Metro-East News

Potential temporary idle of Granite City steel plant compounds industry’s woes

Steel company layoffs in Granite City

Steel workers face layoffs at the mill in Granite City
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Steel workers face layoffs at the mill in Granite City

A potential temporary shutdown of U.S. Steel’s Granite City mill is due to worsening market conditions and other factors working against the domestic steel industry, industry observers say.

The warning was issued to the metro-east steel mill’s 2,000 steel workers Tuesday, as Pittsburgh-based U.S. Steel Corp. considers a consolidation of its North American flat-rolled steel plants. It’s the second time in eight months the company announced a possible shuttering of the steel mill.

U.S. Steel spokeswoman Courtney Boone said demand for the flat-rolled tubular steel manufactured at U.S. Steel-Granite City Works has declined, and other factors have forced the steel company to consider the temporary shutdown.

“It’s a combination of a number of issues,” Boone said. “This led us to make the notification to employees. We have not announced an idle. We have announced the prospect of that, and we’re notifying our employees.”

Boone said there is no timetable for the potential temporary shutdown. She said market conditions will dictate whether the Granite City mill ultimately is idled.

The announcement comes just months after U.S. Steel scuttled a plan to temporarily close the Granite City plant and idle 2,080 workers in May. Instead, the company opted to lay off 80 workers here and reduce the plant to one shift.

It’s a combination of a number of issues. This led us to make the notification to employees. We have not announced an idle. We have announced the prospect of that, and we’re notifying our employees.

Courtney Boone, U.S. Steel spokeswoman

The news caught the local steel workers’ union off guard.

“It was unexpected,” said Dave Dowling, director for the United Steelworkers Sub District 2 in Granite City.

Steel workers at the Granite City plant said they knew of the economic challenges facing the industry but did not anticipate a possible temporary shutdown.

“We didn’t expect it at all. I knew we were struggling and having some difficulty getting our feet under us, but as far as idling the plant, we were kind of blindsided,” said 52-year-old Edwardsville resident John Werths, a 25-year employee.

“It was a kick in the pants,” said Jerry Coonrod, 61, of Glen Carbon, with 42 years at the plant. “It affects this whole town. I used to live here, and I know how it affects this town. It’s already hanging on by a thread. It’s going to be a ghost town, fast.”

Another worker, 59-year-old Tom Pierce, a 41-year employee from Maryville, said, “It’s certainly disheartening. We’d like to see the mill progress and we’d like to see the mill profitable. We’d like to see things turn in the favor of United States steel.”

Boone said oil rig counts continue to decrease and have reached an overcapacity in that market, and oil drillers are not buying as much flat-rolled tubular steel products. She also said cheap imported steel continues to flood the market, leaving U.S. Steel and other domestic steel manufacturers at a disadvantage.

“There is a great number of unfairly traded imports,” Boone said. “We filed three trade cases related to the enforcement. Most of that also impacts Granite City. Steel prices are also very low, artificially low, because of unfairly traded product.”

The announcement comes as U.S. Steel employees in Granite City and across the country continue to negotiate for a new contract. The company’s steel workers have been working without a contract for about five weeks. Dowling said there has been little to report about the negotiations between the two sides that continue in Pittsburgh.

“There has been no great breakthrough or announcement to be made at this time,” Dowling said. “There has been progress, but it continues to be slow progress. But we still have quite a ways to go.”

In August, steelworkers in Granite City had threatened a work stoppage, but that did not materialize.

The announcement comes just months after U.S. Steel scuttled a plan to temporarily close the Granite City plant and idle 2,080 workers in May. Instead, the company opted to lay off 80 workers here and reduce the plant to one shift.

The announced potential idling of the Granite City plant comes at a time when new federal trade policy is forming that Dowling believes will work against the domestic steel industry. On Monday, the United States reached a trade agreement with Japan and 10 other nations along the Pacific Rim. Pending congressional approval, the Trans-Pacific Partnership (TPP) would phase out thousands of import tariffs on steel and other goods that have been barriers to international trade.

However, Dowling said because of a fast-track voting policy that was previously passed, which would only allow an up or down vote and no amendments or debate, that would only hurt, and potentially kill, the U.S. steel industry.

He said cheap imports continue to inundate the market and cited a recent report from the U.S. International Trade Commission, which reported that $1.9 billion in hot-rolled steel imports and $1.2 billion in cold-rolled imports from seven foreign countries have flooded and damaged the domestic steel market.

“As steel workers are beset by unfairly imported steel products, this experience of recent warning notices compounds or distorts what’s happening in the steel industry in this country, that being unfairly traded steel products,” Dowling said. “We continue to work very hard for (anti-dumping) tariffs. We fear that TPP over time could be the death knell of the steel industry.”

