Citing market headwinds, U.S. Steel will lay off up to 40 nonunion workers at its Minntac and Keetac taconite plants on Minnesota's Iron Range, officials said.
The news comes a week after disappointing third-quarter results and three weeks after Pittsburgh-based U.S. Steel idled one of its Minntac production lines in Mountain Iron in response to changing market conditions and softer demand for flat rolled and tubular steel.
Minntac and Keetac have about 2,200 workers combined at their mine and iron pelletizing plants in Mountain Iron and Keewatin, Minn. Fewer than 40 workers are expected to be affected by the layoffs, local officials said. Company officials would not disclose exact numbers.
U.S. Steel spokeswoman Amanda Malkowski on Monday said via e-mail that the decision to lay off workers came as the company puts in place a new operating structure it announced last month.
"Leaders examined organizational structures, work performed and spending to find opportunities to more efficiently execute our strategy," U.S. Steel said in a statement. "At the same time, we've been battling challenging market conditions, which means we need to truly become a leaner, more efficient organization faster. … Unfortunately, this was a necessary step in the execution of our strategy."
The layoffs are the latest indication that industry conditions are again changing for the iron ore and steelmaking industries.
Iron ore and its associated "taconite" ore pellets or "hot-briquetted iron" are key ingredients to making steel. Minnesota's Iron Range in the northeast pocket of the state is home to six mines and taconite plants.
Steel's newest downturn comes less than five years since the last global collapse, which beyond market conditions was also caused by swells of underpriced imports mostly from China but also from South Korea, India, Brazil and England.
During the 2014 and 2016 downturn roughly 2,000 Minnesota iron workers were laid off until idled factories or production lines began reopening in 2016 and recalled workers.
Today, sagging steel prices and slowing growth in China, Europe and global auto markets are pinching industry growth.
U.S. Steel lost $84 million during the third quarter of 2019, compared with a profit of $291 million realized for the same quarter one year ago.
Tony Barrett, a retired economics professor at the College of St. Scholastica in Duluth, said Monday that U.S. Steel's blues stem from the cyclical swings normally experienced by the iron and steel industry.
"Taconite production depends on the demand for steel. With the U.S. economy slowing in 2018 and 2019 there has just been a weakening in the demand for steel," he said. "The whole world has been kind of sluggish, and steel goes hand in hand with the overall economy. The economy is slowing and so the demand for infrastructure … and steel is going down. That means the demand for our taconite also goes down."
Barrett emphasized that layoffs at Minntac and Keetac are small and not indicative of any regional collapse.
"It's just that we had our steel tariffs. We had the tax cut and a nice rebound in 2018. You could say we had a sugar high and now we are back down to our 1.5% [GDP] growth," he said.