U.S. Steel Corp. plans to idle much of its Great Lakes Works operation in Detroit, a move that could affect more than 1,500 workers.
The Pittsburgh steel manufacturer announced that the idling of the iron and steelmaking operations in Michigan will begin in April, followed by the hot strip mill rolling facility before the end of 2020.
The company also slashed its quarterly dividend _ to 1 cent per share, down from 5 cents _ starting in 2020, formally ended its idled stock repurchase program and forecast a bigger loss for the fourth quarter than analysts were expecting.
U.S. Steel described the move at Great Lakes as a strategic one meant to focus on core assets within its North American flat-rolled segment, with the goal of differentiating its offerings either by cost or capability.
U.S. Steel cuts undisclosed number of nonunion jobs
"In order to further accelerate our strategy of creating a world-competitive 'best of both' U.S. Steel, we must make deliberate but difficult operational decisions," President and CEO David B. Burritt said in the announcement.
"In this case, current market conditions and the long-term outlook for Great Lakes Works made it imperative that we act now, allowing us to better align our resources to deliver cost or capability differentiation across our footprint."
He said transitioning production currently at the Great Lakes Works site to U.S. Steel's Gary Works in Indiana will make the company more efficient.
The decision to idle capacity at the Michigan site follows U.S. Steel's previously announced plans to invest more than $1 billion in its Mon Valley Works and to fully acquire Big River Steel in Arkansas, the nation's first LEED-certified steel mill, within the next four years.
At the Great Lakes Works, U.S. Steel said it will continue operating "the Pickle Line, Cold Mill, Sheet Temper Mill, Continuous Galvanizing Line (CGL), Annealing, and Warehouses."
The company said it will issue layoff notices to approximately 1,545 employees at Great Lakes Works, "although we anticipate the final number of employees who will be impacted by the idling will be lower."
U.S. Steel said it will stay in contact with union officials as the plans develop.
Roller Coasters from Kennywood park peek out amongst the wires and smoke from the U.S. Steel's Edgar Thomson Works on Wednesday, June 5, 2019. The Pittsburgh steelmaker is spending less than expected on upgrades to the plant in 2020 as it focuses on its recent stake in a nonunion plant in Arkansas.
"We are conscious of the impact this decision will have on our employees, their families, and the local community, and we are announcing it now to provide them with as much time as possible to prepare for this transition," Mr. Burritt said.
The steelmaker said it expected an adjusted loss of $1.15 per share for the fourth quarter, higher than analysts' consensus estimate of a loss of 59 cents. For the full year, the loss is projected to be 42 cents per share vs. the consensus estimate for a profit of 6 cents.
"While steel markets in North America are recovering, the Europe and tubular segments remain weak," the company said in its statement.
U.S. Steel shares skidded almost 11% Friday, losing $1.44 to close at $11.92.
