41.8 F
Fort Worth
Wednesday, October 28, 2020
Energy U.S. Steel to idle two pipe factories - one in Texas -...

U.S. Steel to idle two pipe factories – one in Texas – due to oil price collapse

Other News

A look at big issues on Supreme Court’s agenda

Some of the issues either already on the Supreme Court's docket when it begins its new session or likely to be before...

Wall Street posts solid gains after surge in corporate deals

By ALEX VEIGA and DAMIAN J. TROISE AP Business Writers Wall Street kicked off the week with a broad...

Tarrant County ranks low in work-from-home study by NAR

North Texas ranks pretty high in the “Work from Home” category, according to a just-released study by the National Association of Realtors....

Closing prices for crude oil, gold and other commodities

The Associated Press Benchmark U.S. crude oil for September delivery rose 31 cents to settle at $41.60 a barrel Monday. Brent crude...
Robert Francis
Robert is a Fort Worth native and longtime editor of the Fort Worth Business Press. He is a former president of the local Society of Professional Journalists and was a freelancer for a variety of newspapers, weeklies and magazines, including American Way, BrandWeek and InformatonWeek. A graduate of TCU, Robert has held a variety of writing and editing positions at publications such as the Grand Prairie Daily News and InfoWorld. He is also a musician and playwright.

Tim Loh (c) 2015, Bloomberg News. NEW YORK — U.S. Steel Corp., the country’s second- biggest producer of the metal, plans to idle two pipe plants and lay off more than 750 employees as the oil-price slump cuts spending by energy companies.

U.S. Steel Monday notified 614 workers about potential dismissals in March at the company’s plant in Lorain, Ohio, which produces 780,000 tons a year of seamless tubular steel products. It issued similar notices to 142 employees at its tube factory in Houston, which processes 120,000 tons annually.

U.S. Steel has benefited from the high-margin line of business in recent years amid the country’s oil and gas boom. It’s helped Chief Executive Officer Mario Longhi’s efforts to transform the 144-year-old manufacturing giant — which has posted five annual losses and was ejected from the Standard & Poor’s 500 Index last year — into a more efficient producer.

Yet, with the U.S. benchmark price for crude tumbling more than 50 percent since June, oil and gas companies have cut budgets and explorers are expected to cut spending on capital projects by an average of 20 percent this year, Citigroup said in a Jan. 4 note to clients.

“The tubular segment has been the company’s most reliable profit driver,” Sam Dubinsky, a New York-based analyst for Wells Fargo, wrote in a note Tuesday.

He called the idlings and layoffs a “negative” for U.S. Steel and said that the tubular sector “could go from an earnings tailwind to a headwind in 2015.”

U.S. Steel made the decision to idle the plants because of “softening market conditions influenced by oil prices and trade,” Courtney Boone, a spokeswoman, said in a phone interview Tuesday.

In 2013, U.S. Steel’s tubular division comprised 10 mills with a production capacity of 2.8 million tons a year, according to a company filing. The segment posted a $69 million profit in the third quarter of 2014, up from $49 million a year earlier, even as the company posted an overall net loss.

“Sales had been quite strong and had boosted company-wide results when the general steel-mill side of the business was struggling,” Andrew Lane, a Chicago-based analyst for Morningstar Inc., said in a phone interview. “U.S. Steel is now kind of experiencing the other side of the coin.”

U.S. Steel will continue to produce and finish tubular products at its facilities in Alabama, Arkansas and Texas, the company said in an email.

Even before the recent decline in the price of oil, U.S. Steel said its tubular business was under pressure from cheap imports from Asia. That was behind the company’s decision in August to halt two unprofitable tube mills in McKeesport, Pennsylvania, and Bellville, Texas. The company has taken part in an anti-dumping action with the U.S. Department of Commerce to limit some of those imports.

Longhi, who became CEO in September 2013, has been “very willing to take swift action in hopes of restoring consistent profitability to the company,” said Lane.

The workers at Houston and Lorain received WARN Act notices, legally mandated alerts issued at least 60 days ahead of any closings or large-scale firings.

U.S. Steel fell 3 percent to $24.58 at the close in New York.

Latest News

2020 Dennis K. Stone Award Winner

Dr. Hubert Zajicek is the 2020 Dennis K. Stone Award, presented annually by Bio North Texas to an individual who has...

Texas Republicans highlight energy issues as a closing argument of campaign

By Mitchell Ferman, The Texas Tribune Oct. 28, 2020 "Texas Republicans highlight energy issues...

Michael Bloomberg gives $2.6 million to Texas Democrat running for railroad commissioner

By Patrick Svitek, The Texas Tribune Oct. 26, 2020 "Michael Bloomberg gives $2.6 million...

Trump intensifies fracking assault on Biden in Pennsylvania

By MARC LEVY Associated PressHARRISBURG, Pa. (AP) — In a late gambit to win the battleground state of Pennsylvania, President Donald Trump...

Lee Kun-Hee, force behind Samsung’s rise, dies at 78

By KIM TONG-HYUNG and HYUNG-JIN KIM Associated PressSEOUL, South Korea (AP) — Lee Kun-Hee, the ailing Samsung Electronics chairman who transformed the...