Leaders of the United Steelworkers Union yesterday rejected an appeal from the nation's steel companies that they sacrifice already-negotiated wage and benefit increases over the next several years to help restore the struggling industry to health.
Their decision breaks a recent pattern of concessions by organized labor. It also leaves both the union and the industry still locked in a painful decline.
"I am disappointed we could not reach an accommodation because I'm aware of the many problems that are there and that are mutual," USW President Lloyd McBride said after some 400 local union presidents, meeting in Pittsburgh, voted unanimously to refuse to give anything back.
Said J. Bruce Johnston, head of the Big Eight steel companies' bargaining team, "With the steel industry's very existence threatened, it is regrettable that the Steelworkers chose to increase wages for a few at the expense of many."
His remark was a reference to layoffs, both past and prospective.
America's steel-making giants have joined the somber parade of industry's walking wounded, claiming that soaring labor costs must be cut in order for them to regain their competitive edge. One of the lowest-profit industries, steel makers pay the highest wages.
Employment in the nation's fourth largest industry has sunk to its lowest level since 1933. From a high of 1.4 million workers, union membership has fallen to under a million. More than 100,000 of the 375,000 steel-making members are laid off.
Steel mills are operating at just over 40 percent of capacity, the lowest rate since 1938. Leading steel makers have recently reported millions of dollars in losses for the last six months.
Since spring, in a flurry of meetings centered in Pittsburgh, U.S. Steel and seven other major companies have been wooing the union informally. Yesterday, the industry asked the union to accept a new three-year contract and sacrifice a 33-cents-an-hour pay increase that kicks in Sunday.
The existing contract does not expire for another year.
Both sides kept a tight lid on details of the talks. But Johnston, a U.S. Steel vice president, signaled his drift when he wrote in a letter to the union that "our pay for steel employment has passed all reasonable bounds."
The steelworkers' hourly employment costs, including wages, benefits and employment taxes, average $22.69, the highest in American industry--and $10 an hour more than their top competitors in Japan.
Unionists have argued that the high pay is justified because the work is highly skilled, dangerous, dirty and uncomfortable.
The big pay raises of recent years came partly as a trade-off for an innovative no-strike agreement which expired a year ago. Since it was first signed in 1973, steel wages and benefits have climbed 195 percent, as inflation fattened cost-of-living increases.
Now, like the auto workers and others, the steelworkers are caught in seismic upheavals in the country's economic landscape. Thousands of their jobs are disappearing forever, as the country shifts away from making things in factories to doing services.
Blame for the steel industry's problems is not limited to high labor costs. Both the unions and the companies complain that the federal government has failed to curtail competition from steel imports. And unionists blame company managers for failing to modernize steel mills.
A growing number of steel towns scattered across the Midwest are feeling the pain of the industry's struggle.
In Aliquippa, Pa., sympathetic steel workers have agreed to have part of their pay deducted in order to provide food for unemployed co-workers whose jobless benefits are running out.
In a recent rally at Pittsburgh's Three-Rivers Stadium, 7,500 people turned out to pray for jobs. An evangelist blamed the devil for hard times.
McBride reacted to the near depression in the industry by getting local USW presidents around the country to authorize him to talk to the companies' team to "explore possible solutions."
Instead of outright wage concessions, for instance, McBride had suggested that the union might consider diverting part of the Aug. 1 pay increase "to deal with the problems of the unemployed," to replenish drained company jobless benefit funds.
Among the other possible trade-offs mentioned were an extension of the coverage of the workers' job security program, and commitment by the companies to reinvest some of the labor-cost savings in the steel business.
The companies wanted to put a two-year cap on cost of living increases, cut by $3 the starting rate for new hires, as well as scrapping the Aug. 1 wage and benefit hikes, McBride said yesterday.
In exchange, they offered to increase funding to the union's unemployment benefit plan, improve insurance programs and permit local strikes.