Lorain Hopes For New Markets And Renewed Oil And Gas Development For Its U.S. Steel Plant
U.S. Steel has said the rapid fall in world oil prices and declining demand for piping used in shale oil and gas production are behind its decision to shutter the Lorain plant.
And while many motorists are happy that gas prices have dipped below $2.00 a gallon, steel workers are feeling the burn as their industry takes a hit. 614 with the US Steel plant in Lorain that makes tubing for shale drilling are to be laid off, starting in March.
Mayor Chase Ritenauer says that'll have quite a ripple effect for his city.
“Because those employees at U.S. Steel…they were getting paid a good wage, they had money to invest in the local economy, to spend in the local economy," says Ritenauer. "Y’know houses don’t’ get sold without those types of jobs.. Automobiles can’t be purchased without those types of jobs. So obviously nobody’s rooting for gas prices to go back to $4-$5 a gallon, but I’m rooting for it to get to a point where U.S. steel has the market demand to where they can bring people back to work.”
Lorain will also take a hit on taxes, losing $400,000 a quarter that U.S. Steel would normally pay. It's a sizable chunk of the city's budget.
Mayor Ritenauer believes the layoffs won't last long, but won't say what exact deals or products may be in the works.
“We’re looking at hopefully mid-year for this to come back with the operation that they currently do, providing or producing the steel for drilling and fracking, so we’re hoping by mid-year to the 3rd quarter that that comes back," he says. "But in looking ahead in terms of diversification, we continue to work with U.S. steel on some deals with potential expansion there, in a way that diversifies what they do. It could serve a different part of the market, it can soften any future downturns.”
Some forecasts indicate natural gas production will start to grow again this year but other analysts predict demand could be only half what it was a year ago. Sharp drops in energy stock prices also suggest tubular steel will suffer.
Tom McDermott of the United Steel Workers Local 1104 declined to be recorded for this story. But he tells WCPN that his union and corporate representatives from U.S. Steel will meet in 60 days to discuss the Lorain’s plant future.