Tariffs prompt US Steel to restart work on Alabama mill

US Steel says it is restarting construction on an Alabama mill to take advantage of higher steel prices.The company had stopped work on a furnace at t...

Posted: Feb 12, 2019 1:19 PM

US Steel says it is restarting construction on an Alabama mill to take advantage of higher steel prices.

The company had stopped work on a furnace at the plant in 2015 because of unfavorable market conditions. But US Steel said it resumed construction because of the Trump administration's trade policies, as well as incentives from the state and local government and support from the United Steelworkers union.

US Steel reached a new labor deal with the USW late last year. Steel prices have climbed lately because of the Trump administration's 25% tariff on imported steel.

The new mill will have 150 full-time jobs once it is completed in the second half of 2020. It will be able to make 1.6 million tons of steel tubes and pipes a year.

The company is reopening another mill in Lone Star, Texas. Last week US Steel announced that it would restart a tube works facility there that it had idled in 2016. The move will bring back 140 jobs.

Low steel prices weren't the only reason behind the decision to idle factories. Lower oil prices led to a cut back in oil drilling, which hurt demand for the steel tubes and pipes.

US Steel reported adjusted earnings of nearly $1 billion for 2018. That is nearly triple its earnings from 2017.

Sales grew by almost $2 billion for the year, a 16% increase. But steel tubes, which is what both the Texas and Alabama mills produce, still lost money last year. Flat-rolled steel, the kind used in automobiles and appliances, produced the big jump in income for the year.

But steel customers have reported a big hit from higher commodity prices in the wake of the tariffs. General Motors reported that higher commodity prices cost it $1.3 billion, while Ford reported a $1.6 billion hit.

Both automakers have announced plans to cut costs, including jobs, though neither have specifically cited commodity prices for the cuts.

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