US Steel wins tax breaks from one of America's poorest cities

GARY (Indiana), Feb 09 (Reuters): United States Steel Corporation founded Gary, Indiana in 1906 - naming it after co-founder Elbert Henry Gary - and the city's fortunes have been closely tied to the company ever since.

When the firm started losing business to cheap Asian imports in the 1970s, waves of layoffs followed as Gary became a haven of blight, crime and lost population.

Last year, the city harbored hopes for a revival after President Donald Trump imposed tariffs on steel imports and the company planned a $750 million investment to modernize Gary Works, its largest North American plant.

But it's now clear those hopes will not translate into new steel jobs, even after the city and state offered the firm a $47 million tax break package.

The whole point of the investment is to make the plant more efficient, so the incentives will help finance a project that city and company officials concede could ultimately result in job losses, not gains.

Gary's dimmed hopes for a tariff-driven renaissance underscore how the policy has so far provided a windfall for US steel firms but only a marginal benefit to workers and struggling steel towns.

Gary Works once employed more than 25,000 people but now supports only about 4,000 in a city that has seen its population plummet from 175,000 in 1970 to 77,000 today.

Steel industry employment nationwide increased by 1,000 jobs to 83,400 between March, when tariffs where imposed, and November, according to the latest available data from the US Bureau of Labour Statistics.

In a statement to Reuters, Trump's Commerce Department called the 1.2 per cent increase a "welcome change from decades of decline and layoffs" and said "many more" jobs would be created as planned industry investments and expansions are completed, without specifying how many.

"Improving efficiency is important and was one of the goals of the tariffs," a department spokesman said of the Gary investment.

"We are glad to see the American industry is making investments that will protect their long-term viability and ensure a strong domestic supply."