U.S. Steel to Eliminate 1,545 Michigan Jobs


(Bloomberg) -- U.S. Steel Corp. plunged after delivering a barrage of harsh news, warning of a loss and announcing it will shut down most of its Great Lakes Works facility near Detroit, lay off workers and slash its dividend.

The adjusted loss is expected to be about $1.15 a share in the fourth quarter, with a fully diluted loss of 42 cents for 2019, the Pittsburgh-based company said Thursday in a statement. The industrial icon plans to lay off as many as 1,545 workers from the Michigan plant, reduce its quarterly dividend to 1 cent from 5 cents, and prune capital expenditures.

U.S. steelmakers are facing slowing demand in the manufacturing sector, even though mills have enjoyed protection because of Trump administration tariffs. U.S. Steel has been a laggard in the domestic industry, with aging plants that are less efficient than rivals with newer technology. That's led to a spate of operational initiatives under different names that have shifted multiple times since 2014.

The shifting strategies "raise concerns that there's no long-term, overriding execution capability to improve competitiveness," Richard Bourke, a senior credit analyst at Bloomberg Intelligence, said in a note. "Cash costs from layoffs will likely exceed savings from the cuts, in our view."

Bourke cited the "Carnegie Way," the Asset Revitalization program, steel technology projects and Big River investment among the "ever changing changing operational priorities."

U.S. Steel stock has sunk by about a third this year, hitting the lowest since 2016 in October, even as the broader U.S. equity market hit all-time highs. The shares dropped 8.1% to $12.28 at 9:45 a.m. in New York.

In October, the producer announced a $700 million investment in a steel mill with rival steel technology to the legacy integrated mills the company has operated. Chief Executive Officer David Burritt surprised some analysts during a conference call after the announcement when he said the new investment would be a core part of the business, conspicuously leaving out Great Lakes Works and Granite City -- two legacy mills -- as key to the company's future.

All of this comes more than two years after U.S. Steel shocked investors with a three- to four-year plan to revitalize aging facilities that were choking earnings. Former CEO Mario Longhi stepped down weeks after the unexpected announcement, Burritt stepped into the role, and by July 2017 stated that the projects price tag would be $1.2 billion.

The company said Thursday it will indefinitely idle a "significant portion" of the Michigan operation, starting with the iron and steel-making facilities in April and then the hot-strip mill rolling facility before the end of 2020.

Mixed Reaction

The company's late-Thursday night announcement was met with a mixed reaction from Jefferies LLC, which said that while the expected loss was worse than analysts had expected, there would be benefits for the industry as a whole from the plant closures.

Although the loss "likely surprises most investors, its proactive move to permanently idle Great Lakes Works is laudable," analysts including Martin Englert said in a note. "We see the shuttering of U.S. flat-rolled steelmaking capacity as a broader incremental positive for the domestic industry into 2020 and beyond given the numerous expansions planned by peers."

The Trump administration put 25% duties on imported steel in March 2018, fulfilling a campaign promise to help the steel industry, which he said was suffering from dumping by actors like China. Michigan, where U.S. Steel's Great Lakes facility is located, was narrowly won by Trump in 2016, helping pave his way to the White House.

"Current market conditions and the long-term outlook for Great Lakes Works made it imperative that we act now," Burritt said in a statement. Production currently at Great Lakes Works will be shifted to Gary Works in Indiana.

It was a stark change from Burritt's comments in 2018 when the company restarted two blast furnaces in Granite City, Illinois. Back then, the CEO hailed Trump's tariffs for creating the market conditions to boost supply and re-hire workers.

--With assistance from Steven Frank, Jake Lloyd-Smith and Reg Gale.

To contact the reporter on this story: Joe Deaux in New York at jdeaux@bloomberg.net

To contact the editors responsible for this story: Phoebe Sedgman at psedgman2@bloomberg.net, Steven Frank, Joe Ryan

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.


More Related News

Duncan Robinson
Duncan Robinson's improbable basketball journey: From Michigan basketball to NBA Finals

Former Michigan basketball player Duncan Robinson will play in the NBA Finals for the Miami Heat. Once a Division III player, he now will face LeBron.

