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The basic oxygen furnace at the U.S. Steel Granite City Works facility in Granite City, Ill. is shown in 2018. 

Processed taconite iron ore pellets are shown.

U.S. Steel is planning to slash steelmaking jobs in Illinois as it looks to expand its domestic iron ore supply by investing in a pellet facility in Minnesota and reaching a deal with SunCoke Energy to make pig iron at blast furnaces at Granite City Works near St. Louis.

The company is looking to reduce employment from about 1,500 to about 550 at the Illinois steel mill because of the shift in strategy to focus more on iron ore production and electric arc furnaces, or EAFs.

"U.S. Steel has established a trend in recent years of shutting down operations, as it has done at the Great Lakes facility in Detroit, Lone Star Steel in Texas, tubular operations in Ohio, and the company abandoned a previously announced major capital improvement project at the Mon Valley Works and announced the closing of its West Coast operations at UPI in California," United Steelworkers Union International President Thomas Conway said. "The company continues to invest heavily in its non-union operations at Big River Steel in Arkansas, and management continues to point to their transition to EAF-produced steel as the pathway to success while they shutter operations."

U.S. Steel spokesperson Amanda Malkowski said it would be the end of the steelmaking operations at Granite City Works as both remaining blast furnaces would be converted to pig iron production. All that would remain would be finishing lines, supplied by another U.S. Steel mill, potentially Gary Works.

Displaced workers would be able to apply for a job at SunCoke or transfer to another U.S. Steel facility, Malkowski said. Those who are not placed somewhere will get severance packages.

The Pittsburgh-based steelmaker, one of the largest industrial concerns in the Calumet Region, recently announced it would invest $60 million in a pig iron caster at Gary Works that would produce up to 500,000 tons of pig iron for Big River Steel in Arkansas. That operation should go online next year, contributing $30 million a year to run-rate enterprise EBITDA and a return rate of more than 30%.

This fall, the steelmaker will build a DR-grate pellet facility at either its Keetac or Minntac iron ore mine in Minnesota. One of the two plants will start making DR-grade pellets for electric arc furnaces as well as blast furnace-grade pellets for blast finances like those at Gary Works.

The expected investment is about $150 million. U.S. Steel will have the option to sell the pellets to third-party suppliers or feed them to a direct reduced iron or hot briquetted facility of its own in the future.

It immediately plans to use the pellets for a new product line.

"Our conviction remains that steel mined, melted, and made in America is vital to our national and economic security," U.S. Steel President and CEO David Burritt said. "We are strategically investing in our raw materials that will feed the advanced steel mills of today and tomorrow, making us increasingly self-sufficient. It’s another way that we’re supporting domestic manufacturing, simplifying complex global supply chains, addressing the sustainability demands of our customers, and ultimately creating profitable steel solutions for people and the planet."

U.S. Steel has signed an agreement that would allow SunCoke to acquire the two blast furnaces at Granite City Works in Illinois. The company plans to build a 2 million ton granulated pig iron production facility, supplying U.S. Steel with 100% of the pig iron it produces for 10 years.

The project would take about two years to build. U.S. Steel would use the pig iron to supply its fleet of electric arc furnaces with iron ore from its own mines, realizing a significant cost advantage.

It would also result in the loss of about 1,000 steelworker jobs mostly represented by the USW.

"The USW and U.S. Steel concluded a successful startup of an EAF operation in Birmingham, Alabama, at the Fairfield Works, and that's where the company should have continued to place additional EAF investments," Conway said. "Instead, they chose to double down their investment in their Arkansas facility," Conway said. "In its announcement regarding Granite City's future, the company callously failed to mention a word about the massive job loss or impact the decision will have on a skilled and loyal workforce, their families or their community."

The USW said it was just the latest in a string of closures, including the indefinitely idled East Chicago Tin Mill U.S. Steel acquired from National Steel.

