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U.S. Steel confirms layoffs after financial loss

By  Giavonni Nickson

Last week, U.S. Steel (USS) let go an undisclosed number of workers after a recent company restructuring. Workers have been laid off nationwide, including the Gary Works and Midwest Plant locations. The layoffs are the latest indication that iron ore and steelmaking industries are sharply declining.

U.S. Steel declined to disclose the number of people it let go. It did confirm that the layoffs were non-union which means the affected parties worked in managerial or other professional positions. In 2016, U.S. Steel laid off managerial staff at Gary Works when it cut 750 non-union workers nationwide, approximately a fourth of its salaried workforce at the time.

The latest round of layoffs adds to the 150 workers the steelmaker plans to let go as it idles East Chicago Tin this year.

US SteelU.S. Steel updated the State of Indiana regarding previously announced layoffs at East Chicago Tin. The company now says 314 workers will be displaced. This number is slightly higher than initially projected. In an updated WARN notice to the Department of Workforce Development the company also cited seven more security position layoffs for December.

The company has not provided a date for reopening the tin mill. Most industry analysts expect it to permanently close because of declining demand for tin.

Earlier this year, USS shut down one of its blast furnaces at its Great Lakes Works near Detroit. Fifty workers were laid off at the time and another 200 lost their jobs at the end of September.

The nationwide wave of layoffs comes as U.S. Steel, the second largest steel producer in the U.S., faces a financial crisis. The company’s stock has lost over 75 percent of its value since reaching a high of $45 per share in February 2018. Today USS stock is trading at less than $11.

U.S. Steel lost $84 million during the third quarter of 2019, compared with a profit of $291 million realized for the same quarter one year ago. This marks the first quarterly loss since 2017.

U.S. Steel is not the only steelmaker experiencing financial turbulence and slashing jobs. All the major steel producers in the U.S. have reduced production this year as seen in a series of job cuts.

Luxembourg-based ArcelorMittal, the largest steelmaker in the world, has seen its stocks fall drastically this year and is under pressure to cut costs and jobs.

ArcelorMittal’s stock has fallen nearly 60 percent, from a high of $36 in January 2018 to just $15.

Like U.S. Steel, ArcelorMittal relies primarily on blast furnaces to produce steel from iron ore.

U.S. Steel’s announcement to realign its operating and organizational structure, is slated to generate $200 million in annual cost savings by 2022.

U.S. Steel’s recent purchase of a minority stake in Arkansas-based Big River Steel for $700 million with the option to buy the rest over the next four years, is a crucial part of its cost cutting plan to prevent further financial loss. Big River uses an electric arc furnace to melt scrap metal instead of a blast furnace that produces new steel from iron ore.

“The closing of our investment in Big River brings us one step closer to creating a differentiated, world-competitive company that can offer our customers, employees and stockholders the ‘best of both’ integrated and mini mill steel making technology,” said David B. Burritt, president and chief executive officer of U.S. Steel. “We have done more than make an investment in the newest and most advanced flat-rolled mill in North America…. we have invested in the future of U.S. Steel.”

The financial impact of this acquisition will be reflected in U. S. Steel’s fourth quarter 2019 results.

Giavonni is a passionate freelance writer native of Gary IN. She covers business, politics, and community schools for the Chicago/Gary Crusader.

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