United States Steel has laid off 3 percent of its production workers in North America, as the global economic meltdown cuts into demand for steel used in construction, autos and appliances.

The Pittsburgh-based company said the layoffs, effective immediately, affect 500 employees in the US and 175 in Canada. All of the workers are union members.

The US layoffs affect workers at the steel maker's plants in Pennsylvania, Indiana, Michigan, Illinois and Alabama.

The cuts primarily reflect weaker demand for US Steel's flat-rolled steel, a sheet product used in autos, appliances and construction.

US Steel, the largest domestic steel company, said it cut production late in the third quarter to match declining order rates for its flat-rolled and European segments.

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