For many of the 200,000 men and women who still earn their living in America's remaining steel mills -- and for several major steel companies -- it is coming down to a question of survival.
Behind closed doors in Pittsburgh and Chicago, the future shape and size of the ailing steel industry is being hammered out in union negotiations, amid the most turbulent labor-management climate in 30 years.
These tense bargaining sessions, according to industry analysts, could largely determine which of the Big Six steel makers survive the 1980s, which steel mills shut down forever, and which employes join the growing ranks of dislocated workers in an industry that has lost two-thirds of its work force in the sharpest employment decline in the history of U.S. manufacturing.
For the first time since 1956, the steel makers will not bargain jointly with the United Steelworkers of America. Their varying degrees of economic distress has led the fiercely competing firms to act individually to try to cut the best deal with the union. The industrywide "no-strike" agreement that prevented a major steel strike for 25 years is now defunct, and some analysts believe a walkout is likely at U.S. Steel Corp., the industry leader.
The stakes in the steel showdown are particularly high on both sides of the bargaining table:
The steel companies' losses have exceeded $1 billion in the last two years, the hemorrhage caused by declining demand for steel, increased foreign imports from more than 50 countries, and fierce price wars among themselves. The corporate drive to cut $23-per-hour labor costs and to increase productivity by scrapping work rules is intense. Depending on the outcome, analysts predict one or two firms could join No. 7 steel maker Wheeling-Pittsburgh Steel Co. in Chapter 11 bankruptcy proceedings, and as many as eight major steel making plants may close.
On the union side, the United Steelworkers of America has lost nearly half its 1.4 million members in the past decade, the sharpest loss any union has ever recorded. Union members in basic steel already have given up an estimated $2 billion worth of wage and benefit concessions in the last five years -- but are being asked to give up more. They are steadily losing their $25,000-a-year jobs -- not just because of imports, but because unionized firms are contracting out thousands of jobs to lower-wage nonunion workers.
The breakdown of 30 years of coordinated bargaining has created a potential nightmare for the Steelworkers because the union must simultaneously negotiate separately with firms that each will be pushing hard to match or exceed the concessions granted its competitors.
The strategy adopted by USWA President Lynn R. Williams and top union leaders is that major concessions will be granted only to the weaker companies that open their books and demonstrate a "dire situation." In those cases, the union plans to demand an "equality of sacrifice" from management, including the options of giving workers a stock-ownership share of the company, seats on the board of directors, profit-sharing agreements, and a high degree of union participation in management decision-making.
Industry observers predict that the union will agree to wage and benefit cuts of roughly $2 to $4 per hour, particularly in the cases of the big money-losers, LTV Steel Corp. and Bethlehem Steel Corp.
The union will take its toughest stand at U.S. Steel, the only firm to turn a profit in the past two years and the company with the most bitter labor-relations history. The relationship has been further strained by U.S. Steel's heavy investment in the oil industry and its recent joint venture with South Korea's Pohang Iron and Steel Co., moves that the union sees as a prelude to scrapping more domestic steel operations.
The steel crisis has forced Williams and the union leadership to shift bargaining tactics, tailoring compromises with each firm based on financial analyses conducted for the union by Lazard Freres & Co., a Wall Street firm whose involvement in the negotiations illustrates the union effort to do battle on a more sophisticated level.
The union also is launching a novel effort to turn the nationwide bargaining into a public forum for a joint labor-management plea for help:
"America's most basic industry is dying, and nobody but us seems to care," the Steelworkers said in full-page newspaper ads calling on banks, steel firms, Congress, the Reagan administration and state governments to help resuscitate the industry.
Labor contracts expire on July 31. But in an unusual move, the union and the Big Six -- except U.S. Steel -- have signed "crisis bargaining" agreements in which LTV, Bethlehem, National, Inland and Armco Steel have all moved up the target dates for settlement to March 15 to 30, and have agreed to participate in the union-sponsored publicity campaign aimed primarily at Washington. The campaign is aimed at dramatizing the need for further import protection, and for a government role in stimulating steel demand through tax policies and through increased spending on roads, bridges and other projects that use steel.
"We are trying to make the point that there is a crisis in American steel, and that it threatens the standard of living of the entire country" if a basic industry withers and the nation must rely too heavily on imports, Williams said in an interview.
