Metro-East News

SHUTDOWN: Low oil prices, continued cheap steel imports force idling of Granite City mill

U.S. Steel employee George Yeager, of Granite City, talks about U.S. Steel's announcement to temporarily idle the Granite City plant.
U.S. Steel employee George Yeager, of Granite City, talks about U.S. Steel's announcement to temporarily idle the Granite City plant. Belleville News-Democrat

Learning that they were facing a temporary layoff just days before Thanksgiving was not how local steel workers envisioned celebrating the holidays.

On Monday, U.S. Steel Corp. contacted the 2,000 employees at Granite City Works about the idling. The temporary shutdown is anticipated to commence in the coming weeks, but the company has not yet announced when that will happen.

For those like 38-year employee George Yeager, the news could not have come at a worse time of the year.

“It’s just sad,” said the 55-year-old Granite City resident, who started working at the steel mill in 1978. “It’s Christmastime. It’s not a good thing. Not a good thing for anybody.”

This is the fourth time this year that U.S. Steel Corp. has made a major announcement regarding the Granite City steel mill. On March 26, the Pittsburgh-based company announced that it would idle Granite City Works and lay off its 2,080 workers for up to two months beginning May 28.

On May 28, the company announced it was reversing its decision and would lay off just 80 employees and keep the plant open, but reduce operations to one shift. Then on Oct. 8, the company issued a warning that the plant would be idled at some point in the future.

That point came Monday, when the company announced the open-ended idling that could come sometime over the next few weeks. Workers expect is will happen before Christmas.

Eric Cruse has been working at the plant for almost 44 years. The 63-year-old Mitchell resident said he is thinking about retiring, although he is not wanting to do so, yet.

“Not really, but I could retire and give it up,” Cruse said.

Mark Willers said he is still years from retirement and is concerned how the coming temporary shutdown will impact his life and the local economy.

“It’s not just going to affect Granite City, it’s going to affect the whole community,” said the 51-year-old worker who lives in Florissant, Mo. “In Granite City, this is probably one of the largest employers. It’s going to affect everybody. It’s going to affect the school districts and taxes and that stuff.

“I’d like to be out of here in the next nine or 10 years myself,” he said. “This affects my retirement, too. If you’re not working, I’m not paying into the pension, I’m not paying into my 401(k). It affects everything.”

The company does not know how soon the shutdown will begin or when steel workers will be laid off, or for how long.

Company spokeswoman Courtney Boone said market conditions continue to be primarily challenged by low oil and gas prices, because the Granite City mill produces steel for both the auto manufacturing industry and oil refineries.

Another key factor affecting the mill and overall steel industry is the continued flood of cheap imported foreign steel that has been driving down prices for years.

“I think it’s really important to understand that this is truly related to a number of market conditions affecting the steel industry, where the oil and gas prices continue to stay low, and Granite City Works serves those in that market,” Boone said.

“In addition to that, there continues to be a glut of imported goods that challenge the overall industry. A number of those goods, we believe, are unfairly traded, and shows an unlevel playing field with subsidized steel coming in from other countries. When you add each additional market condition, it makes for a challenging environment.”

Steel workers and the union that represents them have long argued and held public rallies in opposition to Washington, D.C., allowing cheaper steel from China and Korea to be dumped in the United States.

2,000Number of people who will temporarily lose their jobs at Granite City Works

“Our country keeps on letting China ship and dump steel on our markets,” Willers said. “Their government subsidizes their steel industry. Our government doesn’t subsidize us. So if they’ve got any excess amount of steel that they can’t sell in their country, they’ll ship it over here to the United States. This has been going on for years.”

United Steelworkers Local 1899 President Dan Simmons also blamed foreign imports for crippling the domestic market and driving down domestic steel prices. He said the cost to manufacture steel now exceeds the market price. He also accused lawmakers and other elected officials of ignoring the problem.

“They just keep ignoring this like it’s going to go away,” Simmons said. “The whole community is devastated. The whole community is impacted directly from this. It’s not just Granite City.”

U.S. Rep. Mike Bost, R-Murphysboro, released a statement and vow to lend his support to the metro-east steel workers.

“My heart goes out to these hardworking men and women and their families as they receive this news right before the holidays,” Bost said. “The company informed me the idling will be temporary. Nevertheless, I’m going to do all I can to make sure that ‘temporary’ is as short as possible. I will continue to be in communication with our steelworkers and the company to offer my assistance during this time of uncertainty.”

United Steelworkers District 7 Sub-district 2 Director Dave Dowling called U.S. Steel’s announcement “a bitter disappointment and a huge blow to our members and their families and to the community.” He assumes the shutdown process could be completed soon after the new year.

We’ll probably see some of the iron-making side and blast furnace go cold and shut down anywhere to the latter part of Dec. 20. Sometime between Dec.13 and Dec. 20, they will start to shut down. That will dictate everything after that.

Dan Simmons, United Steelworkers Local 1899 president

“It will be that way for a while,” Dowling said. “The next step, I guess, in the process that appears to lie ahead would be the announcement of when the shutdown would begin. We don’t know when that announcement will be made. That will be the next thing we hear.”

Dowling said the company will soon be transitioning and will make another announcement about when the shutdown will begin. He said that could happen in the next few weeks.

Simmons said the plant’s iron-making and blast furnace will be shut down first and estimated that could happen the week before Christmas. After that, he believes the entire steel mill will halt operations within a three-week period.

“We’ll probably see some of the iron-making side and blast furnace go cold and shut down anywhere to the latter part of Dec. 20,” he said. “Sometime between Dec.13 and Dec. 20, they will start to shut down. That will dictate everything after that.”

This is not the first time the Granite City mill has temporarily shut down. Seven years ago this month, the steel mill was idled and did not reopen until the following June.

“The last time, it lasted for seven months,” Simmons said. “I remember that.”

Simmons said steel orders are what reopened the steel mill back then and will again dictate how soon operations resume. Until steel workers will have to cope.

He also said it’s unfortunate that like the last idling, this will be again happening around the holidays.

“Yeah, Merry Christmas,” he said.

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.
  • Nov. 23, 2015: U.S. Steel announces it will idle Granite City Works and lay off the plant’s 2,000 workers. The start date or length of the idling is undetermined.

Source: City of Granite City and BND