Steel: Forging a future

Unions: Members must stay engaged to remain relevant

Steel: Forging a future
2013-04-07T00:00:00Z 2013-04-08T10:17:03Z Unions: Members must stay engaged to remain relevantBy Bowdeya Tweh The Times
April 07, 2013 12:00 am  • 

It’s not getting any easier to lead a union.

Negotiations last year between the United Steelworkers and domestic steel companies reflect the sometimes contentious relationship labor and management have. Informational pickets brought thousands of current and retired union members –- many carrying “Respect our past, secure our future” signs –- while officials sought to hammer out a new contract.

Union officials say members will have to be as active and engaged as they were in 2012 to remain relevant in the future.

"American manufacturing cannot succeed unless it's incredibly productive," said Jim Robinson, director of the United Steelworkers District 7, with 85,000 members in Indiana and Illinois. "That's what globalization has done. You can't succeed unless you have a workforce that works productively together. You're not productive if people aren't all working on the same page for the same goals."

Robinson said future collective bargaining agreements will have to continue to balance competitive needs with employee desires, and new people will have to be attracted to join the labor movement.


Tougher negotiations coming

Companies including United States Steel Corp. and ArcelorMittal remain concerned about retiree health care and other post-employment costs including pension obligations.

Those issues will remain major sticking points in contract bargaining once the current agreement between the steelworkers and the companies expires in 2015.

"When you have an industry now that is supporting three to four retirees for every worker, it makes it that much more difficult and how to fund it will be a continual problem," said United Steelworkers Vice President Tom Conway.

Robinson said the union is reaching the outer limits on its ability to negotiate for a reduced burden on retirees in paying for health care costs.

Dean Gloster, partner with San Francisco-based law firm Farella Braun & Martel LLP, said the industry appears to be headed toward setting up more voluntary employees’ beneficiary associations to cover the unionized steel industry.

Voluntary employees’ beneficiary associations, or VEBAs, are tax-exempt trusts established to fund benefit plans. These trusts have been set up to serve people ranging from United Auto Workers retirees from Ford, GM and Chrysler, to retirees from shuttered steel companies such as Bethlehem Steel and LTV Steel.

Gloster said companies want to "exit the retiree health care business" especially since the cost of medical care has risen faster than the rate of inflation for 20 years.

"Folks on both sides of the table including the labor side have to appreciate that you have to come up with some way where the employer has to (be able to) compete," said Gloster, who has represented retirees of Delta Airlines, General Motors and Delphi during bankruptcy proceedings.

In addition to retiree health care, companies also want to contain costs for active employees, said Andy Harshaw, executive vice president of operations at ArcelorMittal USA. ArcelorMittal management has had a series of discussions about how to improve the wellness and health of employees.

“We need to find ways to get ahead of that curve and in many ways, provide an opportunity for employees to take a serious look at their lifestyles and what are the key things that improve their health,” Harshaw said.

Balance sheets also measure health, and pension costs for steel companies and others in the private sector can make a company appear unhealthy. Robinson said it’s important for people to continue to have access to defined-benefit pension plans, and the United Steelworkers will fight to protect them.

“A retirement system that assumes everyone is an above-average (money manager) is not going to work,” Robinson said, referring to defined-contribution pension plans such as 401 (k)s.


Changing industry times

Steel mills served as magnets of employment and opportunity in Northwest Indiana during the 20th century, said James Lane, Indiana University Northwest history professor. Lane said mill conditions and wage concerns provided fertile ground for labor to help unionize a large part of the domestic industry.

"A steelworker could raise a family and the wife wouldn't necessarily have to go to work and they could buy a car every few years and buy a swimming pool," he said. "It provided a middle class standard (of living) for the children and grandchildren of immigrants."

That case would be tested. Steel companies shed employees as a result of global competition and by making capital investments for less labor-intensive equipment in the late 1970s and 1980s. Lane said by the 1980s, unions "were trying to hold on by their fingertips and prevent the erosion of contracts."

Charles Bradford, a New York-based steel industry analyst, said during the 1980s and 1990s, steel industry production had a tremendous switch from integrated steel mills that produced steel from iron, coke and limestone in blast furnaces, to electric-furnace minimills, which melt scrap metal to produce steel.

Bradford said the unions were hurt during this period, because all the steelmakers that went bankrupt employed union workers and some of the largest minimill operators don't run union shops. In all, 50 steel companies went bankrupt between 1998 and 2002, according to the United Steelworkers.

The erosion of jobs in the industry has left people frustrated over the years, especially since unions and company management couldn’t help many mills remain in operation. Failed steel companies also sapped millions of dollars in wealth from thousands of workers’ pension plans.

Companies such as Nucor and Steel Dynamics have grown in prominence, employing workforces not represented by unions, leaving questions about whether there is still a need for unions.

United Steelworkers' Vice President Conway said unions are critical in their support of workers’ rights. He said companies that resist having a union-represented workforce miss opportunities such as providing training for workers.

The United Steelworkers represents 55,000 workers in primary metals production. The union is among 22 affiliates with the International Metalworkers' Federation, which represents 25 million metalworkers in 100 countries.

Robinson said it's important for unions in the United States to build solidarity among workers around the world to help improve the standard of living for workers in other countries. This also would protect employment opportunities domestically. He said if the wage gap among countries were smaller, firms wouldn't be as encouraged to move production offshore to chase lower labor costs.


Not up for discussion

One plan the union wants to keep out of the steel industry is the use of a two-tier wage scale. Union officials want to avoid a rollback in contract provisions deemed important to maintain the workers' standard of living.

Robinson said he doesn't want wages lowered for any worker and that the conflict created in the workforce in the short-term to prevent two-tier wages outweighs any cost.

Conway said wage stagnation in the U.S. manufacturing sector is alarming and the trend has continued over the last decade. He said there's no reason an assistant manager at McDonald's should be making more money than a worker in a metal-forming shop.

"I think it's a bad idea," Conway said about a two-tier wage system. "I would resist it as long as I am in the industry. I don't think it makes sense."

Union executives also continue to see right-to-work as a policy designed to drive a wedge between labor and management. The policy, which exists in 24 of 50 states including Indiana, makes it illegal for workers to be required to pay dues to a labor organization or third parties as a condition of employment.

Participating in rallies protesting right-to-work and being on informational picket lines during the USW contract negotiations last year have been important activities for younger union members, said Al Smallwood, member of USW Local 6787 and a third-generation steelworker at ArcelorMittal Burns Harbor.

Smallwood said his father and grandfather talked about their picket-line experiences at the dinner table and he visited some as a youth. But there are many first-generation steelworkers who haven't had the opportunity, and he said it's important for them to understand the activist culture that epitomizes what the union has fought for.


Better relationships ahead?

ArcelorMittal’s Harshaw said he has spent time educating members about the company’s competitive standing prior to the expiration of the previous contract. The company set up a website,, to share information about the impact of increased competitiveness of electric-furnace minimills and rising labor costs.

He said employee communication is an important part of responding to developments affecting workers on the shop floor.

Domestic companies want flexibility in their operations, especially when it comes to labor costs. Robinson said unions also want enterprises to be productive and sustainable.

Threats of a labor stoppage last year during contract negotiations were real, but conflict is inherent in the relationship between employees and companies, especially when it comes to resource distribution, he said.

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