United States Steel Corp. (NYSE: X) will lay off roughly 750 employees between two plants, undoubtedly the result of falling oil prices. It is worth noting that these facilities are not being shut down completely but temporarily idled.
The layoffs are taking place in a tubular testing and finishing facility in Houston, Texas and a manufacturing facility in Lorain, Ohio. The tubular products that are produced and tested by these facilities are associated with drilling and construction in the oil-and-gas industry.
Lorain has an annual production capability of 780,000 tons of steel.
Altogether the Lorain facility is losing 614 workers and the Houston facility is losing 142, a total of 756. In comparison to the big picture and according to a recent SEC 10-K filing, the company noted that it had approximately 26,000 employees in North America and 12,500 in Europe at the end of 2013.
24/7 Wall St had the chance to talk with spokeswoman, Sarah Cassella, who confirmed that these layoffs are not expected to be effective until March when the facilities will be idled as well.
Oil prices dipped to a new multiyear low Tuesday; the price of crude oil was down almost 4% at $48.10 in the second half of the trading day. Oil dipped has dipped as low as $47.74 on the day. This has fallen from the 52-week highs over the summer.
Looking at a recent rig count done by Baker Hughes, North America recorded a decline of 77 rigs or -3.7% to 2,019 rigs for the week ending January 2, 2015. In the same period from a year ago there were 2,033 rigs which was 0.7% more than are currently being operated. These are all potential clients of US Steel that are cutting production.
Unfortunately, this is another result of the market carnage from falling oil prices.
U.S. Steel’s President and CEO, Mario Longhi, announced Tuesday that the company will relocate its corporate headquarters to the former Civic Arena site in Pittsburgh’s lower Hill District. This announcement seemingly assures that the company will help anchor new development in the region while sustaining over 800 jobs in Pittsburgh at the headquarters location.
Shares of U.S. Steel reacted negatively to the news and were down 2% at $24.82. The stock has a consensus analyst price target of $42.63 and a 52-week trading range of $22.47 to $46.55. It has a market cap of over $3 billion.