U.S. Steel appeared to be on the ropes just a few years ago.
The Pittsburgh-based steelmaker — the world's first billion-dollar corporation, the founder of the city of Gary and long the largest steel company in the world — reeled during the import crisis that roiled the domestic steel industry in 2015 and 2016.
Amid a record surge of cheap steel imports, U.S. Steel idled East Chicago Tin and Granite City Works and canceled an Electric Arc Furnace project in Alabama. The steelmaker laid off 25 percent of its salaried workforce at a dire time when thousands of steelworkers were laid off nationwide.
With imports capturing a record 29 percent of the U.S. market share, according to the American Iron and Steel Institute, U.S. Steel lost more than $2 billion during 2015 and 2016, capping a period in which it posted an annual loss in seven out of eight years.
But market conditions have improved in the United States. Section 232 tariffs of 25 percent have helped lift steel prices and restore profitability. And U.S. Steel dumped former CEO Mario Longhi whose cost-cutting schemes were blamed for failing to keep up equipment at U.S. Steel mills, crippling production when the industry started to turn it around, after a shocking, surprise loss of $180 million in the first quarter of 2017.
Chief Executive Officer David Burritt, who took the helm in 2017, has overseen a "renaissance" of the storied steelmaker and has pledged $2 billion into a company-wide asset revitalization program. U.S. Steel, the Northwest Indiana Business and Industry Hall of Fame's Enterprise of the Year, announced last year it would invest $750 million into Gary Works, following an investment of just $50 million the previous year.
A renaissance at U.S. Steel
The 113-year-old integrated steel mill that was name-dropped as the gold standard of corporate success in "The Godfather" made the metal that raised high skyscrapers and buttressed bridges throughout American during the 20th century. Gary Works cranked out metal that was used in many landmarks, such as the Sears Tower, the John Hancock Center, the Chicago Picasso, the Houston Astrodome, the St. Louis Arch, and Touchdown Jesus at Notre Dame. The massive steel mill, stretching stretches seven miles along the Lake Michigan shoreline, is the very reason Gary exists. It remains the largest integrated steel mill in North America and a backbone of the Region economy, employing more than 3,800 steelworkers in good-paying jobs.
"We are honored to be named the Times Business and Industry Hall of Fame Enterprise of the Year," U.S. Steel spokeswoman Meghan Cox said. "We are proud to call Northwest Indiana home to our Gary Works facilities. We owe the honor to the thousands of men and women of U. S. Steel who work daily to uphold our core values of safety and environmental stewardship. These men and women work diligently and proudly to ensure our products are made with the utmost in safety, quality, delivery and cost."
Burritt said at a press conference last year with Indiana Gov. Eric Holcomb that the three-quarters of a billion dollars U.S. Steel is pumping into Gary Works would help preserve the steel mill for another century. The investment means stability in jobs that people across Northwest Indiana depend on, and much-needed tax revenue for the city of Gary.
“We are pleased to be making this significant investment at Gary Works, which will improve the facility’s environmental performance, bolster our competitiveness and benefit the local community for years to come,” he said. “Through the skill and determination of our employees, support from the state and city, without which this project would not be possible, and favorable trade policies with the strong Section 232 national security action on steel imports, we are experiencing a renaissance at U.S. Steel.”
U.S. Steel spokeswoman Amanda Malkowski said the $750 million investment was "a minimum commitment" into "critical steelmaking facilities" that include the four blast furnaces, the steel shop, the casters and the hot strip mill. U.S. Steel pledged to work for years on modernization projects without slowing production at its single largest mill, which can produce up to 7.5 million tons of steel a year.
"This is a complex effort that will be marshaled over a period of years with individual projects of varying size performed by both internal expertise and external contractors — all timed to minimize impact to production," Malkowski said last year. "This is a major modernization at Gary Works, with investments focused on improving reliability, throughput, quality, cost, and capability."
U.S. Steel did not expect to hire any more workers in Gary, but said the investment indicated its long-term commitment to the city at a time when the company had turned only three annual profits in a decade.
"This news couldn’t have come at a better time as we continue to persevere in the progress of our great city," Gary Common Council President Ronald Brewer said last year. "This multi-million dollar investment demonstrates U.S. Steel’s renewed commitment to its workers and to the city of Gary, and we look forward to strengthening this relationship for the betterment of our great community.”
A century of partnership
Gary Works may no longer employ more than 30,000 workers, and may no longer hire anyone with a strong back who hops off the train to Gary with little more than a bindle, but it remains an economic pillar of the city and Northwest Indiana as a whole.
“The city of Gary and U.S. Steel have had a partnership for well over one hundred years," State Sen. Eddie Melton, D-Gary, said last year. "The investment that the company announced today represents a continuation of that partnership for many years to come. The announced renovation and expansion of Gary Works will have far-reaching benefits, not only for the company, but for the employees, the City of Gary, the Region, and the entire state.”
What's good for Gary Works is good for the Region as a whole, State Sen. Frank Mrvan, D-Hammond, said after U.S. Steel's announcement.
“I am extremely happy that the steel industry is alive and well in Northwest Indiana," Mrvan said. "This announcement will ensure that steel production will have a major presence in this part of the state for many more years. The continuing impact of investments such as this at Gary Works, will ripple throughout the Region.”
Holcomb said the ongoing investment into Gary Works, long one of the pillars of Northwest Indiana's economy and industrial might, would have a lasting positive impact on the state for years to come.
“U.S. Steel has a rich history in Indiana, producing steel for customers around the world while providing quality career opportunities for Hoosiers and supporting their families here in Northwest Indiana," Holcomb said. "We look forward to U.S. Steel’s continued success and growth right here in Gary, Indiana. U.S. Steel has powered this Region, powered this state and powered this country. It's been an engine to our economy for over a century.... With this reinvestment, we're well on our way to celebrating another 100 years. It shows U.S. Steel's continued commitment to the state of Indiana, the No. 1 steel manufacturing state in the country."
The steelmaker is getting $47 million in incentives from the state and city over the next five years, with the city government, Gary Community School Corp. and Gary Public Library receiving an estimated $25 million of payment in lieu of taxes. The city, the schools and the library will receive an estimated $2 million a year in new tax revenue as a result of the massive investment in Gary Works.
U.S. Steel also has also pledged to donate $100,000 to a community development fund in Gary that could go to services such as police or road repairs, or the demolition of vacant buildings. As market conditions have improved and U.S. Steel has gotten more profitable, turning a $592 million profit in the fourth quarter and a $1.11 billion profit for the year, the steelmaker also revived its electric arc furnace project in Alabama and brought blast furnaces at Granite City Works in Illinois, bringing hundreds of steelworkers back to work.