U.S. Steel's EAF project in Fairfield on schedule, no new layoffs announced

12 August 2015

U.S. Steel Corp. said work on its new electric arc furnace, or EAF, at its Fairfield Works facility is expected to be completed by the second half of 2016.

The furnace will replace the aging blast furnace, but could also result in major employment cuts. Experts recently told the BBJ that EAF facilities typically employ less workers than traditional integrated steel producers, and in making the switch to this new technology, U.S. Steel could be faced with even more layoffs.

The company has already said it expects to idle blast furnace production by mid-August, a move that could result in 650 layoffs for the company.

Representatives of U.S. Steel have previously said any future layoffs would be contingent on the new electric arc furnace once it goes online.

Sarah Cassella, a spokeswoman for U.S. Steel, said no new WARNs have been sent to company workers as of Tuesday, Aug. 11. The company currently employs about 1,500 in the area.

The aged blast furnace at the Fairfield Works has been the topic of recent discussions by U.S. Steel under its new Carnegie Way series of initiatives, all aimed at reducing operational costs and maximizing profits.

"Our Carnegie Way efforts, combined with short-term cost improvements, have helped to partially offset the continued depressed volumes and low prices in both the tubular and flat-rolled markets as well as the negative impact of tremendously high levels of imports," said U.S. Steel President and CEO Mario Longhi in the company's latest investor call.

The steel market has yet to recover from the pains felt by foreign overproduction of steel at the end of 2014 to the present date, and U.S. Steel is looking to take a page out of the book of one of their biggest competitors to stay afloat.

With the addition of an EAF, which incorporates scrap metal into the melt as opposed to iron ore and metallurgical coal, U.S. Steel will operate much like a "mini mill," which was first implemented by Nucor Corp. – currently the nation's leading steel producer.

While changes are being implemented in Fairfield, the market is far from adjusting in U.S. Steel's favor.

The Fairfield Works specializes in flat-rolled steel, which is a production sector that has continually decreased over the last several months. For its U.S. flat-rolled production, the company's capability utilization is currently at 59 percent, which is an 18 percent drop year-over-year.

Several steelmakers, including U.S. Steel and AK Steel, filed petitions on Tuesday claiming unfair imports from Australia, Brazil, China and other countries are hurting the domestic market.