Have you followed the tips in the article about reducing arc blow? Beyond that, I recall heating up steel will demagnetize it. Heating up the metal to red hot, and then slowly letting it cool, would demagnetize the metal. It will also soften up the metal, which may or may not be acceptable depending on the requirements. Depending on your facilities, you could feasibly re-harden the softened metal afterwards by heating and quenching.
This link may help as well:
http://www.magwerks.com/documents/No...agnetizing.pdf