U. S. Steel Moving 225,000 Tons of Steel Production From Canada to America
09/02/2015 - United States Steel Corporation is shifting a large portion of its automotive steel production away from its Canadian subsidiary, U. S. Steel Canada (USSC), to its American mills, a move that's estimated to cost the ailing Canadian operation more than $200 million in revenue over the next 15 months.
USSC is operating under creditor protection, and the resulting impact on revenue, earnings and cash flow "will be significant," the court-appointed monitor in the case reported to the Ontario Superior Court of Justice.
In the report, the monitor said U. S. Steel is preparing to move 15,000 tons of monthly production from Canada to American mills. USSC makes steel at its Lake Erie Works and sends it to its Hamilton Works for finishing.
"Although this does not represent all of Hamilton Works’ automotive production, the … tonnage loss represents approximately 27 percent of total Hamilton Works total production, based on current production levels," the monitor wrote.
Because of the shift, USSC intends to lay off 17 people and reassign another 10, assuming that that the lost production isn't replaced.
The monitor noted that U. S. Steel centrally allocates steel production among its mills, and previous production shifts have been largely due to market conditions and lowered steel demand. The monitor said he is reviewing the decision to see whether the current shift is consistent with past practices.
The monitor said U. S. Steel cited several reasons for moving production, one of which was the lower shipping costs that would arise from having the production closer to the customer.
U. S. Steel also said it historically has concentrated production at mills with unused capacity, allowing fully booked mills to look for additional orders. Hamilton's galvanizing lines are fully booked, U. S. Steel said, according to the monitor.
U. S. Steel spokesperson Courtney Boone told The Hamilton Spectator newspaper that the production shift is indeed is consistent with past practice.
"The plant loading decisions underway at U. S. Steel Canada are consistent with U. S. Steel's past and best practices in determining the most cost-efficient loading of our North American facilities. Many of our customers receiving these products are U.S. based and will be closer in proximity to the plants serving them, shortening the supply chain," Boone said in a statement to the newspaper.
USSC is up for sale, and the monitor and others are currently reviewing potential bids, the newspaper reported. U. S. Steel has said it would like to keep the Lake Erie Works and pay for it by canceling some of the $2.2 billion in debt it says it is owed by USSC, according to the newspaper.
In the report, the monitor said U. S. Steel is preparing to move 15,000 tons of monthly production from Canada to American mills. USSC makes steel at its Lake Erie Works and sends it to its Hamilton Works for finishing.
"Although this does not represent all of Hamilton Works’ automotive production, the … tonnage loss represents approximately 27 percent of total Hamilton Works total production, based on current production levels," the monitor wrote.
Because of the shift, USSC intends to lay off 17 people and reassign another 10, assuming that that the lost production isn't replaced.
The monitor noted that U. S. Steel centrally allocates steel production among its mills, and previous production shifts have been largely due to market conditions and lowered steel demand. The monitor said he is reviewing the decision to see whether the current shift is consistent with past practices.
The monitor said U. S. Steel cited several reasons for moving production, one of which was the lower shipping costs that would arise from having the production closer to the customer.
U. S. Steel also said it historically has concentrated production at mills with unused capacity, allowing fully booked mills to look for additional orders. Hamilton's galvanizing lines are fully booked, U. S. Steel said, according to the monitor.
U. S. Steel spokesperson Courtney Boone told The Hamilton Spectator newspaper that the production shift is indeed is consistent with past practice.
"The plant loading decisions underway at U. S. Steel Canada are consistent with U. S. Steel's past and best practices in determining the most cost-efficient loading of our North American facilities. Many of our customers receiving these products are U.S. based and will be closer in proximity to the plants serving them, shortening the supply chain," Boone said in a statement to the newspaper.
USSC is up for sale, and the monitor and others are currently reviewing potential bids, the newspaper reported. U. S. Steel has said it would like to keep the Lake Erie Works and pay for it by canceling some of the $2.2 billion in debt it says it is owed by USSC, according to the newspaper.
