FARRELL – Hefty tariffs on Russian steel imports hurt NLMK Pennsylvania, but adding quotas on how much can be imported from other countries is a combination that’s resulting in rolling layoffs, the company’s president said.
The number of workers who will be laid off at the company’s Farrell steel plant at any given time will vary, NLMK Pennsylvania president Bob Miller said.
“It’s going to be rolling layoffs and it’s something we’ll be looking at month-to-month and week-to-week,’’ Miller said. “It could be 100 people or less, or 200 people at a time. That has the ability to change as our order books evolve from month-to-month, so it may not be that bad. You take it one day at a time.’’
However, he emphasized these aren’t long-term layoffs and that the company would stagger them among the key production departments. The goal, Miller said, is for no single group to be laid off for more than one week in any given month.
“One week we may idle the hot mill and another week it will be the cold mill,’’ he said.
The layoffs will be hanging around for a while, Miller added.
“You’re probably looking into next year,’’ he said.
But there will be weeks where nobody is laid off, he added.
“This week we have everyone working,’’ Miller said.
There have been one-week layoffs for production departments at the plant this year. Miller didn’t immediately know when then next round of layoffs will hit.
In all, the steel plant employs about 600. NLMK employs another 150 at the company’s Sharon Coatings operation, which isn’t affected by the layoffs.
Under a tariff imposed by the Trump administration in March 2018, a 25 percent fee on steel slab imports is slapped on a number of countries, including Russia. NLMK Pennsylvania is owned by Novolipetsk Steel – abbreviated as NLMK – which is among Russia’s leading steelmakers.
The local plant imported most of its slabs from NLMK. Those slabs are then rolled into steel coils at its Farrell plant.
Miller said there is a very limited amount of American-made steel slabs that are available to buy.
“There’s just not enough slabs produced in the U.S.,’’ he said.
NLMK has been buying slabs produced in other nations at a good price that aren’t subject to tariffs, such as Brazil, Miller said. But there are other limitations.
On May 31, 2018, President Trump issued Presidential Proclamation 9759 under Section 232 of the Trade Expansion Act of 1962, according to the U.S. Department of Commerce’s website. The proclamation gives a quota for steel imports from Argentina, Brazil and South Korea, effective June 1, 2018.
“I wish I could buy more slabs from Brazil, but I can’t because of the quotas,’’ Miller said.
He added the situation is a delicate balance of getting enough slabs at a good price with a fluctuating market.
“We don’t have enough orders to be at full capacity,’’ Miller said.
A message left for Jim Wells, president of United Steelworkers Local 1016-03 representing production workers at the Farrell plant, was not returned by presstime Wednesday.
Randy Seitz, chief executive officer of Penn-Northwest Development Corp., said NLMK’s situation needs prompt attention by the Trump administration. Penn-Northwest is Mercer County’s economic development agency.
“It’s not always the politicians’ fault,’’ Seitz said. “It’s often the bureaucrats who administer the laws created by the politicians and they don’t use common sense.’’
But Seitz called upon politicians to find a solution. Further, he said he plans to visit Washington, D.C., to address the situation.
“Somebody needs to come up with a decision,’’ he said. “Here we have a small community that has had tremendous population loss and an economic downturn. This policy is hurting companies like NLMK and couldn’t possibly be something the president had in mind.’’
Miller acknowledged the company needs to get in better financial shape. But he quickly added it isn’t dire.
“We’re not talking about a shutdown,’’ Miller said. “We’re talking about balancing our raw material supplies under the tariffs where we can compete in the market.’’