Despite new contract, Granite City steel plant idling will go on

GRANITE CITY A tentative deal between U.S. Steel Corp. and its 18,000 steel workers nationwide will not change the company’s plans to temporarily close the Granite City Works steel plant beginning next week, officials said Monday.

Pittsburgh-based U.S. Steel Corp. spokeswoman Courtney Boone said she could not release details of the tentative contract agreement reached Saturday night. She said the contract still needs to be ratified, which should take two to three weeks, and that it’s the company’s policy not to discuss contract negotiations until an agreement has been finalized.

The new contract covers workers at the company’s Granite City Works and at the steelmaker’s domestic flat-rolled and iron ore mining facilities across the country as well as tubular operations in Fairfield, Ala.; Lorain, Ohio, and Lone Star, Texas.

The contract is subject to ratification from the members of 26 union locals. Details of the contract will be released after it is ratified, the company announced.

“We are pleased that we have reached a tentative agreement in the best interest of our company, our stakeholders and our employees,” Mario Longhi, U.S. Steel president and CEO, said in a press release.

“We believe this competitive three-year contract further supports the mutual success we have had with the USW in pursuing our Carnegie Way efforts and confronting unfair trade that is significantly impacting our industry,” he said.

Last fall, union officials said the company was seeking more money from members for health care and concessions on overtime, contracting out work to nonunion workers and other issues.

The previous contract expired Sept. 1, but union members stayed on the job while the two sides held bargaining sessions.

Market conditions remain challenging

The contract agreement does not change the challenging market conditions that led to the plant idling in the first place, Boone said. Cheap imported steel from China and other foreign countries continues to flood the market and has forced U.S. Steel to cut back domestic production.

The market price for the Granite City steel mill’s product continues to plunge to the point where it has become too difficult for the domestic steel industry to compete against the ongoing flood of cheap imports. According to the American Institute of Steel and Iron, the price of hot-rolled steel, like what is manufactured in Granite City, has dropped from $684 a ton in May 2014 to about half that price.

The company will begin laying off the first of Granite City Steel’s 2,000 workers on Sunday and the process will take several weeks.

“We don’t expect the tentative agreement to have any impact on the U.S. Steel’s plans to idle the Granite City facility,” United Steelworkers District 7 Sub District 2 Director Dave Dowling said. “There’s been no change in the projected idling that U.S. Steel projected.”

Dowling and other local union officials said they also could not discuss details of the new contract.

This is the second time U.S. Steel had announced a possible idling this year at the Granite City Works plant. A similar announcement was made in March but was averted a month later when the company decided to lay off just 80 workers.

The Granite City plant had an idling about seven years ago that lasted seven months, from November 2008 to June 2009, when orders for cold-rolled and hot-rolled steel manufactured at the Madison County mill picked up.

Retired Granite City steel worker Gary Gaines said although it’s good that local workers will have a contract, it’s little consolation if they’re laid off.

Gaines does not believe the tentative contract will affect the coming temporary shutdown.

“I still think they will idle us for a while,” he said. “I don’t think that will change.”

Operations at the plant’s blast furnace take time to shut down, he said. If the steel mill were to suddenly pick up orders, it would still take time to fire it back up. The company previously announced that it will begin the cooling down process of the plant’s furnace this week.

“What you’re talking about is it’s really hard to turn it around to get it going, again,” Gaines said. “It will take them another month, at least, to get good iron out of it again. It’s not an easily made decision to idle a blast furnace.”

Gaines said that most local laid off steel workers will not go without any pay during the idling. He estimated that most union members could receive supplemental unemployment benefits that equal about 60 percent to 75 percent of their current wages for about six months.

“It depends on your seniority,” he said. “Some of the last people who got hired may not be eligible for that (much).”

Plant idling won’t affect nearby coke plant

Meanwhile, the plant idling should not affect workers at the SunCoke Energy plant, located adjacent to the Granite City mill.

Mike Fultz, who once worked at the steel mill, said the coke oven is in the sixth year of a 15-year contract with the steel plant to produce all of the coke for U.S. Steel Corp.-Granite City Works.

“The idle should not impact us,” Fultz said. “We will still go to work every day.”

Coke is a byproduct of crushed coal that is burned and the coal gas, water and tar are removed. The remaining raw material is used to fuel blast furnaces at steel mills.

Fultz said that while the steel plant is closed, space has been reserved to store the finished coke for storage. “We are still working to supply directly to U.S. Steel,” he said.

He hopes the shutdown will not last much longer than the last idling. He said the shorter, the better.

“You can cover grounds so much with coke,” he said. “So hopefully, that’s not the case.”

This story was originally published December 21, 2015 at 3:59 PM with the headline "Despite new contract, Granite City steel plant idling will go on."