U.S. Steel, however, rejected the preliminary agreement. "Labor negotiations should be labor negotiations," company President David M. Roderick said at a recent press conference. "I don't think you should have to adopt the United Steelworkers of America's political philosophy in order to negotiate a labor agreement."
Roderick also attacked the union's two-tier bargaining stance of offering special concessions to the weaker firms. "It's very essential we get a competitive wage and salary structure. We can't begin to have one or two competitors in some sweetheart arrangement and expect our employes to be sacrificed to the unemployment lines," he said. "We won't tolerate that."
U.S. Steel has said it will be demanding concessions equal to those granted by the Steelworkers to Wheeling-Pittsburgh last year following a 98-day strike during the firm's Chapter 11 reorganization under $330 million outstanding debt. The union agreed to cut labor costs to $18 hourly. But it also successfully demanded the ouster of company president Dennis Carney and senior management, and gained partial control of company decision-making by creation of joint worker-supervisor committees to oversee operations in every department in the company.
Williams, 61, a Canadian serving in his first full term as USWA international president, is regarded within organized labor as among the more creative and thoughtful union officials, although he has yet to be tested in overseeing nationwide bargaining. He said worker stock-ownership plans and participation schemes such as Wheeling-Pitt's, and a similar plan at ailing LTV, are among possible keys to industry survival.
"We are interested in involvement at every level" of corporations, Williams said. "The knowledge of our people and their skill should be utilized" to improve productivity to help save jobs, he said.
But Williams said the union will strongly resist U.S. Steel's seeking the same terms as Wheeling-Pitt. "We say that the pattern should not be set by a company that is in Chapter 11," he said.
The Steelworker strategy "requires them to do something they never did in the past, which is to really understand the companies' books and the economics of the industry," said Robert McKersie, professor of industrial relations at Massachusetts Institute of Technology's Sloan School of Management. McKersie described the union approach as "damage control . . . control the concessions. Minimize the dislocation, and run a sort of holding action on the assumption they can have a rising tide" if the industry recovers.
Banks are playing an increasing role in trying to force debtor companies to crack down on labor costs, Williams said, "and we want to bring the banks out of the shadows." The Steelworkers contend that banks in some cases are more flexible in restructuring loans to the Third World than to the U.S. steel industry. " . . . If saving industry in America is important -- and we believe it to be -- then the involvement of the financial community is an important part of the process," Williams said.
But Wall Street believes the banks' role is secondary in achieving the goal of drastically reducing the $450-a-ton price of domestic steel, which is anywhere from $50 to $150 above key foreign competitors, said Charles A. Bradford, steel analyst at Merrill Lynch.
Bradford predicted a loss of up to 50,000 jobs if labor costs are not substantially cut. "You will see major plant-closings, very major ones, if there is not a reduction of $5 an hour," said Bradford, who said that previous wage concessions in the 1983 steel contract "were meaningless" compared with the cuts needed.
Labor represents only about one-third of total costs in the increasingly automated steel industry. A ton is now produced with six hours of human labor, compared with 13 hours 10 years ago, according to the American Iron and Steel Institute. But labor is still the easiest target for cost-cutting, compared to raw materials, debt service and other overhead, analysts agree.
The degree of resistance to cuts will determine in large part the future size of the industry, said David Healy of Drexel Burnham: "The union has a basic decision of whether they want a handful of highly paid members, or a lot more who are poorly paid. And the decision so far appears to be to protect high wages . . . maintain a diminishing elite and tolerate plants closing."
Changing work rules are "even more important than cutting wages" in reducing steel labor costs, said Robert Decker, a Chicago analyst with Duff & Phelps. Union contracts originally set up many rigid job classifications to protect jobs, preventing companies from overworking some workers and laying off others, he said, "but the rules have gone to absurd levels" of featherbedding and greatly inflate labor costs.
Most Steelworkers realize the seriousness of the steel crisis and are willing to sacrifice on wages and work rules to save jobs, said Johnny Fair, a top local union official at Bethlehem Steel's Sparrows Point, Md., plant, where the union has lost 8,000 members.
But union members want assurances that companies will use concessions to save jobs, he said.
Workers are angry and fearful about job security because Bethlehem Steel has increased use of outside nonunion contractors to perform steel work, Fair said.