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U.S. Steel to idle two tubular plants, affecting 260

| Monday, June 2, 2014, 10:45 a.m.

U.S. Steel Corp. said it will idle money-losing plants in McKeesport and Bellville, Texas, that make pipes for the oil and natural gas industry, mainly blaming competition from cheap imports into the United States.

The plants will be closed indefinitely in early August, affecting 260 workers, the Pittsburgh-based steelmaker said. The Mc-Keesport plant employs 180.Closing the two “loss-making” operations will reduce its number of pipe-making plants to eight from 10 and allow it to operate more profitably, the company said. The steelmaker has other tube, or pipe, plants in Alabama, Arkansas, Ohio and Texas that employ about 2,900.

U.S. Steel is cutting costs under an initiative called the Carnegie Way, which it previously said will yield $290 million in benefits this year.

“U.S. Steel remains fully committed to the tubular products business. While these are difficult decisions, they are necessary in order to return our company to sustainable profitability,” CEO Mario Longhi said.

U.S. steel producers have faced weak global demand and price competition from imports.

The industry has complained about unfair competition from foreign companies, accusing government-backed overseas producers of dumping excess steel on the market at below cost.

“We will continue to fight unfair trade by foreign competitors who are creating a detrimental impact and threat to middle-class paying manufacturing jobs,” Longhi said.

About 45 professional and management employees and 215 members of the United Steelworkers union were told of the shutdowns on Monday. Several declined to comment as they came and went from the McKeesport plant.

“I'm kind of shocked,” said Willie Hanks of Wilkinsburg, a truck driver for PI&I Motor Express of Sharon, which carries steel coils from U.S. Steel's Irvin Plant in West Mifflin to McKeesport. “They told us we probably have another month.”

Mayor Michael Cherepko said the decision “is absolutely devastating to the whole Mon Valley region.”

The shutdowns are the result of several factors, according to John Tumazos of Tumazos Very Independent Research of Holmdel, N.J.

“This is a combination of less-than-expected domestic demand, lower gas prices, domestic competition from newly built mills and then foreign competition.”

Drilling activity has declined, he said, because drillers are getting more output from each well drilled, and lower prices.

Last year, U.S. Steel and other domestic producers filed an anti-dumping action with the Department of Commerce to halt unfair trading and dumping of so-called oil country tubular goods into the American market.

Imports rose from 840,313 tons in 2010 to 1.76 million tons in 2013. South Korea alone shipped 894,300 tons to the United States in 2013.

In February, a preliminary decision by the Commerce Department imposed high duties only on India, and small levies on other nations, which are mostly smaller producers. It did not impose anti-dumping duties on products from South Korea, the largest exporter among nine nations targeted. A final decision in that case will be issued by July 10.

Two weeks ago, an estimated 400 to 500 people attended a “Save Our Steel Jobs” rally at U.S. Steel's Research & Technology Center in Munhall, sponsored by the Alliance for American Manufacturing, which said “it is critical that our government fully investigates South Korea's cheating.”

United Steelworkers President Leo W. Gerard said the union warned government officials that a flood of cheap imports was a threat to American steel companies and that jobs were at stake.

Economists said hundreds of thousands of jobs are at risk.

The McKeesport Tubular Operations, a remnant of its old National Tube Works, was operated for years by Camp-Hill Corp., a U.S. Steel spinoff. On May 1, 2011, U.S. Steel assumed operation of the plant.

“McKeesport Tubular is once again producing world- class pipe,” after a number of upgrades, said Mark Fronczek, president of USW Local 5852, at the rally. Fronczek, who represents rank-and-file at the plant, could not be reached for comment.

Congressional Steel Caucus Chairman Tim Murphy, R-Upper St. Clair, said, “The administration needs to stand up now and put an end to illegal practices by foreign countries before another Southwest Pennsylvania family loses their livelihood.”

Gov. Tom Corbett said he directed the secretary of Labor and Industry to deploy teams to help identify new opportunities for the plant's employees.

Trib Total Media staff writer Pat Cloonan contributed. John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or joravecz@tribweb.com.

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