With $30.7 million in state grants, U.S. Steel promises to stay in Pa.
United States Steel Corp. is committed to keeping its headquarters in Pennsylvania, Gov. Tom Corbett said Friday as he announced the state was providing $30.7 million in grants for the Fortune 500 company to help rehabilitate some of its plants.
The company has not said publicly that it was looking to relocate from Pennsylvania, but there has been speculation about whether it would move to another site in the region when its lease at U.S. Steel Tower, Downtown, expires in 2017.
Corbett and administration officials acknowledged that they acted to secure a commitment from the company to stay in Pennsylvania based on fears — and not any knowledge — that it would exit the state.
“I think they were considering it,” said Corbett. The governor cited Chicago and Indiana, where U.S. Steel has its largest mill, as places where he thought it might relocate.
Sarah Cassella, a U.S. Steel spokeswoman, said this is the first time the company has acknowledged its commitment to stay in Pennsylvania, but she would not say if it would keep its headquarters in Pittsburgh. She said executives are “exploring all of our options” under the company’s Carnegie Way cost-cutting program.
Corbett, a Republican running for re-election, announced the grant at U.S. Steel’s Research and Technology Center in Munhall. The money would go toward a $187 million rehabilitation project at the steelmaker’s Mon Valley Works plants in West Mifflin, Braddock and Clairton.
The announcement coincided with seven others across the state to commemorate National Manufacturing Day. The events were designed to promote manufacturing, which constitutes 10 percent of the state’s industrial sector, employing more than half a million people.
Corbett, 65, of Shaler, pointed to the rich history of Pennsylvania steel, and said the investment ensures U.S. Steel will continue to develop here.
“I look at them as partners with Pennsylvania and partners with Pittsburgh,” Corbett said. “To me, it would’ve been extremely demoralizing if U.S. Steel’s headquarters left Pittsburgh.”
In recent years, U.S. Steel has refused to address speculation that it might move from U.S. Steel Tower at 600 Grant St. when its lease expires. The company was linked to a proposed $238 million, 33-story skyscraper on Smithfield Street between Fifth and Forbes avenues, Downtown, or an existing seven-story building there when Oxford Development Co. presented plans in May 2012. There was speculation also that it was considering a site near Pittsburgh International Airport.
The announcement of state assistance for its capital projects happened as the company struggles to cut costs and improve operations. It filed for court protection for its money-losing Canadian subsidiary last month and scrapped $800 million in expansion projects in the United States.
The nation’s second-largest steel producer is being pressured by foreign competition and lower prices for steel. It has not turned a profit in five years, and it began an intensive review of its operations for cost savings in April 2013.
The grant is contingent upon U.S. Steel’s successful application to the Redevelopment Assistance Capital Program, and Railroad Transportation Assistance Program, and the Multimodal Transportation Fund.
Steve Kratz, spokesman for the Department of Community and Economic Development, said the award was made so as not to “run the risk” of U.S. Steel fleeing the state. He said discussions have been going on for about six months and the timing had nothing to do with Corbett’s election campaign.
This is about jobs, this is about the economy of Pennsylvania,” he said. “There isn’t a sort of cut-off date or deadline to do the right thing and support the growth of a Pennsylvania company that’s providing 4,300 family-sustaining jobs.”
Funds will go toward projects by the company to reline one of its Mon Valley Work blast furnaces at its Edgar Thomson Plant in Braddock. Plans also include improvements to its railroad transportation infrastructure.
U.S. Steel CEO Mario Longhi said the company’s production plans focus on developing innovative products, such as new light-weight, high-strength steel for automobiles.
The effort requires “substantial investment,” Longhi said, and workforce development.
“That is why manufacturers need to operate in an environment that is supportive and recognizes the reality of capital investment,” Longhi said.
Melissa Daniels is a staff writer for Trib Total Media. She can be reached at 412-380-8511 or [email protected].