Chile’s largest steel mill, Wachipato, is closing its doors on Monday after 74 years in operation, putting thousands of people out of work.
For generations, life in Talcahuano, a town of 160,000 people in the Biobio region 500 kilometers from the capital Santiago, has centered around the steel mill that has become a landmark.
The plant closure directly affects 2,700 jobs, including those held by subcontractors, and about 20,000 indirect jobs, and marks the end of non-recycled steel production in the country.
Wachipato produced 800,000 tons of steel annually and was a key supplier to the mining industry, the backbone of the Chilean economy.
The factory was founded in 1950, but it could not withstand competition from Chinese steel, which was sold to Chile at prices 40% lower than locally produced steel.
Trying to hold on
The steel plant tried to hold out by demanding additional tariffs on Chinese imports. Although these duties were imposed last April after the Chilean Anti-Unfair Practices Commission concluded that there was “unfair competition,” they were not enough to ensure the survival of the plant, which has accumulated losses of up to 700 million euros ($775.8 million) since 2019.
“It’s a decision that hurts us deeply, but we are convinced that we have done everything we could,” plant manager Julio Bertrand said when announcing the facility’s imminent closure last August.
10 million tons of Chinese steel flooded Latin American markets last year, a 44% increase in 2023 compared to the previous year.
In 20 years, China’s share of the global steel market has increased from 15% to 54%, according to the Latin American steel association Alacero.
In Talcahuano, the steel mill was much more than just a job for many; it also produced social and cultural associations, helped build housing for workers and created a football team that is currently the leader of the Chilean championship.
Impacts on small businesses
On the eve of the complex’s closure, which will begin Monday with the shutdown of the second heat treatment furnace, employees signed a layoff plan that provides benefits, but it has failed to ease the bitterness and confusion 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,” says union president Hector Medina.
The plan provides for the payment of an additional end-of-service gratuity of about 30% compared to the end-of-service gratuity stipulated by law, in addition to other benefits, but it does not include subcontractors.
“It’s terrible to find yourself unemployed overnight,” said Roberto Hernandez, a 54-year-old contract worker.
According to a study conducted by a Catholic university in Talcahuano, the factory’s closure will affect 1,090 small and medium-sized businesses in the area.
Another study by the region’s labour observatory indicates that unemployment will rise by 2.5% to 11%.
The government is expected to announce on Monday a plan to boost industry and increase employment in the Biobio region, details of which have not yet been revealed.
For its part, the plant intends to maintain some of its “non-steel” activities, such as the extraction and marketing of limestone, a material used in the steel industry.
