Cleveland-Cliffs Closing More Plants in Move to Save $300M Per Year
Cleveland-Cliffs Inc. will lay off nearly 1,000 workers in the coming weeks as it fully idles two plants in Pennsylvania and one in Illinois as part of a plan to save $300 million annually. The moves come about six weeks after executives said they planned to similarly cut back some operations in Minnesota and Michigan, which cost about 1,200 people their jobs.
In addition to the planned closings, Chairman, President and CEO Lourenco Goncalves and his team also are stepping away from plans to build a transformer production plant in West Virginia and cutting their 2025 capital spending forecast by another $25 million. They disclosed their plans alongside Cliffs’ first-quarter report, which showed a net loss of $495 million on sales of $4.6 billion.
In line to be idled are:
- Steelton, Pennsylvania: Rails and other railroad products
About 550 employees.
“Unfortunately, our rail customers prefer artificially cheap imported rail. In one case, the customer imports 50% of his needs from Nippon Steel, who is continuing to ship rail from Japan right through the Section 232 tariffs,” Goncalves said. - Conshohocken, Pennsylvania, north of Philadelphia: Plate finishing facility
Most of the work now being done at that plant will be moved to Coatesville, Pennsylvania. - Riverdale, Illinois: Compact strip mill facility
Goncalves said it has an uncompetitive cost structure and production will be moved to Cliffs’ Indiana Harbor plant about 10 miles east.
Regarding pulling back from his team’s plans to redevelop a section of Cliffs’ Weirton, West Virginia, plant with a 600-job factory to make transformers, Goncalves said the company’s (unnamed) partner is “having second thoughts” about the project’s location and size. Not moving forward means the company won’t spend $50 million both this year and next on the project, which was also in line to receive a $50 million forgivable loan from West Virginia.
Likely next for the portfolio of Cleveland-Cliffs plants around the country—which has been assembled in large part via the acquisitions since 2020 of AK Steel and ArcelorMittal USA: Some divestitures. Goncalves and CFO Celso Goncalves said they’ve received some inquiries recently and are willing to strike deals as long as they don’t compromise the company’s competitive position.
“I’m not going to go into specifics of which ones but we have received unsolicited inbounds,” Celso Goncalves said, adding that he plans to use sales proceeds to pay down debt. “We’re talking assets that could bring several billion dollars of potential value.”
Shares of Cliffs (Ticker: CLF) tumbled more than 15% to $7.15 after the report and conference call. They have now lost more than 40% of their value over the past six months, a slide that has cut the company’s market capitalization to $3.5 billion.