Dowling said the union will keep its members informed as steel workers continue to work through this latest challenge.

“The union at all levels will keep close contact with U.S. Steel to see how things develop as we go forward,” he said. “In the meantime, we urge members to work safely, keep focused on their jobs and we’ll go forward together, and hopefully be able to avoid the potential temporary shutdown.”

It was a kick in the pants. It affects this whole town. I used to live here, and I know how it affects this town. It’s already hanging on by a thread. It’s going to be a ghost town, fast.

Jerry Coonrod, a 42-year veteran steelworker

The U.S. is not the only place where the steel industry is slumping.

According to Reuters news agency, Britain’s second-largest steelmaker — SSI UK — went into liquidation last week, citing a slump in steel prices and record exports from China, which produces half the world’s steel.

Similar troubles are circling South Africa's second-largest steelmaker Evraz Highveld Steel, which is undergoing so-called business rescue proceedings.

Experts say measures taken so far are nowhere near enough.

"The steel industry is in its worst recession in 10 years, potentially it's as bad as 1991-92," said Wiktor Bielski, VTB Capital's global head of commodities research. "There's almost nobody who isn't hurting right now. Less than 50 percent of the global industry can make money at current prices."

This flood of cheap Chinese steel has helped send global prices to their lowest in 11 years.

On Tuesday, the Madison County Treasurer’s Office announced that it had invested $1.6 million in Granite City School District bonds. Chief Deputy Treasurer Doug Hulme said the municipal bonds were sold on the secondary market and that he believes the investment is in response to the announced possible idling at the Granite City steel plant.

“The idle would impact 2,000 steelworkers and their families,” Hulme said in a released statement. “We feel this investment is an opportunity to show confidence in our community.”

Treasurer Kurt Prenzler said the investment is a “win-win” for the county and school district.

“This is not just an investment for the county, but an investment in a community,” Prenzler said in a statement. “With this investment we stand with Granite City and the steelworkers.”

U.S. Rep. Mike Bost said Tuesday he has reached out and offered his assistance in both Washington, D.C., and to steelworkers in Southern Illinois.

“I am deeply disappointed in today’s announcement and will do all I can to advocate for this idling not to occur,” said Bost, R-Murphysboro.

State Rep. Dwight Kay, R-Glen Carbon, said, “I am very disappointed to learn that one of the largest employers in the region is considering a consolidation of its operations. In May of this year my colleagues and I from across the aisle sent a resolution to President Obama and Congress urging the federal government to consider all possible trade and economic policies to keep the steel industry viable in the United States. I will keep exploring ways to keep US Steel operating in Granite City.”

Madison County Board Chairman Alan Dunstan said if the Granite City steel mill is temporarily closed, he would work with county officials and local representatives and senators in Congress to do everything possible to assist steel workers.

“This announcement comes at a time following several years of steady economic growth in Madison County and the creation of thousands of new jobs,” Dunstan said. “At the same time we are working to ensure the long-term viability of the Granite City Steel Works, we must continue to focus on economic development in Madison County, the creation of new jobs and an environment where new businesses want to locate and existing businesses can grow and prosper.”

Timeline of key events at Granite City Steel

1878: Brothers William and Frederick Niedringhaus establish Granite Iron Rolling Mills in Granite City where they manufacture sheet iron.

1895: Granite City Steel begins steel manufacturing.

1896: Granite City is incorporated as a city.

1951: Granite City Steel undergoes a large expansion.

1971: Granite City Steel becomes a division of National Steel Corp.

2002: National Steel files for Chapter 11 bankruptcy.

2003: U.S. Steel Inc. purchases Granite City Steel from National Steel out of bankruptcy and renames the plant U.S. Steel-Granite City Works.

2008: U.S. Steel-Granite City Works and Sun Coke Energy invest $600 million in a new steam-powered co-generation plant constructed in Granite City.

2009: U.S. Steel temporarily lays off 1,600 workers at the Granite City mill when the plant is idled for about seven months, and 390 are furloughed.

Jan. 19, 2015: U.S. Steel Corp. announces plans to shut down Granite City Works' coke ovens and lay off 176 workers by March because the ovens that produce the coke, or fuel used to manufacture steel, are more than 30 years old and are no longer economically efficient.

March 25, 2015: U.S. Steel announces it will consolidate its tubular operations and temporarily idle the Granite City mill and lay off 2,080 steel workers by or after May 28.

May 2015: U.S. Steel cancels the plan to idle the plant and instead lays off 80 workers and reduces production to one shift at the Granite City plant.

Oct. 6, 2015: U.S. Steel gives its 2,000 Granite City workers notice of a potential idling of the plant, due to tough conditions within the industry. No date has been set.

Source: City of Granite City and the BND

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