U.S. Steel Idles Plants Across U.S. -- Christmas Now a Time of Uncertainty

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Researched by Industrial Info Resources (Sugar Land, Texas)--United States Steel Corporation (NYSE:X) (Pittsburgh, Pennsylvania) announced more layoffs in the wake of falling steel prices and devastating market conditions. What started off as a few hundred workers here and there in plants across the U.S. and Canada has escalated. Current estimates are that about 3,500 employees will be affected. Christmas this year will still be a time of wonder, but not in the traditional sense. Employees of U.S. Steel are now wondering who will have a job in the coming year.

Current production needs will be supplied temporarily by Mon Valley Works, (Pittsburgh, Pennsylvania), the Gary Works (Gary, Indiana), Fairfield Works near Birmingham, Alabama, and Lake Erie Works in Nanticoke, Ontario. Plants on the schedule to be idled during the next few weeks include the Keetac iron-ore-mining and pelletizing facility in Keewatin, Minnesota; Great Lakes Works near Detroit, Michigan; and Granite City Works near St. Louis, Missouri. What the new year will bring is unknown and only filled with speculation and uncertainty.

Traditional maintenance projects that have previously been run according to rigorous schedules have been put in an indeterminate state. Dates, durations and dollar amounts earmarked for repairs will be decided on an as-needed basis. None of the plants can count on any set schedule at this time. Maintenance normally has run into tens of millions of dollars on an annual basis. Steel mills need those dollars for contractors, equipment replacement and repairs, as well as normal maintenance throughout the year needed to turn out a quality product. Because of the current reduction in the steel market, market conditions will continue to play a significant role over the next year in determining not only the schedules but how money within the industry will be allocated.

U.S. Steel still has plans for expansion. Hamilton Steel Works in Ontario has planned for multi-phase cogeneration additions, adding turbine generator sets to produce electricity using waste heat. These projects are scheduled to kick off from mid-2009 through 2010 and maybe beyond. To date, the schedule for these has not changed. Identical turbine sets, capable of producing 9.2 megawatts (MW) each for construction phases I and II have already been purchased. Phase I has an overall cost set at about $9 million. Phase II has a cost estimate of $7 million. The last of these projects, Phase III, is more ambitious, with a projected budget of $35 million and a production rate of 40 MW. Future market conditions will no doubt play a role in the completion of these undertakings.

The Clairton Works coke plant (Clairton, Pennsylvania) has been working on Phase I of a multimillion-dollar modernization plan. The plant has arranged the Uhde Corporation of America (Bridgeville, Pennsylvania) to cover the design/build needs for the $500 million project, which includes replacing 192 coke ovens with a new "C" battery that will contain 84 ovens. Rebuilding additional batteries at the plant is expected to further reduce harmful air emissions. Clairton Works produces approximately 4.7 million tons of coke annually. The schedule calls for construction to start early next year, and while that start date is close, it might be somewhat premature to tell if that date will hold or will also be pushed out. A second phase of the modernization has a tentative kick-off date after the completion of Phase I and carries a cost of $500 million. This project is in the early stages of engineering.

The Fairfield mill (Fairfield, Alabama) has been reviewing a rebuild for its 6,000-ton-per-day blast furnace. The estimated cost is $40 million. This project will continue to be reviewed and currently has a projected start date of 2010.

One of the major projects slated to start in 2010 is the restart of a production line that was idled in 1980 at the Keewatin, Minnesota, plant. The project is expected to increase production by 3.6 million tons per year, to reach full capacity of 9.6 million tons per year. The project has an estimated cost of $350 million. It is not known if the downturn in the economy will affect this project at this time. This is one of the plants that U.S. Steel has idled for the time being.

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