Low Oil Prices Mean Layoffs for U.S. Steel in Lorain

Seamless tubular products from US Steel
Seamless tubular products from US Steel

Lorain is paying a particularly heavy price from the rapid drop in world oil prices - the loss of jobs for 600 U.S. Steel workers in Lorain. The plant made steel pipes used in the oil & gas industry exploring the Utica shale beds in Ohio.

Economist Iryna Lendel, Assistant Director of the Center for Economic Development at the Maxine Goodman Levin College of Urban Affairs at Cleveland State University, says the layoffs are an illustration of how the shale affected the regional economy.

“It just very visibly shows that manufacturing is the huge supplier to the oil and gas industry and our region benefited from shale development not only from drilling per se but more than anything else by energizing our manufacturing.”

That manufacturing supplies more than shale drillers. It also makes steel for crude oil pipes and rigs around the country and off shore.

“The region is hit not just because we have this local development of Utica. We are suffering more because we are becoming part of the national supplier of the oil and gas industry.”

But just as oil companies are pulling back production, the United States is left with a glut of steel suppliers. The French company Vallourec in Youngstown is also producing steel tubes for the oil and gas industry. Lendel says steel companies may still get contracts on the coming gas and oil pipelines to be built in Ohio and other states but competition will be intense.

Some industry analysts speculate that OPEC is keeping oil prices low in order to slow down drilling by American shale oil companies. US Steel also announced layoffs at a Texas plant.

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