United States Steel will lay off 636 workers as part of a temporary idling of its Lorain Tubular Operations.
Low gas prices and a decrease in global oil exploration have led to declining demand for the plant, which makes oil country tubular goods used in exploration and drilling for oil and natural gas.
“This action is a result of a decline in tubular market conditions, which is impacting demand for the plant’s products,” U.S. Steel said in a letter to United Steel Workers President Leo Gerard in Pittsburgh.
The letter was a notice the company published as result of the federal Worker Adjustment and Retraining Notification, or WARN, Act. The company’s notice was published online by the United Steel Workers Local 1104 of Lorain and sent to Mayor Chase Ritenauer.
The layoffs will start March 8 or in the two-week period following, with additional layoffs occurring through May. Ritenauer said he expects the layoffs to last three to four months.
Among the workers affected are 277 operating technicians, 172 utility technicians, 73 electrical maintenance technicians, 57 mechanical maintenance technicians and 40 utility workers, according to a list included with the WARN Act notice.
Many consumers notice low gas prices at the pump, but the low prices of oil are having an effect elsewhere.
“The company has suddenly lost a great deal of business because of the recent downturn in the oil industry,” said a statement from USW Local 1104 President Tom McDermott. “What appeared just a few short weeks ago as being a productive year, (with new hires in December and extra turns going on), has most abruptly turned sour.”
Ritenauer said he hopes market conditions improve and the layoffs will be shorter than expected. He added he believes U.S. Steel remains committed to making Lorain a hub of its steel production.
The most troubling effects will be for steelworkers, their families and the local economy in and around Lorain, Ritenauer said.
“It’s upsetting to the families, it’s upsetting to the employees, it’s upsetting to what U.S. Steel is trying to do,” Ritenauer said.
United States Steel employees do good work and the company is a good corporate citizen to have in Lorain, the mayor said. “But they’re at the mercy of the global economy,” he said.
“We don’t have any control over this,” Ritenauer said. “This is way above Lorain, Ohio. This is way above U.S. Steel corporate headquarters in Pittsburgh.”
The layoff will have an effect worth hundreds of thousands of dollars on the city’s 2015 budget due to lower income tax collections, Ritenauer said.
That is a relatively small percentage of the city’s annual general fund budget, which usually is $28 million to $31 million, Ritenauer said. However, he added he is willing to consider methods such as scaling back city projects, not filling open positions and not replacing workers who leave to balance the city budget.
U.S. Steel is a company that provides living-wage jobs for people who live in the city and in surrounding communities, and other local businesses may feel the effects, Ritenauer said.
“Ultimately the hope is that this is a cycle, we get through this cycle, U.S. Steel is back up and running,” he said. “Even Lorain is susceptible to volatility in the global economy.”
In recent years, U.S. Steel’s Lorain Tubular Operations has become something of a 21st century Midwest industrial celebrity.
Ohio Sen. Sherrod Brown and Sen. Rob Portman have toured the plant and they cite Lorain in their continuing opposition to foreign countries allowing their industries to “dump” steel pipe for sale in the U.S. market at below fair prices.
In May 2014, Brown and Rep. Marcy Kaptur, D-Toledo, led a rally at the plant’s gate with the USW and Alliance for American Manufacturing to oppose the low-cost steel imported pipe.
The American Petroleum Institute featured the Lorain Tubular Operations in a commercial broadcast on television and posted online for its EnergyFromShale.org promotional campaign.
The commercial does not mention U.S. Steel by name, but it does mention Lorain and appears to show the company logo and local workers making the steel pipes.
Zhejiang Yaang Pipe Industry Co., Limited