uss.jpg (Photo : Post-Gazette.com)
This will be one of the massive lay-offs in the history of US Steel. Idling two steel pipe factories would mean lots of jobless people. Around 750 workers will be sent home and out of jobs as soon as the factories shut down. Due to the recent oil price hump, the factories were left nothing but to stop operation.
US Steel Corporation is one of the biggest steel pipe-producing factories employing hundreds of factory workers. The steel company announced yesterday and gave notice to some 614 potential dismissals by March from the Lorain, Ohio plant. This plant produces around 780,000 tons of seamless tubular steel products each year. The management sent the sad news to another 142 employees at its steel tube plant in Houston, Texas from which some 120,000 tons of steel are produced each year.
These tube pipes are being used by oil rigs to pump and drill gas and oil. It is also used for construction purposes.
The reason behind such drastic measures is that the steel company has been hurting from falling oil prices and unfair competition coming from foreign companies.
The oil prices have plummeted around mid of the previous year and has since been at its lowest mark in five years' time. This reduced the demand for more tube pipes and steel. Hence, the less demand the two factories were getting.
Moreover, the US benchmark price for their crude oil had collapsed about 50% since June 2014. Gas and oil companies have started to cut on budgets, investors have reduced an average of 20% this year according to CitiGroup Inc. last January 4th.
The layoffs may have a negative effect on US Steel and that the tubular sector has a possibility to go from tailwind to headwind come 2015, according to Sam Dubinsky, a Wells Fargo New York-based analyst.
US Steel had 26,000 workers in North America, and 12,500 in Europe by 2013. They lost company shares of around 44cents to $24.91 by midday trading.
