This article first appeared in The Edge Financial Daily, on April 19, 2016.

KUALA LUMPUR: Hit hard by low prices and dumping by foreign producers, troubled steel manufacturer Megasteel Sdn Bhd has resorted to reducing its workforce by half.

The country’s largest hot-rolled coil producer said it has since January laid off 487 workers (including 99 foreigners) and retrenched 102 from its total workforce of 1,148.

“The company has organised several town-hall sessions with its employees to brief and engage them on the business challenges and the unavoidable decision to lay off and retrench employees.

“It is also providing support and training for the employees to seek alternate employment,” Megasteel said in a statement to The Edge Financial Daily yesterday.

The company said it has sought the assistance of the Labour Department and other companies for job placements of its employees.

“It is noted that the overall job market is not so encouraging at the moment with other industries also affected by poor sales and low production levels,” it added.

Megasteel, a 79%-owned subsidiary of the Lion Corp Bhd, has been bleeding red since 2011. Its revenue for financial year ended June 30, 2015 (FY15) was RM1.89 billion with a loss before tax of RM595 million. Its accumulated losses as at FY15 were RM2.4 billion.

It attributed the losses to the dumping of steel products in the domestic market by foreign steel producers, as well as the global steel glut and drop in steel prices.

Megasteel said its production is currently nil. Its output in 2015 was 613,000 tonnes, a drop of 53.6% compared with the 2011 production of 1.32 million tonnes.

Megasteel’s workers’ union president Mohd Amir Rapini said the laid-off employees are being paid half their basic salary since January.

They were told to be on standby to resume duties but to date there is no indication that they would get to go back to work.

In light of this, about 350 workers picketed at the Megasteeel factory in Banting yesterday, seeking compensation as provided for under their collective agreement.

Alternatively, the workers are demanding that they be paid a monthly lay-off payment of more than 50% of their basic salary, or be allowed to take up other jobs,  while remaining entitled to the lay-off benefits.

A Megasteel official who met the workers promised to respond to their demand by April 30, said Mohd Amir.

Megasteel said the government is aware of the developments affecting the steel industry.

“We have provided information on the lay-off and retrenchment of our employees to the ministry of international trade and industry and Malaysian Investment Development Authority as requested.

“Megasteel urges the government to assist the local steel industry and the employees, whose jobs are at stake, by taking the necessary urgent action to curb dumping and dubious imports of steel products,” it said.