EAST CHICAGO – ArcelorMittal is looking to close finishing lines at ArcelorMittal Indiana Harbor to address the overcapacity that’s been nagging the domestic steel industry.
The Luxembourg-based steelmaker lost $7.9 billion last year, more than half of which was because of loss of cash flows from overseas mining operations due to a steep drop in the price of iron ore. ArcerlorMittal then announced its Action 2020 five-year capital plan, which aims to cut $250 million from its U.S. operations.
Most of the cutbacks ArcelorMittal is proposing would take place in East Chicago, United Steelworkers District 7 Director Mike Millsap said.
The steelmaker employs more than 5,000 workers at ArcelorMittal Indiana Harbor. The massive steel mill has numerous finishing lines, including five continuous casting machines, a slab dimensioning facility, 80-inch and 84-inch hot strip mills, a pickling line, a five-stand tandem mill, batch annealing, continuous annealing, a temper mill, two hot-dip galvanizing lines and an aluminizing line.
ArcelorMittal wants to close several lines and make a major multimillion-dollar investment in the remaining ones so they can run around the clock, Millsap said. The idea is to save money by running fewer operations more efficiently.
Nationally, only 72 percent of the nation’s steelmaking capacity was used last week, according to the American Iron and Steel Institute. It’s estimated there are 600 million tons over-overcapacity worldwide, and that adds costs, depresses prices, and makes it hard for steelmakers to turn a profit.
No layoffs would take place, Millsap said. Any displaced workers would be transferred to other areas of the mill, which sprawls across 3,100 acres on the Lake Michigan shoreline.
“Some operations get idled, others get capital,” he said. "Nobody gets laid off.”
The USW and ArcelorMittal are discussing what operations would be idled as part of their contract negotiations, and nothing is final until a new contract is agreed to. The union has a vested interest in the company's success, Millsap said.
He said there’s largely a conceptual agreement on the restructuring, though the union has other unresolved issues, such as with the increased out-of-pocket expenses on health insurance ArcelorMittal wants workers to pay.
“We need the company to be able to sustain itself in the future," he said. "It has to be profitable in order for us to do our jobs. The type of investment they’re talking would protect our members.”