NYT report says Trump paid $750 in taxes as Senate looks to confirmation fight over Amy Coney Barrett - election updates
NYT report says Trump paid $750 in taxes as Senate looks to confirmation fight over Amy Coney Barrett - election updates

A New York Times report showing Trump paid little and sometimes no federal income taxes has put the president's finances in the spotlight again.

Michigan cherry farmers could lose jobs, livelihoods amid tough competition from overseas
Michigan cherry farmers could lose jobs, livelihoods amid tough competition from overseas

Turkish cherries are being sold at 20% of the cost of those grown in Michigan. It's like buying a loaded, full-sized import pickup for $10,000.

Majority of Michigan, Wisconsin voters think RBG Supreme Court seat should not be filled before election
Majority of Michigan, Wisconsin voters think RBG Supreme Court seat should not be filled before election

The poll found Democratic nominee Biden leading Trump among likely voters 52%-44% in Michigan, and 54%-44% in Wisconsin.

Rep. Justin Amash, the ex-Republican who tussled with Trump and the GOP, reflects on what
Rep. Justin Amash, the ex-Republican who tussled with Trump and the GOP, reflects on what's next

Rep. Justin Amash isn't seeking reelection after leaving the Republican Party and clashing with its leadership.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply


  • AHoffGeolla
    (2020-01-09 05:44:35Z)

    deserve http://cialisoni.com/# - buy generic cialis online wall cheap cialis online constant
    the https://cialsagen.com/# - when will generic viagra be available in the usa cheap canadian pharmacy online viagra generic buy viagra critic

  • xxnx
    (2020-01-14 02:37:53Z)

    Once I thought about things like: why such information is for free here? Because when you write a book then at least on selling a book you get a percentage. Thank you and good luck on informing people more about it…

  • AHoffGeolla
    (2020-01-20 04:22:28Z)

    him http://cialisle.com/# - online cialis arrest cialis online buy drag
    regularly https://cialsagen.com/# - buy viagra buy viagra online viagra prescription slave

  • AHoffGeolla
    (2020-01-21 06:42:19Z)

    impressive http://cialisoni.com/# - cheap cialis online root online cialis outcome
    fiction https://cialsagen.com/# - erection pills online viagra generic viagra india buy viagra online without prescriptions allow

  • ysnxticpejbh
    (2020-03-23 16:13:52Z)

    zbnkwh sildenafil generic india buy sildenafil citrate online click here! qfplri straight from the source viagra vs sildenefil click here

  • poxybeubswdc
    (2020-04-18 02:32:35Z)

    xbeauw basics bviagra directory xztoqi buy sildenafil in usa usa generic viagra made a post

  • ksbnbojouutd
    (2020-05-23 23:20:24Z)

    cialis.com coupon CIALIS Cialis cialis prescription cialis
    CIALIS cialis viagra vs cialis is Cialis eli lilly coupons for cialis best price on cialis Cialis
    cialis cialis cialis tadalafil from walmart cialis without a doctor 20mg cialis

  • plbgbveliyxs
    (2020-06-10 18:20:57Z)

    viagra without a doctor prescription usa Viagra canadian sildenafil buying viagra online canada buy viagra canada viagra
    purchasing viagra from canada

    viagra viagra from a pharmacy in canada generic viagra india pharmacy get viagra viagra canadian online pharmacy
    canadian pharmacy viagra online viagra no prescription canadian pharmacy viagra and cialis viagra canadian viagra
    cost of viagra in canada Viagra

  • efggnjrqpwxm
    (2020-06-11 19:34:08Z)

    canada drug store Viagra canadian online viagra canada pharmacy canadian sildenafil viagra canada online pharmacy
    canadiandrugstore.com viagra cialis walmart rx prices cialis viagra viagra canada with prescription
    prescription prices viagra canadian online pharmacy online drugstore canada viagra online canada viagra canada drugs
    online drugs canada www viagra com buying drugs from canada pharmacy online store cialis viagra canadian pharmacy viagra cialis order cialis

  • judicial case search virginiaiq
    (2020-08-21 05:03:21Z)

    wopgfixophxz nebraska court case search
    la court case search frederick judiciary case search search for court cases alaska court cases search


Top News: Economy