THE BARGAINING in the steel industry has a mournful quality about it this year. Both sides are in weakened condition, haggling over a shrunken pie. The union is negotiating with the six largest steel makers in the country. The serious question is whether these once mighty symbols of smokestack America can survive. The topic is not just the terms and conditions of future employment in steel; it is the restructuring of a basic national industry.
For years the industry and its union seemed to inhabit a dream world. With modern plants and lower labor costs, foreign and smaller domestic producers were eating into the U.S. market. Yet bargaining between the Steel workers and Big Steel went blithely ahead as if on automatic pilot. The union gave a no-strike pled and got in return a guaranteed real wage increase each year. This produced very large wage increases with the high inflation of the 1970s. The companies lost even greater market share. Several now are in extremis, as is the union. Seven years ago, it represented more than 450,000 workers; now there are fewer than 200,000 working Big Steel plants.
The union has now given up industry-wide bargaining in favor of company-by-company negotiations on the theory that not all the companies are hurting the same and, therefore, that not all deserve the same concessions. And because it expects bargaining to be concessional for the second round in a row (there were also give-backs three years ago), it has provided for the first time for rank-and-file ratification of each company contract. The union has become an intermediary as each company and its employees decide their fate.
The first company with which the union reached agreement is perhaps the weakest, second-largest LTV.
The pact has been ratified: a reduction in labor costs of about one-seventh in return for job security provisions and a likely future share of the company in the form of preferred stock. A similar agreement has now also been tentatively reached at sixth largest National Steal, though the degree of concession was less on both sides; National is not in as bad shape as LTV.
But the further this process goes the harder the agreements may be to reach. The healthier companies will want comparable concessions, which their workers will be less inclined to give. The union has hired Lazard Freres & Co. to help it calibrate the degree of need at each company, and there is now a sharp dispute about the neediness of Bethlehem, the third in size. It is also not clear that even concessions as large as given LTV will be enough to save all these companies. In some ways what you have here is not bargaining, but scavenging. The steel industry of the next century -- 14 years from now -- is likely to be very different from today's.