U.S. Steel Layoffs Due to Oil Slump

Oil Slump Leads to U.S. Steel Layoffs


The largest steel producer, U.S. Steel, said they will be temporarily putting some of its plants on hold and lay off 750 workers. U.S. steel

“These actions are part of an ongoing adjustment in operations due to challenging market conditions, including fluctuating oil prices, reduced rig counts, depressed steel prices and unfairly traded imports,” the company said in its statement, as reported by the Pittsburgh Business Times.

The layoffs were made public to the companies employees sometime in January looking for it to take effect in March and April of this year.

Four U.S. Steel sites have been targeted for the layoffs. 450 workers will be released at the Lone Star in Texas, as well as 200 workers at the Fairfield, AL, site. The company made the announcement through email.

Due to low production levels in Lorain, OH and Huston, 120 salaried employees were laid off in the tubular business. The Lone Star operations went Idle on March 25 and the Fairfield plant went idle in April.

10 percent of U.S. steel consumption is accounted for in the energy sector. “Oil country tubular goods” (OCTG) are the steel products used by crude oil companies in the construction of pipelines and rigs. Since OCTG products costs are higher than other steel goods, they happen to account for a large margin in steel companies’ businesses.

OCTG has been the most valuable segment for U.S. Steel and is the largest supplier of OCTG on the market.

U.S. SteelFluctuations in energy production affects steel companies bottom lines. With energy companies cutting their budgets  in response to oil glut and purchasing fewer tubular goods, the demand for U.S. Steel primary product has dropped dramatically.

Usually the most profitable division being tubular, was posted at an operation loss of $179 million in 2015 and a cut in sales by 68 percent reported by the Chronicle.

The company is looking to make a number of adjustments to its workforce and operations coming up in the next years. They are looking into depressed pricing in the steel industry  in addition to falling oil prices. In particular, the glut in global steelmaking, especially China, has resulted in sharp increases in steel imports.


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