GRANITE CITY — U.S. Steel on Friday reported it plans to lay off several thousand employees nationwide, including about 700 at Granite City Works. However, a much smaller number is expected to be laid off.
On Friday, a Worker Adjustment and Retraining Notification Act notice was received by the Madison County Board office. The federal act requires employers with 100 or more employees to provide 60 days’ notice of plant closings and mass layoffs.
On April 30, U.S. Steel Corp. notified the U.S. Securities and Exchange Commission that it would be sending out WARN notices regarding about 6,500 employees at a number of facilities.
Tony Fuhrmann, director of Madison County Employment and Training, said the local notice listed 737 positions, but “actual layoffs might be a lot less.”
“It’s still a work in progress, depending on what is going on in the industry,” Fuhrmann said.
Both U.S. Steel and officials from the United Steelworkers of America echoed that.
“We expect the total number of employment impacts to be significantly lower than the number of WARN notices issued,” said an email from a company spokesperson.
Dan Simmons, president of USWA Local 1899 which represents about 1,900 workers at the mill and related businesses, said the union expects just under 100 to be laid off at this time. He said most are probationary workers who had been at the plant for a few months or less; some had been there for about a year.
Included in the nationwide shutdowns will be the “A” blast furnace at Granite City, which had been down for maintenance and will not be restarted as originally scheduled, and blast furnaces at Gary Works and Mon Valley Works. The “B” blast furnace at Granite City will continue operations.
Other affected facilities include iron ore production and steel processing at a number of plants. The notice came as U.S. Steel announced a net loss of $391 million for the first quarter of 2020, compared to earnings of $54 million in the first quarter of 2019.
“Over the past several weeks, we have announced a series of actions in response to the coronavirus pandemic and the significant changes in the global oil and gas markets,” said U.S. Steel President and CEO David B. Burritt in a written statement.
He also noted that “challenging days are ahead.”
“As the impacts from these unprecedented market dynamics became apparent, we adjusted our footprint, fortified our balance sheet and aggressively cut costs,” he said. “While these decisive actions helped us exceed our first quarter guidance, we have quickly turned our attention to the second quarter to not only ensure the safety and health of our employees but also to preserve cash and liquidity.”
According to the American Iron and Steel Institute, an industry trade organization, both actual steel production and capability utilization, which measures the percentage of steel making capability actually being used, are down dramatically from last year.
Fuhrmann said what is happening is a “trickle-down effect.” As stores remain closed and people don’t purchase things, eventually manufacturers slow down. Then that impacts the companies that make raw materials like steel.
“We saw it first in the hospitality and entertainment industry,” he said, adding that now people are not purchasing cars and doing other things.
According to the U.S. Census Bureau, new orders for manufactured goods in March decreased by $51 billion, or about 10 percent, to $445.8 billion.
According to the AISI, domestic raw steel production for the week of April 25 was 1.25 million tons, down by slightly more than one-third from last year’s 1.892 million tons. For the same period the capability utilization rate was 55.8 percent, down from 81.3 percent last year.
The plant was idled about two years ago during a nation-wide downturn in steel production, and reopened in April 2018. Since then U.S. Steel has been hiring large numbers of workers. Simmons said they had a group getting ready to go in in April, but that was stopped as part of the slowdown.
Simmons said prior to the coronavirus pandemic the plant was “doing well” and he hoped for a quick turnaround once the economy started to ramp up.
He noted that the “A” blast furnace was “banked,” meaning they were keeping it hot, rather than a “cold idle.”
“That tells me something,” he said.