Local workers try to weather steel industry storm – Canton Repository
Decreased demand is hurting steel companies throughout the region and has translated into layoffs for hundreds of workers.
TimkenSteel has more than 150 workers laid off locally, and another 70 laid off in Texas. Over the past year the company has maintained rolling layoffs and temporary closings to control costs.
Canton-based Republic Steel has started the process of idling operations in Lorain, which will leave 400 workers on layoff. The closed Lorain facility added an electric arc furnace in 2010, but the equipment has been shut down since last summer.
The steel industry has been subject to ups and downs for years, but observers see the current downturn as among the worst.
While reviewing 2015 results with stock analysts, Tim Timken, chairman, chief executive officer and president of TimkenSteel, described this downturn as being “as deep and long as any.”
BY THE NUMBERS
In an October report, the World Steel Association said the industry had reached the end of a major growth cycle — fueled by China’s economic development — and is experiencing low growth.
Changes in the highly cyclical oil and natural gas industry also have impacted the steel industry.
Republic Steel cited the decline in energy markets as a reason Lorain operations struggled during 2015. Meanwhile, TimkenSteel reduced operations at a Houston facility that serves energy market customers.
In 2014 OPEC countries failed to agree on production cuts, which prompted a drop in oil prices. U.S. companies responded by curtailing exploration and drilling in shale fields around the country. That cut into demand for steel pipe and products used in the drilling process.
Steel production has declined worldwide, with crude steel production sliding 2.8 percent in 2015 compared with 2014, according to reports compiled by the World Steel Association.
The biggest decline among major global markets came in the United States where production dropped 10.5 percent, according to the association. The drop saw India produce more steel (89.6 million tons) in 2015 than the United States (78.9 million tons). U.S. production of 88.2 million tons in 2014 had outpaced India’s production of 87.3 million tons.
The world’s largest steel market, China, saw a 2.3 percent production decline, but still produced 803.8 million tons of steel, the association reported.
Lower steel production in China likely coincides with the country’s economic slow down. Still, all of that Chinese-made steel eventually will be used somewhere.
U.S. steel companies are grumbling about foreign steel finding its way into U.S. markets. Several companies have filed complaints with the U.S. Department of Commerce. Late last year the federal agency issued a preliminary determination that China, India, Italy and South Korea were illegally dumping corrosion-resistant steel in U.S. markets, but it still is reviewing other cases.
In addition to bringing new steel into the country, the imports can push the price of steel lower.
TimkenSteel and Republic both make special bar quality (SBQ) steel, as opposed to high commodity steel products, which helps both in the battle against imports.
A strong brand name and niche business model put TimkenSteel in a better position against imports, but the company still feels the pricing pressure, spokesman Joe Milicia said.
Steelworkers cite imported steel as one of the reasons so many have been laid off.
The federal government isn’t responding quickly enough to imports being dumped here, said Dennis Brommer, a representative with the United Steelworkers. “That is something that should be an easy fix, but Congress is reluctant,” Brommer said of the foreign steel problems.
Steel companies are hoping markets turn around in the coming year. While energy and mining markets still seem to be lagging, there are signs that other segments are improving.
Internationally, the World Steel Association expects China’s economy will stabilize. There are concerns because of the vulnerability of emerging markets, but it appears the recovery of steel demand in developed economies is on track.
TimkenSteel and Republic are hopeful that steps the companies have put them in a job position when the markets turn around.
Jamie Vigil, Republic’s president and chief executive officer, expressed hop in the statement announcing the Lorain plant’s shut down. “We are positioned for growth and will be ready to provide capacity once the turns around.”
Reach Edd at 330-580-8484 or firstname.lastname@example.org
On Twitter: @epritchardREP
Source: Google news - Steel production