steelmakers have announced sharp reductions in output over the past few weeks, including SeverStal of Russia; Tata, the Indian group that owns Corus, the Anglo-Dutch steelmaker; Baosteel of China and other big producers in the country; and Nippon Steel of Japan.

Many industrial groups have found that their markets have contracted further in the past few weeks as the economic crisis has tightened its grip on the real economy. GKN, the engineering group, has issued several profit warnings as it has experienced a sudden deterioration in its orders. Fujitsu Siemens yesterday added to the toll of job losses with plans to cut 700 jobs in Germany – about 12 per cent of its workforce there. The computers business, which is Europe’s largest producer of PCs, said that the move was in response to “competitive and economic challenges”.

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