Devastating news is hitting 756 workers between two states as U.S. Steel Corp. announced the expected lay offs. The steel giant said the drastic collapse of global oil prices have forced them to turn the Ohio and Texas plants into ghost towns. They are not shutting down permanently, but will enter an “idle” state. The plants manufacturer steel tubing and piping for gas and oil exploration and drilling. The oil prices have completely bottomed out, which means less demand for the tools U.S. Steel Corp. produces.
A letter was shared with the Wall Street Journal from a worker who received a memo from the United Steelworkers Local 1104’s president Tom McDermott, from Lorain, Ohio. A majority of the lay offs will happen in Ohio, approximately more than 600 employees will be without work.
The company just opened jobs in December as the year started looking up for the company. But, then, states McDermott, the shift “abruptly turned sour.” While U.S. Steel has become the first casualty of the oil prices, more companies may be following their lead. This would be a huge hit in Ohio (my hometown), as the state already suffers an economic depression. Youngstown’s V&M’s plant may eventually be at risk, the company has declined to comment on any possible future plans.
For the past several years, U.S. Steel Corp. swam in the red, with a burst of profit in 2014 - citing the sales of steel tubes and pipes as being the biggest driver.
On Wednesday, the crude oil prices continued to decline to below $50 a barrel. This has not been seen since 2009. The company issued lay off notices to their stunned employees on Monday, explaining the weakened market conditions.
Industry experts believe while the price of oil crashing did not help the bottom line for U.S. Steel, they are certain the company would have faced a need to lay off a large number of employees, due to the competition from Asian imports.
Only the two plants have been notified. It is unknown what amount of U.S. Steel’s 26,000 employees workforce might be affected this year, the company has only signified two plants will go idle at this time.
The shares of the steel giant has dropped over 8 percent from January 1 to January 6. Affected by the news of the plant? Share your thoughts in the comments.