One of the most iconic industrial titans of America has been doing quite poorly over the past few years. Just recently, U.S. Steel (NYSE: X) made news again when the company announced it had decided to fire 1,545 jobs in a small Michigan town.
The company made news on Friday just before the weekend when it announced it was closing a major mill close to Detroit, laying off plenty of workers while also cutting back on its dividend. The mill in question, called the Great Lakes Works, will be officially closing down on April 1st. Earlier this year, U.S. Steel announced that it would be temporarily cutting 200 workers from the plant, but this recent announcement seems to suggest that these job cuts will be permanent.
“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. These decisions are never easy, nor are they taken lightly,” said CEO David Burritt according to CNN. “In order to further accelerate our strategy of creating a world-competitive…US Steel, we must make deliberate but difficult operational decisions. 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,”
Overall, it seems the general strategy that U.S. Steel is employing is to try to cut down on facilities that aren’t strong revenue generators and instead focus on its better-performing facilities and provide them with upgrades. That’s exactly what the company announced it would do for another mill outside of Pittsburgh, with U.S. Steel in the process of a $1 billion upgrade to make the facility more efficient.
At the same time, there’s a political element to this business decision as well. President Trump has promised in the past to help states such as Michigan which have seen their manufacturing industry disappear. Following the news that these 1,545 jobs would be lost, Peter Navarro, the White House’s director of the office of trade and manufacturing policy, went on to say that these layoffs were due primarily due to problems with U.S. Steel rather than a result of the ongoing tariffs and trade wars with China.
In response to the news, shares of U.S. Steel ended up falling by 11.5% over the course of Friday. In general, the outlook for U.S. Steel looks pretty grim, a thought that’s reflected by most analysts on Wall Street. Out of the 15 or so experts covering the stock at this time, 10 of them have a “hold” rating, while 5 have some sort of a “sell” rating.
U.S. Steel Company Profile
U.S. Steel is an integrated steel producer, with 22 million tons of steelmaking capacity in the United States and Slovakia. The company produces flat-rolled and tubular products for a wide variety of end markets and applications. U.S. Steel also operates four iron ore mining sites and engages in rail and barge transport services. – Warrior Trading News
