GARY | Another 300 steel jobs will disappear in yet another blow to Northwest Indiana's already bruised and bloodied steel industry.
U.S. Steel wants to permanently close the coke-making plant at Gary Works, which would displace 300 workers. The sprawling steel mill in Gary would bring in coke — a purified form of coal that's burned in blast furnaces to make iron — from elsewhere instead of making it itself.
An estimated 300 workers now bake coal into fuel for steelmaking at the No. 2 coke battery, which produced an average of 593,000 tons over the last two years. The Pittsburgh-based steelmaker plans to talk with affected workers and the United Steelworkers union about whether they will be transferred or laid off, spokeswoman Courtney Boone said.
In either case, an estimated 300 jobs that command some of the highest wages in the local manufacturing sector will vanish for good. U.S. Steel already announced it would lay off 369 production workers indefinitely in March when it idles East Chicago Tin, which employs 397, including management and office workers.
Earlier this week, U.S. Steel warned the union that it is proposing to permanently close the coke plants at Gary Works on May 27, Boone said.
"This strategic decision was made in light of the company's long-term coke position and the future anticipated steelmaking operations, including the inclusion of an electric arc furnace," she said.
USW District 7 Director Mike Millsap said the union would work with the company to transfer as many workers as possible to fill vacant positions or replace contractors at the mill, which employs about 5,000 steelworkers.
"They're basically hiring, since enough workers are retiring," Millsap said.
Rumors have been swirling that the days of coke-making at Gary Works were numbered ever since U.S. Steel restarted Clairton Coke Works in November 2012 after a $1.2 billion upgrade to make it more efficient and environmentally friendly, he said. Clairton, which is near Pittsburgh, has the largest coke-manufacturing facility in the United States.
U.S. Steel had been shuttering coke batteries at Gary Works. In 2013, after new CEO Mario Longhi came on, the company closed the No. 5 and No. 7 furnaces in Gary, transferring 120 workers to other positions at the mill as part of an overall strategy to cut costs after five straight years of annual losses. Last year, the steelmaker announced it would cancel the Carbonyx project at Gary Works, after dumping $210 million into a failed quest to find a coke substitute that would shield the company from the open market's volatility.
The problem is the coke battery at Gary Works is old and not cost-effective, said steel industry analyst Charles Bradford with New York City-based Bradford Research. U.S. Steel has done a calculation that it's cheaper to ship coke in from Western Pennsylvania than make it in Gary, he said.
Gary Works could source its coke from a number of places, Boone said.
"In addition to U. S. Steel's other coke-making operations, including Clairton, we also have relationships with coke suppliers to support our steelmaking operations," she said.
The steelmaker, which turned its first profit in five years in 2014 after a cost-cutting initiative known as Carnegie Way, has been trying to reduce fixed costs that drag down on its financial performance when business slows. U.S. Steel also recently announced it would close Granite City Works, laying off 176 workers in Southern Illinois.
"We are continuing to pursue the current EAF (electric arc furnace) project as was described in our recent fourth quarter, year-end 2014 earnings call," Boone said. "We are also monitoring market conditions and believe the EAF and the proposed closure of the coke-making operations at both Granite City Works and Gary Works puts the company in a more flexible position to adjust to cyclical market conditions."
Total job losses in Northwest Indiana's steel industry now run to about 1,000 in 2015. ArcelorMittal plans to idle Indiana Harbor Long Carbon in East Chicago, which would eliminate another 300 jobs, though those workers would be transferred.
ArcelorMittal idled the No. 2 galvanizing line — once the most productive in the world — at ArcelorMittal Indiana Harbor West last year. The Luxembourg-based steelmaker also warned the union it plans to idle the No. 1 aluminizing line at the former LTV steel mill in December.