Steel producers around Alabama have felt the pinch of the market, forcing firms like U.S. Steel Corp. to rethink production at its Fairfield Works.

In an effort to mitigate losses over the last decade, U.S. Steel has started to shift production across its North American footprint – this includes the addition of a new electric arc furnace at the Fairfield Works, which will replace the existing blast furnace that will be taken offline as soon as the new EAF is complete.

"Through careful assessment of our operational footprint, the blast furnace at Fairfield would require significant maintenance and had reached the end of its useful life, which allows for the construction of the EAF," said Sarah Cassella, a spokeswoman for U.S. Steel

What is an electric arc furnace?

EAF technology is a relatively new concept in steelmaking. It is dependent on recycled scrap metal (shredded cars, appliances, etc.) for steel production, as opposed to the coke and iron ore traditionally used at integrated facilities like the Fairfield Works.

"E fficiencies have been seen in our recent announcement regarding the strategic investment to build an EAF at Fairfield Works, which is part of the company's larger transformation journey," Cassella said.

This journey is formally called "The Carnegie Way," which is comprised of a large number of initiatives to improve the company's operational flexibility, cost structure and raw materials position in order to improve customer relationships and build shareholder value.

Tax abatements were approved in March for the company's $230 million investment in the new EAF for the Fairfield Works. That is in addition to a second capital investment project at Oilwell Services, where it will create a Fairfield-based manufacturing facility for tubular products with a capital investment of $47.5 million.

The EAF concept was first made successful by Nucor Corp., which used the design in its "mini mill" steel production process.

Despite U.S. Steel having 23,000 employees compared to Nucor's 21,800, the smaller producer's capacity is 29 million tons – compared to the 19 million tons of capacity at U.S. Steel, according to aWall Street Journal report.

Profits for the companies also differed greatly, with Nucor pulling in $714 million in profits for 2014, while U.S. Steel only cleared $102 million.

Through its design, Nucor Steel, with five production sites in Alabama, was the top producer of steel in the U.S. in 2014, with U.S. Steel ranked second, according to data from Statistica.

Adam Parr, vice president of policy and communication for the Steel Manufacturers Association in Washington D.C., said EAF production facilities normally have lower employment than integrated facilities.

However, he could not speak to the specifics of how the Fairfield Works employment will fare when the EAF goes online.

"It's going to be more than mini-mill type production, but I am not sure what other equipment changes there will be," Parr told the BBJ on Tuesday. "But it would definitely be more on the lines of a mini-mill in terms of production."

Cassella said U.S. Steel is currently weighing its options, but the effect on employment totals has yet to be decided.

"Any changes in staffing once the EAF is complete would be worked through with the United Steelworkers under the terms of the collective bargaining agreement," She told the BBJ. "We have not speculated as to that headcount."

Attempts to contact the United Steelworkers union were unsuccessful.

Parr said the shift away from U.S. Steel's current blast furnace production will be costly, but could be a design that pays dividends as the construction sector begins to ramp up.

"The investment that is required to build an EAF facility is typically lower than other integrated facilities and now, almost two-thirds of the steel made is made by the EAF process." he said.

Mini mills make the vast majority of construction products, like rebar, but there are other more traditional uses, such as automotive applications, Parr said.

U.S. Steel, which currently focuses on pipe and tube for the energy market, could capitalize on the post-recession market growth through the implementation of the EAF, which could help it adapt and offer new products to a wide range of growing sectors.

What this means for Birmingham?

While many steelworkers are back on the job in Fairfield following the 800 layoffs in March, uncertainty looms on the horizon as U.S. Steel prepares to take the blast furnaces offline.

More than 1,400 workers could still be affected by layoffs starting in August, according to a recent filing.

Related: What's causing U.S. Steel's cutbacks?

Specifically, 1,332 workers could be affected at Fairfield Works, in addition to 82 at Fairfield Southern.

"There have been widespread layoffs throughout the steel industry, from the second half of 2014," Parr said. "It is an extremely challenging time for the North American steel industry, but this wouldn't be about the Fairfield operations, but indicative of the steel industry as a whole. "

Related: Alabama steel and coal producers hit with layoffs, cuts in production

The replacement of the blast furnaces and addition of the new EAF could also substantially cut coal consumption at the facility, which could further strain the area's struggling coal industry.

"For an EAF, 90 percent of what is going into the furnace is recycled scrap metal, so EAF producers use recycled scrap, like shredded cars, appliances, as their primary input," Parr said. "But an integrated producer will use more virgin raw materials like coking coal and iron ore. The impact of that is that EAF production is much more environmentally friendly."

Parr also said iron ore prices have forced U.S. Steel to reconsider its production methods.

Residents may be exposed to less carbon emissions through the implementation of the EAF, but the coal industry – namely met coal in Alabama – is poised for more belt-tightening as the steel market continues to adjust.

Jason Hayes, associate director of the American Coal Council in Washington, D.C., told theBirmingham Business Journal that coal producers in Alabama's region – the Central Appalachia region – are hurting as a result of the downturn in steel.

While an EAF would use substantially less coal in the production process, Hayes said coal would not be completely phased out for major industrial producers like the Fairfield Works or Nucor's Alabama production facilities.

"I know that to produce the electricity to run the EAF, you need coal," Hayes told the BBJ. "The other options are wind and solar, which aren't consistent, so you need coal to run those big industrial plants."

Parr said the problems facing steel, which include the high volume of cheap imports, a strong U.S. dollar, and falling energy prices, are problems that continue to cut into the bottom line for many Alabama steel and coal producers.

"The steel industry and demand has gradually recovered since the recession, but the vast majority of that growth has been affected by increased imports, causing domestic producers to not be as successful as we would want them to be. The global overcapacity of steel is a major problem and will be for years ahead," Parr said.