Striking While the Iron Is Hot? as Steel Industry Talks Contracts, Negotiators Face Changed Market

By Boselovic, Len | Pittsburgh Post-Gazette (Pittsburgh, PA), September 16, 2018 | Go to article overview

Striking While the Iron Is Hot? as Steel Industry Talks Contracts, Negotiators Face Changed Market


Boselovic, Len, Pittsburgh Post-Gazette (Pittsburgh, PA)


With domestic steelmakers basking in the glow of President Donald Trump's 25 percent tariffs on imported steel, the chronically cyclical industry's moment in the sun is being jeopardized by the failure of two major U.S. producers to make peace with the United Steelworkers union.

Labor agreements covering more than 16,000 USW members at U.S. Steel and more than 15,000 at ArcelorMittal expired Sept. 1. Bargaining continues as union workers at both companies work under the terms of the expired contracts.

U.S. Steel offered a sweetened proposal Wednesday, but the United Steelworkers union's response indicated the two sides have a lot of ground to cover before striking a deal. Meanwhile, the USW's rank and file stand ready to strike should the Pittsburgh steelmaker not feel as strongly as they do about sharing the tariff-induced profits. Earlier this month, they overwhelmingly gave USW leadership authority to call a strike on a 48-hour notice.

That kind of militancy has largely disappeared from an industry where strikes and lockouts were once routine. The last work stoppage at U.S. Steel occurred 32 years ago, when the company, then known as USX Corp., locked out about 22,000 USW workers in August 1986. The standoff lasted six months.

A lot has changed since then.

China, which produced a mere 12 million metric tons of steel in 1986, has replaced Japan as the bane of U.S. producers. Although China accounted for less than 3 percent of the 29.6 million tons of finished steel the U.S. imported last year, the 832 million metric tons that the Asian giant produced in 2017 hurt U.S. producers by suppressing global prices.

In 1986, U.S. Steel's major competitors were LTV, Bethlehem, Inland and other union-organized, integrated producers that begin steelmaking by melting iron ore in blast furnaces fueled by coke, a baked coal. Some of them still relied on open hearth furnaces, a technology dating back to the 19th century.

Today, the competition is Charlotte, N.C.-based Nucor and other nonunion producers who make steel by melting scrap in electric furnaces. Unlike integrated producers that have fixed costs no matter what steel is selling for, scrap costs tend to rise and fall in tandem with steel prices - giving electric shop producers more secure profit margins, according to Charles Bradford, a New York industry analyst.

In 1986, the first electric steel shop - or minimill - to produce the sheet steel that is U.S. Steel's core product was still three years away from opening.

Minimills "have probably taken 30 odd percent of the sheet market," said James Moss, of First River, a North Shore consultant. "That was an exclusively integrated [producer] preserve in 1986."

Nor were U.S. steel producers faced with a threat from aluminum producers in the 1980s. Recently, Pittsburgh-based Alcoa and other aluminum makers have expanded the use of aluminum from high-end German luxury cars to popular vehicles like Ford's F-150 truck.

"U.S. Steel has a lot to lose sleep over," Mr. Tumazos said.

The USW also has dramatically changed over the last three decades.

From about 675,000 members in 1986, today the union has about 850,000 workers in the U.S., Canada, and Caribbean under its umbrella. The 31,000-plus members at U.S. Steel and ArcelorMittal - the USW's two largest U.S. steel industry employers by far - are outnumbered by workers from the rubber, oil, chemical, paper and other industries represented by the union. …

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