Big Union vs. Minimills

By McClure, Laura | Multinational Monitor, December 1995 | Go to article overview

Big Union vs. Minimills


McClure, Laura, Multinational Monitor


As hulking old steel mills give way to sleek new minimills, workers cannot help but to notice that their ranks are diminishing apace. Workers at steel mills owned by Cleveland, Ohio-based LTV Corporation feel especially betrayed by this shift, since they say that, without their sacrifices, LTV would not be around to invest in new mills.

"Say you were taking care of your husband, providing the income while he was going to school," says Mike Scarver, who represents LTV workers in Cleveland. "And as soon as he got his degree and got a good-paying job, he told you, 'Well, I've got this other woman out there, and I'll be leaving you now.' Well, we know how you would react."

LTV, the nation's No. 3 steel company, dove into bankruptcy in 1986 and did not resurface until 1993. While it was underwater, the company received huge concessions from its workforce and the community. "When no one else would help LTV, when the financial institutions turned their back, we helped them," says Scarver. "And the citizens helped them. In Cleveland, LTV got a 10-year tax-abatement plan that'll save them $38 million."

Profitable again, LTV recently decided to build a new steel minimill in Decatur, Alabama. Ground has already been broken for the new plant, which is a joint venture of LTV, British Steel and Japan's Sumitomo Metal Industries. LTV has a 50 percent share in the venture, which has been dubbed "Trico."

For the United Steelworkers of America, the Trico plant is a stab in the back. Rather than investing in what is likely to be a nonunion plant in a distant state, Scarver says, "LTV should put that money back into the communities that cared about LTV surviving." Instead, having taken Cleveland's money, LTV went looking for another handout. Alabama promised Trico $80 million in state tax subsidies to lure the new plant.

Scarver says the least that the new plant could do, given all that the union has done for LTV, is tolerate a union contract. "We don't want the company to fight us the way they've been fighting us elsewhere," he says. "We want a pledge of neutrality [toward union organizing], but we haven't gotten that."

LTV representatives did not return Multinational Monitor calls.

Getting blasted

The Trico furor is one manifestation of a dramatic transformation well under way in the steel industry: Minimills and other new technologies are making traditional "integrated" mills obsolete. "Integrateds" use a blast furnace to convert iron ore and coke to pig iron before making steel, a time-consuming, expensive process. Minimills, which dispense with the blast furnace, melt down scrap metal with electric furnaces. Minimills usually employ a few hundred workers, less than half the number typically employed at integrated mills. Partly because of minimill technology, the average number of worker hours it takes to produce a ton of steel has been cut in half, dropping from eight hours in 1983 to less than four hours today.

Minimills are also much cheaper to build than integrated mills. Mike Locker, a steel industry analyst in New York, says, "No one can afford to build an integrated mill in the United States or Europe or Japan anymore - it would cost you at least $2 billion." By contrast, Trico will cost approximately $450 million. Another minimill advantage, Locker says, is that they are much kinder to the environment than integrateds. Initially, minimills could only produce lower-end steel products, such as the reinforcement bar used in concrete construction. But with improved technology, minimills can now produce medium-quality sheet steel and other products that were once the sole domain of the integrateds.

As a result, minimills are popping up nationwide and U.S. steel-making capacity is expected to skyrocket in the next few years. Between 1988 and 1997, "we'll have at least 18 million tons of new flat-rolled steel capacity," Locker says. …

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