Low gas prices are partially blamed for the up to 614 layoffs occurring at U.S. Steel’s Lorain Tubular Operations this week.

Courtney Boone, a U.S. Steel spokeswoman, said low gas prices are a “large contributing factor.” The drop reduces the profit incentive for fracking and conventional oil drilling, which the mill provides pipes for.

Gas prices dipped below $2 per gallon in Ohio in December, part of a national plunge to the lowest prices since 2009. The drop is due to a glut of oil on the worldwide market. Experts said the glut is because of a combination of increased U.S. fracking of natural gas and crude oil, increased Canadian tar sand oil production and lesser worldwide demand due to economic stagnation in China and Europe.

Prices have increased in Ohio and the rest of the nation since then. The average price for a gallon of regular Saturday was $2.36 – the national average was $2.45 – according to the AAA Daily Fuel Gauge Report. Nevertheless, the price still was substantially lower than the Ohio average at this time last year of $3.62.

Boone said the layoffs aren’t permanent but couldn’t estimate when the workers will be recalled and the mill restarted. She said it will be dictated by market conditions. Lorain Tubular laid off 108 workers last year.

Boone also blamed foreign currency manipulation and steel “dumping.” Dumping refers to foreign nations subsidizing domestic industries, such as steel. It allows the companies to export steel at artificially low prices that U.S. companies can’t compete with. Dumping is tied to currency manipulation – artificially increasing the cost of U.S. exports and decreasing import costs – which increases the U.S. trade deficit. The deficit was $41.8 billion in January, according to the U.S. Department of Commerce’s Bureau of Economic Analysis.

Reducing the deficit would expand U.S. Gross Domestic Product – the total value of all goods and services produced annually – and create between 2.3 million and 5.8 million jobs, according to a report last year from the Economic Policy Institute, a liberal think tank. The report said the deficit is largely responsible for 5.7 million U.S. manufacturing jobs lost since 1998. Ending manipulation would create between 103,000 and 254,000 jobs in Ohio, the seventh most nationally, the report said.

“Decades of diplomatic arm twisting and passive acquiescence to wanton abuse of the rules of the International Monetary Fund and World Trade Organization have failed to reverse the growing tide of currency manipulation,” report author Robert Scott wrote. “Ending currency manipulation is the best available tool for rebalancing global demand, re-inflating the U.S. economy and ending the jobless recovery.”

Lorain Tubular is in the district of U.S. Rep. Marcy Kaptur, D-Toledo, a vocal opponent of unfair trade. Kaptur couldn’t be reached last week, but U.S. Sen. Sherrod Brown, D-Cleveland, expressed disappointment over the layoffs. Brown in February re-introduced a bill he is co-sponsoring calling for greater oversight of currency rates to reduce manipulation.
“Illegal trade practices like dumping and market conditions in the natural gas industry have undermined too many American companies,” Brown said in an email. “Our manufacturing workforce is world-class, so it is disappointing to see layoffs like these affect Ohio workers.”

The layoffs will have a ripple economic effect. Lorain Tubular was Lorain’s top taxpayer last year paying about $1.87 million, said Treasurer Karen Shawver. It also was the top taxpayer in 2012 and 2013 and has been among the top five for many years.

Mayor Chase Ritenauer said Lorain has budgeted $400,000 less in revenue for its annual budget due to be passed by March 31. Ritenauer said in an email that the budget was “incredibly tight” due to the layoffs.

Behind the statistics are human beings. Tom McDermott is president pro tem of United Steelworkers Local 1104 which represents the workers. McDermott didn’t return calls about the effect of the layoffs on the rank and file. However, Boone said she understands how traumatic the layoffs are for workers and their families. “Every layoff is a person,” she said.

The workers will be getting help from at least eight members of the Ohio Department of Job and Family Services this week, said Angela Terez, a department spokeswoman. Workers may be eligible for up to 26 weeks of unemployment benefits and additional benefits if they are enrolled in federal training programs established to help workers laid off due to foreign imports.

The “rapid response team” also offers career counseling, job search assistance, advice on retraining and resume writing help. Terez wrote in an email that the team also tries to provide hope. “The services and information they bring let the employees know they are not alone,” she said.

 

Source : http://chronicle.northcoastnow.com/

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