Comments on economics, mystery fiction, drama, and art.

Wednesday, May 13, 2009

Steel, again

The shoes appear to have dropped--in northwest Indiana, in Cleveland, and in Georgetown, SC. But the really big shoe dropped in Europe, where workers are rioting in Luxembourg, and where Mittal has shut down 16 of its 25 blast furnaces. Lakshmi Mittal is quoted as expecting an additional 15% to 20% drop in world steel output this year, and this comes on the heels of a nearly 50% drop since the middle of 2008.

In northwest Indiana, steel employment had continued to rise until at least February, when it was fractionally above the February 2008 level (about 17,000). However, Mittal began to lay off workers in April, and US Steel had to shut down part of its operations in Gary for emergency maintenance. (USX has been shifting production from the rest of the country to Gary).

With the 980 layoffs announced today, and the additional layoffs I've been able to identify, it appears that employment in steel in northwest Indiana has declined by something in excess of 1,500 in the last month or so. With the declines that have already occurred in steel output, and if Mittal is correct about continuing production declines, we're going to lose more jobs.

While this is not as devastating an occurrence as it would have been 30 years ago, when more than 25% of local employment was in steel (compared to less than 6% now), steel workers continue to earn much, much higher wages than the average. These layoffs will cost northwest Indiana families about $2.7 million a week in wages, with spillover effects in other industries.

The recession has, I think, finally come home to northwest Indiana.


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