The steel mills that line the Lake Michigan shoreline in Northwest Indiana often date back more than a century.
And they're not just old — they're also capital-intensive and expensive to maintain, often swarmed with legions of contractors. A single blast furnace reline can run $100 million to $300 million.
But significant investment is coming to the lakefront in the next few years.
ArcelorMittal and U.S. Steel collectively agreed with the United Steelworkers union in the latest round of collective bargaining to put $5.6 billion into their U.S. operations, much of which are concentrated along the Northwest Indiana lakeshore. The union sought the investment guarantees to ensure that local mills remain sustainable and jobs remain secure over the long-term.
U.S. Steel committed to $2.5 billion over the course of the four-year contract, to be distributed company-wide based on the needs of each facility and approved projects. The Pittsburgh-based steelmaker has pledged to invest at least $750 million over the next several years revitalizing steelmaking assets at Gary Works, its largest mill.
"American steelworkers are the most competitive and efficient in the world," United Steelworkers Local 6103 President Michael Young said. "However, without capital investment, the mill’s equipment becomes stagnant and inefficient. Inefficiency and stagnation affect our competitiveness in a global marketplace."
International competitiveness has become increasingly important in the steel industry at a time when the world has more than 540 million tons of excess steelmaking capacity and imports account for more than one-fifth of the U.S. market, according to the American Iron and Steel Institute. Investment is necessary to ensure local mills remain efficient and competitive to ensure their longevity in Northwest Indiana, Young said.
"Without the mills, the economies of the communities in the region in which we live, work and raise our families would suffer greatly," Young said. "Whether anyone wants to face facts or not, our region produces 25 percent of America’s steel. We are very much dependent on the health of the steel industry in Northwest Indiana."
ArcelorMittal USA pledged in the new deal to invest at least $3.1 billion over the next four years "to keep our plants among the most productive and efficient in the world," according to a contract summary USW Local 1010 in Hammond provided to its members. During the last round of contract talks, the steelmaker only agreed to put $2.5 billion into its U.S. operations, including $200 million at the 80-inch hot strip mill and casters at ArcelorMittal Indiana Harbor West in East Chicago.
"The company cannot remain profitable, sustainable or viable over the long term without investing in our plants," USW Local 1010 said in the contract summary. "For our members, this is an issue that impacts the security of all of our jobs and important to keep the proud tradition of making steel alive in our communities for future generations."
U.S. Steel and ArcelorMittal both declined to comment on the contracts. Steelworkers have voted to ratify both contracts, which went into effect retroactive to Sept. 1.