VINEYARD, Utah County — An excess in inventory and the continued cheap price of steel due to foreign imports has forced financially strapped Geneva Steel to lay off 70 employees.
The layoffs, which were posted last week and went into effect Sunday, should only be for a couple weeks, said Carl Ramnitz, Geneva's vice president of human resources. Originally plant officials expected the layoffs to last about six weeks. Some of the laid-off workers will be called back next week to begin working reduced schedules.
"The situation may not last for as long as we thought," Ramnitz said.
Geneva officials say for a period of about one month the company's order book was low — mainly because of imported steel flooding the market and because several of the company's clients have an excess in inventory.
"We have an inventory situation we have to deal with and we have to wait until the excess is worked down," Ramnitz said.
To compensate for the low sales period, Geneva officials have cut the plant's entire steel-making process to a lower production level. About 110 workers would have been laid off by the scale down, but plant officials shifted 40 workers to the pipe mill where a third crew was created.
"The orders there are good and should carry through the end of the year," Ramnitz said.
Before the layoffs, the company employed about 1,800 workers, Ramnitz said.
Ramnitz compared the current steel market to 1998, when Japan, Russia and Brazil flooded the U.S. market with steel at rock-bottom prices. About 41 million tons of steel were dumped in the United States that year. Ramnitz said about 40 million tons of steel will be imported this year.
"We're seeing a run-rate on imports right now at the same level as 1998," he said.
The influx of foreign steel in 1998 hit Geneva hard; the company had to lay off hundreds of employees. Ramnitz says the company is in a better position now to compete with foreign markets, due to a bankruptcy reorganization and a $100 million government loan.
Company officials say the layoffs are not related to an accident last week that killed a worker in the blast furnace. The accident shut down the blast furnace for about eight hours and decreased the plant's production for most of the day.
Jerry L. Nelson, 56, Salem, was killed last Thursday when 17 tons of iron-ore pellets were dumped on him. Nelson, a 28-year plant veteran, was doing maintenance work inside a skip car, which carries the ore to the top of the furnace, when a load of ore was dumped from a scale car. He was buried for about one hour. Company officials say a gate that keeps the scale car from accessing the skip car was open when it should have been closed.
Ramnitz said a company investigation into the cause of the accident and recommendations to prevent similar accidents should be complete by the end of the week. Investigators from the Occupational Safety and Health Administration are also reviewing the accident and are expected to finalize their investigation within a month.
"We have not heard where they are at in their investigation," Ramnitz said.