[SteelTown]

Layoffs hit Lake Erie Works
U.S. Steel announces temporary cuts as industry crisis worsens

November 26, 2008
Naomi Powell
The Hamilton Spectator

U.S. Steel Canada is planning about 100 layoffs at its Lake Erie facility as the crisis in the steel industry worsens, union leaders say.

The temporary cuts come on the heels of roughly 175 layoffs at the steelmaker's Hamilton operation, where the blast furnace was shut down due to slumping demand.

"We've been told to expect layoffs and the union is preparing for that," said Bill Ferguson, president of the United Steelworkers union at the Lake Erie plant. "They told us they're running different scenarios, but we should be prepared to see people go in December."

Though no official notice has been issued to workers, many on the plant floor have already been notified of the cuts by their managers, he added.

U.S. Steel Canada employs about 1,100 workers at the Lake Erie plant in Nanticoke. It employs 1,700 workers in Hamilton. Both plants make steel using a blast furnace.

Trevor Harris, a spokesperson for the firm, declined to comment on any potential layoffs.

Demand for steel has flatlined as orders dry up from key customers in the automotive, appliance and construction industries.

Analysts expect the massive production slowdown in the sector to continue as the global financial meltdown unfolds. Although weekly production levels have not yet fallen to the 10-year lows last seen in 2001, they will likely reach this point shortly, according to Mike Willemse, a steel industry analyst for CIBC World Markets.

In a note to investors, Willemse said steel production "could decline by as much as 50 per cent before stabilizing."

Steel giant ArcelorMittal has slashed global production by one-third, cutting output at Hamilton's Dofasco by 40 per cent through at least the rest of this year. The plant will shut down for two weeks at Christmas, with about 5,000 workers required to take unpaid leave or vacation.

Pittsburgh-based U.S. Steel has also slowed production. In addition to the Canadian cuts, it has laid off 500 workers at operations in the Pittsburgh area; northwest Indiana; Fairfield, Ala.; Ecorse and River Rouge, Mich.; and Granite City, Ill.

Analysts don't expect demand for steel to pick up until at least mid-2009 as customers work through their own inventory and scale back on production of cars and appliances.