United States Steel Corp. (NYSE: X) has announced that it will indefinitely idle major operations at its Great Lakes Works facility in a plan that includes layoffs for 1,545 workers. The company said in its statement that steel production at Great Lakes Works will stop around April 1 and the hot-strip mill rolling facility will cease operations before the end of next year. The statement added that production will be shifted to Gary Works in Indiana.
U.S. Steel called the layoffs “terrible news” in its statement and attributed the decision to weak demand, lower steel prices, and new corporate strategy. President and chief executive David Burritt said in a written statement, “These decisions are never easy nor are they taken lightly. However, we must responsibly manage our resources while also strengthening our company’s long-term future, a future many stakeholders depend on.”
U.S. Steel, which saw a record profit in 2018 on soaring steel prices, reported a loss in the latest quarter. Domestic steel prices, after rising in the immediate aftermath of tariffs on steel imports imposed by President Donald Trump, have fallen amid weakening demand. Prices of hot-rolled coil are down 41 percent from their 2018 peak. U.S. Steel is now forecasting a wider-than-expected loss in the fourth quarter and has announced a dividend cut. The company’s shares have fallen 75 percent since March 2018.
The latest layoffs would impact 94 percent of the Michigan facility’s workforce, which could cause big problems for River Rouge, a city of 7,500 that sits on the Detroit River roughly 10 miles south of Detroit. The city, which houses the plant, could see a $1 million hit to its finances and a reduction in business for its retailers. Local officials had worked out a deal to give tax breaks to the company for a $600 million investment to carry out upgrades at Great Lakes Works. The company now says the tax deal discussions are “paused.”