Mesabi Nugget stays down; U.S. Steel continues cuts

Metal profile and pipes on white background.

Business North reports that Steel Dynamics, owner of the Mesabi Nugget plant in Hoyt Lakes, will keep the plant idled as the price of iron remains lower than the cost of production. The idling was announced months ago with the hope that it would end after new equipment was installed during the shutdown. Though the upgrades have been successfully completed, the company now says it’s not profitable to reopen yet.

This is the first of several initial announcements of shutdowns to be extended. U.S. Steel is planning much larger mine shutdowns this June, including the state’s largest taconite plant at MinnTac and also Keewatin Taconite. The company has been giving warn notices at its steel mills all over the country from Illinois to, just recently, Arkansas and Texas. All told, several thousand people will be out of work this summer, including more than 1,100 here on the Iron Range.

As with shutdowns at Mesabi Nugget and Magnetation’s Plant 1 near Keewatin, U.S. Steel will perform maintenance tasks at the two taconite plants during the shutdown, which will keep some workers on the job, but once those are done the matter is entirely economic. When will the price of iron ore recover?

I’ve heard conflicting rumors about the prospects for U.S. Steel’s Iron Range mines (more on that to come) but there are signs the company is planning for a new reality in the global iron and steel business. In its hometown of Pittsburgh, U.S. Steel is moving out of the 64-story U.S. Steel Tower it has occupied for 44 years into a more modest five-story building. As Pittsburgh Tribune-Review columnist John Conti wrote this week, “U.S. Steel’s reality is small.”

Conti writes how U.S. Steel, once the international steel leader, is now 13th on a long list of steel companies that most folks — even here in iron ore country — wouldn’t even recognize. Their former corporate headquarters was built for 7,500 workers; the new one will house 800. Mining and steelmaking will surely continue, but at a much more restrained amount.

Conti concludes:

Pittsburgh’s future is not industry of the sort we’ve known in the past. If you’ve known and cared about Pittsburgh for a while, a look at some of those Fortune 500 lists from the ’70s is sobering. About half of the 20 or so Pittsburgh companies that used to be on those lists no longer exist.

Gulf Oil, Westinghouse, Rockwell International, J&L Steel, National Steel and many smaller corporations once headquartered here are gone. Not moved to other cities. Just plain splintered, divided up into pieces and no longer corporate entities.

One valuable remnant of Westinghouse remains — the nuclear division in Cranberry, now owned by Toshiba. But that alone is far from the diversified company that used to build huge electric generators and electric-distribution equipment, not to mention those once familiar elevators, escalators, lightbulbs and home appliances.

What we can excel at in Pittsburgh right now is taking advantage of our unusual environment. We are a modern city in the midst of forested hills, rivers and valleys. Everything we can do to preserve that, improve it and promote it is what will turn us into a city suited for the 21st century. Technology-based companies and their employees will, in the future, look for attractive working environments, and we can gain a comparative advantage in future economic development by exploiting that.

The work we’ve done on riversides and parks, the beauty we’ve brought to Downtown Pittsburgh in recent years with its dozen mini-parks and fountains, our several pioneering environmentally sustainable buildings, our system of trails, and, yes, even those bike lanes — these are things we need.

Pittsburgh seems as though it’s striving to avoid the fate of other big Rust Belt cities. Conti advises his Pittsburgh brethren to “get real” about the size and scope of U.S. Steel’s future. So, too, should Minnesota’s Mesabi Iron Range. And heck, maybe we start now before the next bad news comes down from the newly economized industrial headquarters of what’s left of the “Eastern Steel Trust.”

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