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US Steel flags layoffs in Michigan, swing to Q4'19 loss amid weak market

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US Steel flags layoffs in Michigan, swing to Q4'19 loss amid weak market

U.S. Steel Corp. plans to curtail a significant portion of its Great Lakes Works operation near Detroit, Mich., as the company adjusts its capital allocation strategy amid a weak market.

The company flagged restructuring costs of about US$225 million and said up to 1,545 workers could be impacted by the indefinite stoppage, though that number is expected to be lower.

U.S. Steel will begin idling the iron and steelmaking facilities by April 1, 2020, and the hot strip mill rolling facility before the end of 2020, it said Dec. 19.

The decision is part of the company's strategy to focus on the Mon Valley Works in Pennsylvania, Gary Works in Indiana, and Big River Steel LLC in Arkansas as it aims to boost efficiency and cut costs.

The pickle line, cold mill, sheet temper mill, continuous galvanizing line, annealing and warehouses operations at Great Lakes Works are expected to continue in line with customer demand.

U.S. Steel expects to post an adjusted diluted loss of US$1.15 per share in the fourth quarter, swinging from adjusted EPS of US$1.82 year over year and diluted EPS of US$3.34. It forecast negative adjusted EBITDA of US$25 million for the quarter, swinging from year-ago adjusted EBITDA of US$535 million.

The company also slashed its 2020 capital spending forecast to US$875 million from US$950 million and reduced its quarterly dividend to 1 cent per share from 5 cents per share, generating about US$100 million in annual cash savings starting in 2020.

In addition, U.S. Steel terminated its stock repurchase program.