“It’s terrible to find yourself unemployed overnight”: cornered by Chinese competition, Huachipato, Chile’s largest steelworks, will close permanently on Monday after 74 years of activity, leaving thousands of people out of work.
For generations, life in Talcahuano, a town of 160,000 people in the Biobio region, 500 km south of the capital Santiago, has revolved around the emblematic steel mill.
Its closure directly impacts 2,700 jobs, including those in subcontracting, and affects around 20,000 indirect jobs. It also signals the end of the production of non-recycled steel in the country.
“I worked in Huachipato, my father worked in Huachipato, my wife was also employed in Huachipato, and we had a good standard of living,” says Fernando Orellana, 62, who joined the cleaning service at the age of 25 before climbing the ladder to become section head.
For this leader of the Steelworkers’ Union 2, the factory represented the guarantee of a secure retirement. “It was a company that gave you security for the future,” he assures.
Huachipato produced 800,000 tons of steel per year and mainly supplied the mining industry, the engine of the Chilean economy. Founded in 1950, the plant was unable to withstand competition from Chinese steel, which was sold in Chile 40% cheaper than that produced locally.
The steelworks tried to maintain itself by requesting surcharges on Chinese imports. Although they were put in place in April, after the Chilean Commission for the Fight against Distortions found “unfair competition”, they were not enough to guarantee the sustainability of the plant, which since 2019 has accumulated losses amounting to 700 million euros.
“This decision hurts us deeply, but we are convinced that we have done everything in our power,” assured the director of the steelworks, Julio Bertrand, when announcing its imminent closure in August.
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Ten million tons of Chinese steel poured into Latin America last year, representing a 44% increase in 2023 compared to the previous year. In 20 years, China has increased its share of the global steel market from 15% to 54%, according to the Latin American Steel Association (Alacero).
In Talcahuano, the steelworks were much more than just a job for many people; they also represented social and cultural associations, the construction of housing for workers and a football team, currently the leader of the Chilean championship.
– “Help shut it down” –
On the eve of the closure of the complex, which will begin on Monday with the shutdown of Blast Furnace 2, employees have signed a generous severance plan. But this does not manage to alleviate the bitterness and uncertainty caused by the closure.
“I have 47 years of seniority in the company and it never occurred to me that I would one day be one of those who would help close it down,” says Hector Medina, president of union 1.
The agreement provides for the payment of an additional compensation of about 30% above the statutory severance pay, as well as other benefits. But it does not include subcontractors.
“It’s terrible to find yourself unemployed overnight,” laments Roberto Hernandez, a 54-year-old subcontractor. “Where am I going to find work at this age?” he wonders.
According to union estimates, more than half of the laid-off workers are over 50.
A study by the Catholic University of the Most Holy Conception of Talcahuano estimates that the closure of the plant will affect 1,090 small and medium-sized businesses in the region.
Another study by the region’s Labor Observatory predicts that unemployment will increase by 2.5 percentage points to reach 11%.
“These are people who have spent their whole lives here, working. They don’t know how to do anything else,” laments Hugo Mendoza, a 58-year-old mechanic.
On Monday, the government is expected to unveil a plan to strengthen industry and boost employment in the Biobio region, the details of which have not yet been made public.
For its part, the plant plans to maintain some of its “non-steel” activities, such as the extraction and marketing of limestone, a material used in the manufacture of steel.
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