U.S. Steel to lay off more than 700 due to falling oil prices
January 6, 2015 11:55 AM
The layoffs at U.S. Steel will begin March 8 and will continue through May.
By Len Boselovic / Pittsburgh Post-Gazette
U.S. Steel has announced plans to lay off 756 workers at steel tube plants near Cleveland and Houston, citing sharply lower oil prices.
Most of the layoffs will occur at the Pittsburgh steel producer’s Lorain Tubular Operations west of Cleveland, where 614 workers will be laid off. Another 142 workers at the Houston plant will be affected.
The layoffs will begin March 8 and will continue through May, according to a letter posted on the website of United Steelworkers Local 1104, which represents workers at the Lorain plant.
“This action is a result of a decline in tubular market conditions, which is impacting demand for the plant’s products,” U.S. Steel wrote in a letter addressed to USW president Leo Gerard.
In a notice posted on the union website, Local 1104 president Tom McDermott said, “What appeared just a few short weeks ago as being a productive year … has most abruptly turned sour.”
Oil fell below $50 a barrel Tuesday, driving prices to a five-year low. Growing stockpiles have prompted some producers to curb operations. Booming production of U.S. oil and gas has contributed to the oversupply.
Industry analyst Charles Bradford said part of the problem is the massive amount of new tubular mills that have begun production or that are being built.
He estimates about 4 million tons of new U.S. capacity has been announced in recent years in a market where consumption is 8 million to 10 million tons per year. The boom was encouraged by the large profit margins that tubular producers were realizing a few years ago, he said.
U.S. Steel’s Lorain plant manufactures seamless pipe used in construction and oil and gas exploration and production. The Houston plant processes pipe, tests it and provides other services.
On Monday, U.S. Steel shares closed at $24.58, down 77 cents.
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