Steeling for Some Givebacks

By John S. DeMott

With half its workers laid off, the union okays a pay slash

For decades every contract signed by the major steel producers and the United Steelworkers brought higher wages and benefits for the people in the grimy business of running America's blast furnaces and rolling mills. In time steelworkers became the highest-paid blue-collar employees in the U.S. In January their average hourly pay ran at $14.39, vs. $13.07 for auto workers and $8.71 for manufacturing workers generally.

Last week, after a year in which the domestic makers lost $3.3 billion in their steelmaking operations, the industry's long-rising wage curve bent downward. The union and the major companies agreed to a new 41-month contract that temporarily cuts Steelworkers' pay by 9% -- about $1.25 off the basic hourly wage. The pact gives up other things too.

Sunday pay, for example, will drop from time and a half to time and a quarter. Steelworkers with ten years' seniority will forfeit the extra 13-week vacation they get every five years, and all workers will lose at least a week of vacation for one year. United Nations Day, barely celebrated by anyone, will disappear as one of the Steelworkers' paid holidays, leaving ten a year.

The union, with 50% of its 260,000 active steelworker members at the big companies on layoff, seemed to have little choice but to give up something or face even more job losses in an increasingly hostile employment picture. The Labor Department reported last week that the civilian jobless rate in February stayed at the high January level of 10.4% of the work force.

The companies have been trying unsuccessfully for nine months to cut wages. In November management won an 11% pay reduction in talks with the union's leaders, but the presidents of the union locals subsequently voted down that cut. Last week's agreement was approved 169 to 63 by the local chiefs representing workers in the seven largest companies: U.S. Steel, Bethlehem, Jones & Laughlin, Republic, Armco, National and Inland.

Adding to the pressure on negotiators for both sides were big steel users, among them General Motors. It had threatened to begin ordering supplies this month from foreign makers if no contract was reached. Such an impasse would have left the industry vulnerable to a strike after Aug. 1, when the old contract was to have lapsed. Last week's deal supersedes that one, and it will run through July 1986. The reduction in hourly pay becomes effective immediately. But it will be restored in increments in 1984, 1985 and 1986. That did not appease everyone. Said Fran Rattigan, 46, a structural steelworker at U.S. Steel's giant Homestead works in Pennsylvania: "If we have to take a cut, everybody else should make concessions -- doctors, lawyers, dentists, Congressmen, Senators, even Presidents."

Paradoxically, the givebacks come just as things are looking a little brighter for the domestic industry. Orders for steel are picking up. For its part, U.S. Steel plans to fire up an idled blast furnace at its Edgar Thomson works in Pennsylvania, which has not made iron for more than a year. In February, steel production was running at 50.3% of capacity, a huge jump from December's low of 29.8%.

The union hoped to gain something from its sacrifices. In part, U.S.W. Vice President Joseph Odorcich negotiated the contract to send a message "to some of our detractors who have vilified us as not being concerned with the total problem."

Although substantial, the concessions fell short of cuts taken by other Steelworkers. Last year Wheeling-Pittsburgh Steel employees took cuts in wages and benefits amounting to $5.18 an hour, and those for Northwestern Steel in Illinois a reduction equal to $7.12 an hour. Both companies were forced to negotiate separately because they were on the verge of collapsing. Workers in other industries have also made concessions as the recession swept through smokestack America. In Detroit, workers at GM and Ford last year gave up a productivity raise, deferred some cost of living increases and forfeited 27 days of vacation over a three-year period.

The Steelworkers' concessions should allow the companies to save about $2 billion over the life of the contract. One provision says savings should go toward reinvigorating existing steel plants and not be used "in other business segments of the company." Labor chiefs regard the clause as a victory. They believe that the steel industry's plight is the fault largely of management, noting that the companies have invested in oil and other nonsteel enterprises instead of spending money to upgrade American steelmaking facilities.

Industry analysts argued that the union had not given up nearly enough. Including salary and benefits, U.S. steelworkers still get $22.20 an hour, vs. $10.15 for their Japanese counterparts. Said Peter Marcus of Paine Webber Mitchell Hutchins: "It wasn't such a great deal for the companies."

Robert Crandall, a steel watcher at the Brookings Institution in Washington, said the concessions might help make American steel more competitive, possibly lowering the producers' per-ton cost by $20 or so. That would be only a small dent in the price to users of finished steel, now about $500 a ton. But steel from Japan and else where is far cheaper.

Other unions are likely to get the message in negotiations this year. Contracts that cover 3.6 million workers in the aluminum, construction, communications, aerospace and shipping industries either expire or become subject to reopening before the end of 1983. Concessions by the steelworkers might dictate prudence in other negotiations, but not much more. Givebacks will be tailored to the needs of individual industries, and may not come at all if the economy continues to improve.

-- By John S. DeMott

Reported by Gisela Bolte/Washington and Sherley Uhl/ Pittsburgh

With reporting by Gisela Bolte, Sherley Uhl This file is automatically generated by a robot program, so viewer discretion is required.