U.S. Steel plans to indefinitely idle "a significant portion" of its Great Lakes Works production facility in Ecorse and River Rouge and will issue WARN notices to 1,545 workers at the steelworks the company said Thursday.
The operations at the Zug Island plant will begin to go dark in April 2020. No employees will be affected before then, according to a statement from U.S. Steel.
The company said the idling is part of an effort to become more nimble and responsive to market demand. The Pittsburgh-based steel company plans to shift production currently handled at Great Lakes Work to its Gary, Ind., steelworks.
"In order to further accelerate our strategy of creating a world-competitive 'best of both' U. S. Steel, we must make deliberate but difficult operational decisions," David Burritt, president and CEO of U.S. Steel, was quoted as saying in the statement. "In this case, current market conditions and the long-term outlook for Great Lakes Works made it imperative that we act now, allowing us to better align our resources to deliver cost or capability differentiation across our footprint.
"Transitioning production currently at Great Lakes Works to Gary Works will enable increased efficiency in the use of our assets, improve our ability to meet our customers' needs for sustainable steel solutions and will help our company get to our future state faster."
The company announced in August that it would temporarily lay off 200 workers at the plant, where it idled a furnace due to reduced consumer demand and "market conditions."
U.S. Steel has struggled to compete with domestic steel producers that use mini mill technology, which recycles scrap metal into steel and is a cheaper method of production than large integrated steel mills such as Great Lakes Works. U.S. Steel plans to incorporate mini mill production as it repositions for sustainability, the company said.
President Donald Trump's tariffs on imported Chinese steel may have contributed to the pinch by boosting U.S. output just as the global economy was cooling, undercutting demand and dropping prices, according to Bloomberg.
The price of domestic steel is down about 40 percent from its 2018 high just weeks after the tariffs. U.S. Steel shares are down so far this year by about 35 percent. The company will report a 98 percent drop in profits for 2019, Bloomberg reported this week.
The company said the final number of layoffs at Great Lakes Works might be lower than 1,545. Operations that will continue at Great Lakes Works include the pickle line, cold mill, sheet temper mill, Continuous Galvanizing Line (CGL), annealing and warehouses, the company said in its statement.
State Sen. Stephanie Chang, whose district includes Great Lakes Works, issued a statement on the layoffs.
"I am disappointed to hear the United States Steel Corporation's announcement to indefinitely idle their River Rouge facility," Chang said. "It is unfortunate that our hardworking men and women are again paying the price for Washington's detrimental policies that have led to the market conditions US Steel and so many others have been facing."
The first blast furnaces for steel production were built on Zug Island in 1902, according to the Detroit Historical Society.
U.S. Steel is only the latest company to operate the steel works on Zug Island since then. For decades, the National Steel Corp., founded in 1929, owned the complex. U.S.Steel purchased the National Steel Corp. in 2003 for $950 million.
The land that became Zug Island was not always an island. Once owned by furniture maker Samuel Zug, who intended to create a riverside estate there, the land was too marshy for an upscale residential development.
After allowing the River Rouge Improvement Company to dig a canal through the land — turning it into an island — in 1888, Zug sold the land to George Brady and Charles Noble for $300,000 in 1891. Brady and Noble may have initially intended to use the island as a dumping ground for industrial waste from Delray, but changed their plans when they discovered salt and limestone beneath the surface.
In more recent years, the steel works on Zug Island have been a sore spot for neighbors in Detroit and Windsor, who have complained of air and noise pollution (including, allegedly, the "Windsor Hum").
Great Lakes Works has been listed as having "high-priority violations" by the U.S. Environmental Protection Agency every quarter annually for the last three years, The Windsor Star reported earlier this year.
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December 20, 2019 at 09:03AM
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US Steel to idle operations at Zug Island plant, lay off up to 1545 - Crain's Detroit Business
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