Western companies will have to cut costs and improve productivity if they are to compete with rivals from emerging markets, the boss of the world's biggest steel producer warned today.

Lakshmi Mittal, chairman and chief executive of ArcelorMittal — which accounts for 10% of the world's steel production — told the Wall Street Journal: “Growth will only come from emerging markets … The question that we will have to address is how to make the industry in Europe and the US competitive. The answer lies in making Western plants more productive and reducing their costs.”

ArcelorMittal has lost money for the last three quarters and has slashed output by 35% and laid off thousands of workers. Mittal said: “We have to work with the unions to ensure that they understand what is competition and productivity in the emerging markets. They should visit these facilities in growth markets and see how they are catching up. China is willing to embrace any technology available.”

He added that worldwide production of steel had now been cut to below demand levels and that Mittal's customers are now restocking. “That's why we have announced the start up of our blast furnaces. Our customers are now demanding more steel.”