U.S. Steel lays off 25 percent of salaried employees

Joseph S. Pete joseph.pete@nwi.com, (219) 933-3316 Updated 57 min ago U.S. Steel, one of Northwest Indiana's largest employers, on Wednesday laid off around 25 percent of its salaried workforce, including at local steel mills. "This is part of the ongoing adjustment to staff levels and operations due to challenging market conditions, including fluctuating oil prices, reduced rig counts, depressed steel prices and unfairly traded imports," said U.S. Steel spokeswoman Sarah Cassella. U.S. Steel, which lost $1.5 billion last year amid a global import crisis, did not disclose exactly how many workers were laid off at each location, or overall. They were managers, supervisors and other white-collar workers not represented by the United Steelworkers union. The layoffs took place at U.S. Steel's headquarters at Pittsburgh and at plants like Gary Works and the Midwest Plant in Portage. U.S. Steel reported having 21,000 employees nationally in its most recent annual report to the Securities and Exchange Commission, and about 18,000 were represented by the USW in the new contract the two sides reached late last year. So the steelmaker likely laid off around 750 of the 3,000 salaried employees who aren't represented by the union. Gary Works is the company's largest mill, so many of those layoffs occurred in Northwest Indiana. Laid-off workers will get benefits under the company's supplemental employment program, Cassella said. But she could not comment on any details of the severance. Cassella said the layoffs were part of the Carnegie Way cost-cutting plan, and that laid-off workers were not let go for any one reason. "Many factors were carefully considered, including skills, knowledge and technical proficiencies needed to meet business needs," she said. No union workers were affected, United Steelworkers District 7 Director Mike Millsap said. "It's all non-bargaining unit — supervisors, engineers, lawyers," he said. "This is just about them taking care of their cost issues. They're trying to reduce their costs." U.S. Steel, which has lost money in six of the last seven years, has now laid off around 1,500 workers so far this year. The steelmaker just laid off about 800 workers last month in Alabama and Texas as a result of the low oil prices and crippled demand for tubular steel used in drilling. The steelmaker laid off an undisclosed number of non-represented workers as part of its Carnegie Way initiative after Mario Longhi was named Chief Executive Officer in late 2013, and has been going from department to department to see where it can cut costs, said Charles Bradford, a New York City-based analyst with Bradford Research Inc. "They're trying to restructure themselves so even in a bad time they could be profitable, or at least in reasonably good shape," he said. U.S. Steel employs far more white-collar workers than its mini-mill competitors, such as Nucor. Labor makes up around 25 percent of U.S. Steel's operating costs as compared to 10 percent for Nucor and as little as 6 percent for Fort Wayne-based Steel Dynamics, Bradford said. This round of layoffs could have taken place now because it took time to do the analysis of what costs could be cut, or because U.S. Steel was adjusting to slower growth projections of 2 percent, he said. Layoffs will not necessarily make the company more efficient, he said. "Who's going to do the work?" he said. "Will a computer do it? Will they hire contractors to do it?" But U.S. Steel is under a lot of pressure after another annual loss and failing to meet analysts' expectations. "When you need to reduce costs, it's something you've got to do, but it's never pleasant," Bradford said. "From what I've heard these layoffs took place a whole lot slower than what people would have liked." Great Lake steel output continues to rise Great Lake steel output continues to rise Imports down 40 percent, but still have quarter of market share Imports down 40 percent, but still have quarter of market share +2 U.S. Steel CEO Longhi takes steep pay cut