ATI Lays Off More Than 250 Salaried Employees in Flat-Rolled Products

by Katie Benchina Olsen on APRIL 21, 2016

Allegheny Technologies, Inc. recently announced the elimination of more then 250 salaried employees in its Flat Rolled Products operations. ATI’s salaried workforce in the FRP segment will be reduced by approximately one-third by the end of June.

ATI will record a $9 million severance charge in its first quarter 2016 results. Rich Harshman — ATI’s Chairman, President and CEO — said the job cuts were “another step in our journey to return the FRP business to profitability as quickly as possible, and to execute our strategy for sustainable, long-term, profitable growth.”

Flat-Rolled Future

ATI expects the FRP business segment will be modestly profitable by the second half of 2016. The workforce reduction will generate an annualized cost savings benefit of over $30 million beginning in the third quarter of 2016.

ATI’s Brackenridge facility is the future and commodity stainless is its past. Source: ATI

ATI’s FRP business segment was to blame for ATI’s staggering losses last year. Operating losses for  the division were $242 million for 2015, as we reported in February.

ATI has already reduced its exposure to commodity stainless products by idling, in January, its Midland, Pa., plant. By the end of this month, its grain-oriented electrical steel (GOES) production facility in Gilpin Township, Pa., will be idled.

ATI’s workforce reduction is part of its strategy for creating, “a smaller, more agile, streamlined, cohesive FRP business that will focus on products and markets with significant technical barriers to entry.”

Specialty Products

The return to FRP’s profitability hinges on the division focusing on its specialty coil and plate products, enabled by the hot-rolling and processing facility in Brackenridge, Pa. The products are 48-inch-wide, nickel-based alloy sheet; titanium and titanium-alloy products and specialty alloy products; and engineered and precision-rolled strip products.

ATI’s Harshman admitted the difficulty of a U.S.-based company to compete in the global commodity markets citing global overcapacity in commodity stainless steel sheet and GOES.

“The restructuring and right-sizing actions we are taking, while painful for our employees and our company, are necessary to help secure the future of ATI Flat Rolled Products,” he said.

U.S. base prices have improved this year, strengthened by anti-dumping actions that resulted in import duties on cold-rolled Chinese stainless steel. Nickel has been hovering around a much narrower band in 2016, which also helps mitigate losses at the mill level. With the settlement of ATI’s labor dispute, I expect ATI to play a greater role in stainless sheet in the second half of this year now that base prices have improved from the late-2015 low point.