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U.S. Steel to shutter Alabama furnace, lay off 1,100

| Monday, Aug. 17, 2015, 10:54 a.m.

U.S. Steel Corp. plans to close permanently an Alabama blast furnace and related steelmaking operations that it moved to idle this month while it builds a next-generation electric arc furnace at the plant.

The Downtown-based company on Monday gave the United Steelworkers union a 90-day notice of its intention to shutter in November the furnace and flat-rolled finishing operations at its Fairfield Works.

The closure would prompt layoffs of 1,100 of the 1,500 workers at the site near Birmingham, spokeswoman Courtney Boone said.

“We have made some difficult decisions over the last year as part of our portfolio optimization,” CEO Mario Longhi said in a statement. “We have determined that the permanent shut-down of the Fairfield Works blast furnace, steelmaking and most of the finishing operations is necessary to improve the overall efficiency and cost structure of our flat-rolled segment.”

The company is negotiating a contract with the union, which said it would help affected employees through its job training and support programs.

“While the USW has been aware of the impending shutdown, today's notice brings tough news to many families, and it is a sad day in Birmingham for our members and the community,” union Vice President Tom Conway said in a statement. “The USW will continue to work to salvage every possible job at the facility and to (ensure) that our members are treated with the dignity and respect they have earned and deserve during this difficult time.”

The furnace has been up and down this year as U.S. Steel idled and restarted operations while dealing with a tough market. The company said July 29 it would be turned off again. Fairfield's tubular works and some other operations will not be affected.

“The main reason for this has to do with the ongoing economic headwinds that the steel industry is facing,” Boone said of the Fairfield decision.

John Tumazos, an analyst and owner of Tumazos Very Independent Research, said oversupply of steel from imports and domestic producers, along with weak demand from customers in the oil and gas industry, drove the decision.

“What they really are saying is that in the next 12 to 24 months, they don't need to restart that blast furnace and they don't need that mill,” he said.

U.S. Steel expected to close the blast furnace eventually in favor of the $230 million electric arc furnace, though a date for closure was never announced, Boone said. The new equipment, scheduled to come online next year, does not replace the full capacity of the older furnace, but can be powered up or down more quickly as demand for production ebbs and flows.

“The installation of the electric arc furnace helps the facility's global competitiveness because it allows for increased ability to keep the facility nimble,” Boone said.

U.S. Steel has idled mills across the country and laid off thousands of workers in response to a downturn fueled by cheap imports and lower demand, especially from the oil and gas sector. The company is trying to lower costs and improve efficiency in a profit-expanding initiative known as the Carnegie Way.

“There can be no doubt that U.S. Steel's decision to shut down the blast furnace and other operations in Fairfield, months before its new electric arc furnace comes online, was the result of unfairly traded foreign steel imports,” USW International President Leo W. Gerard said in the union's statement.

The union and the company have made their case in Washington to fight such imports, especially from China. U.S. Steel and other companies have named that country and others in several recent trade cases filed with the Commerce Department and the International Trade Commission.

“When will Congress wake up and stop the erosion of our jobs due to subsidies, currency manipulation and other unfair and illegal practices by our trade partners?” Gerard asked.

David Conti and Alex Nixon are staff writers for Trib Total Media. Reach Conti at 412-388-5802 and Nixon at 412-320-7928 or anixon@tribweb.com.

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