"It is another tale in a long string of betrayals by the company, which now has permanently closed nearly two thirds of the assets it acquired from National Steel along with other acquisitions," Conway said. "The summer is coming and bringing with it the termination of the labor agreement between the parties. We will undoubtedly be talking about investment in our plants. The company should prepare itself for those discussions. We understand the vital importance of investment in our USW plants and the obligations to our members and their communities, even if the management at U.S. Steel doesn't. We have no intention of becoming the primary pig iron suppliers to their non-union operations."

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Photo Credit: BigPixel Photo / Shutterstock

The health of the manufacturing sector in the U.S. has been a major focus of public attention in recent years. With populist political figures like Donald Trump on the right and Bernie Sanders on the left offering critiques of U.S. trade policy and debating how best to assist American manufacturers and workers, policymakers and economic leaders of all stripes have put new focus on support for manufacturing. From former President Trump’s focus on trade policy and President Biden’s $1.2 trillion bipartisan infrastructure bill to companies “reshoring” plants and consumers expressing preferences for American-made goods, combatting the apparent decline of U.S. manufacturing has become a shared commitment.

Manufacturing is important to the U.S. economy for several reasons. Manufacturing jobs have historically been a pathway to the middle class, offering good pay without requiring high levels of education. Companies that rely on manufacturing invest heavily in research and development, which helps drive innovation. Domestic manufacturing also contributes to more secure and resilient supply chains—a point that has become clear during the COVID-19 pandemic.

But in recent decades, the role of manufacturing in the U.S. economy has been diminished. Many companies began moving factories abroad in search of lower costs and better profit margins. Trade deals like NAFTA reduced the cost of foreign imports, giving U.S. producers more competitors. Technological advances made manufacturing processes more efficient, which reduced the need for many manufacturing jobs.

The effects of these shifts in manufacturing are most apparent in employment, which has decreased over the years as a share of overall employment and in total numbers. After manufacturing peaked near 40% of U.S. jobs at the height of World War II, the sector has seen a steady decline over time, to around 8.4% of employment today. In total employment, manufacturing jobs peaked at 19.5 million in the late 1970s and fell off sharply after 2000 to just 12.6 million today.

But despite the decrease in manufacturing employment over the past several decades, manufacturing output as a share of real GDP has stayed relatively stable. Since 1997, manufacturing has fluctuated between 11.5% and 13.2% of GDP, after adjusting for inflation. While manufacturing output as a share of nominal GDP has declined over that span (from 16.2% to 10.9%), the change in the nominal figures reflects both growth in other sectors as well as slower price increases for manufactured goods more so than a decline in manufacturing productivity.

But one important piece of the conversation around manufacturing in the U.S. is where manufacturing is thriving. Many Northern states that were major U.S. manufacturing centers historically, including New York and Pennsylvania, have seen lower rates of growth in employment and output from manufacturing in recent years. Instead, many of the states with the highest recent growth in manufacturing—both for employment and GDP—are found in the southern and western U.S.

Nevada has seen nearly 50% growth in both manufacturing employment and GDP from 2010 to 2020, while California has had a 45.6% increase in GDP and Florida saw a manufacturing GDP increase of 35.5%. At the metro level, many of the top locations for manufacturing currently are also found in these states, though a few Rust Belt metros have also enjoyed a resurgence in manufacturing.

The data used in this analysis is from the U.S. Bureau of Economic Analysis. To determine the locations where manufacturing is thriving, researchers at Construction Coverage calculated a composite score based on the following factors and weights:

In the event of a tie, the location with the greater manufacturing employment growth from 2010 to 2020 was ranked higher. To improve relevance, only metropolitan areas with at least 100,000 residents were included. Additionally, metros were grouped into cohorts based on population size.

Here are the U.S. metropolitan areas where manufacturing is thriving.

Photo Credit: Kevin J King / Shutterstock

Photo Credit: Songquan Deng / Shutterstock

Photo Credit: f11photo / Shutterstock

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The basic oxygen furnace at the U.S. Steel Granite City Works facility in Granite City, Ill. is shown in 2018. 

Processed taconite iron ore pellets are shown.

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