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Fight between steel industry, union rages unabated | TribLIVE.com
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Fight between steel industry, union rages unabated

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Andrew Russell | Trib Total Media
Regina Stinson, of New Kensington and wife of Terry Stinson, a Local 1138 member chants 'We are one!' when a group of union workers and retirees marched into the lobby at ATI Flat-rolled Products headquarters at PPG Plaza, downtown, Thursday, July 30, 2015, Union workers are demanding a fair contract proposal for its 2,200 members at 11 ATI plants in four states.
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Andrew Russell | Trib Total Media
Dakota McIntyre, 7, of Fawn Township stands with her brother Peyton McIntyre at a Steel Workers rally at the United Steel Workers building, downtown, Thursday, July 30, 2015. A group of union workers and retirees marched into the lobby at ATI Flat-rolled Products headquarters at PPG PlazaUnion workers are demanding a fair contract proposal for its 2,200 members at 11 ATI plants in four states. The McIntyre children's father is a member of Local 1138.
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Andrew Russell | Trib Total Media
Greg Bortz of Brackenridge PA (left) and USW union member shakes the hand of a security guard working in the lobby at ATI Flat-rolled Products headquarters at PPG Plaza, downtown, Thursday, July 30, 2015, when when a group of union workers and retirees marched into the headquarters of ATI, demanding a fair contract proposal for its 2,200 members at 11 ATI plants in four states. 'We're all just working men,' said Bortz to the security guard.

United Steelworkers are talking tough about standing up to a steel industry that the union accuses of using a temporary economic downturn to gut contracts filled with hard-won benefits.

But with demand for steel weak, prices falling and imports rising, negotiations between the union and U.S. Steel Corp., ArcelorMittal and Allegheny Technologies Inc. couldn’t occur at a worse time, which experts said gives labor little leverage in the talks.

“If you’re going to pick a fight with a union, this is the last union you want to fight,” USW International Vice President Tom Conway told the 1,000 supporters at a recent rally. “Just remember there’s more of us than there is of them.”

Yet as talks broke down earlier this month, the union never authorized a strike and offered to continue negotiating when ATI released a final take it or leave it offer. But the company was done talking. It followed through last Saturday on a threat to lock out 2,200 union workers at plants that make flat-rolled steel, including those in Harrison, Vandergrift and Gilpin, demonstrating the hard line steel producers are adopting to achieve lower labor costs.

“Management at these companies are reading the tea leaves that they’re going to have to take a harder stance” against the union, said John Delaney, a professor at the Katz Graduate School of Business at the University of Pittsburgh and an expert in labor relations.

ATI and U.S. Steel officials declined to comment for this story. But ArcelorMittal, where contracts covering about 30,000 workers expire Sept. 1, told the Tribune-Review in a written statement that the union is mistaken in believing that it can “hold out for better times ahead.”

Unlike a strike by the Steelworkers union at oil refineries across the country and a work slowdown by longshoremen at West Coast ports earlier this year — with the effects rippling through the economy — steel producers and consumers likely would ride out a strike without noticeable impact.

“The overall weakness that the steel industry is facing is the biggest factor in the negotiations. There’s not a lot of incentive for the companies to give in,” Delaney said. “Until there’s a pickup, where the industry really needs to ramp up production, they’re (steel companies) in a good spot to force concessions.”

Union officials declined requests to be interviewed. But in statements released on its website, the union has criticized the companies, which are all seeking concessions on health care and retirement benefits but not wages. Union officials argue financial problems pressuring the companies are because of short-term economic conditions and cutting benefits won’t help.

Low morale

At the rally late last month, Conway fired up the crowd by linking ATI’s proposals with those of U.S. Steel and ArcelorMittal.

“This is not an ATI fight alone. This is a steelworker fight,” Conway said. “And we need to win it.”

After the rally, Alan Braden, a 36-year-old ATI worker in ATI’s Bagdad facility, was one of the few workers willing to speak with a reporter. He said the morale of ATI union workers was low because they believe the company is treating them unfairly. He said union members work hard and deserve the benefits they’ve negotiated in the past.

“We didn’t ask for much,” he said.

But steel companies are pressing for concessions, pointing to a decline in the industry’s fortunes. Steel prices have dropped 50 percent since 2008, according to ArcelorMittal. The companies are battling competition from cheap imports even as a collapse in oil and gas prices craters demand for pipes from an energy industry once seen as a bright spot.

The steelmakers, which have reported worsening financial losses this year, are proposing that union workers start contributing toward their health insurance premiums. At ATI, for instance, the company wants workers to pay $125 a month in the first year, an amount that will increase each year until reaching $215 a month in the fourth year of the contract.

“By comparison, according to the Kaiser Family Foundation, the average American family pays $402 in monthly premiums,” ATI said on a website it posted last week to detail its contract proposal. ATI’s previous contract expired on June 30.

ArcelorMittal said it has proposed changes to health care benefits in an attempt to reduce a competitive disadvantage. While steel prices have declined, the company said its fixed costs, including labor, have remained flat.

“It is disappointing that the USW response would actually increase benefit costs, escalating our employment costs when we are trying to compete against unprecedented competitive threats including rising imports and global economic challenges,” ArcelorMittal said.

No end in sight

The problems facing the companies show little sign of easing, said Andrew Lane, an analyst with Morningstar Inc. in Chicago.

“China’s emergence as a net exporter of steel is the most pressing issue” for steel producer earnings, he said.

While demand for steel from the automotive industry has been healthy, domestic producers aren’t experiencing growth. Oil and gas companies, which use steel pipe for drilling, are cutting back on exploration as prices for those commodities decline.

“Any incremental demand is being serviced by steel imports,” Lane said.

China’s move to cut the value of its currency relative to the dollar last week will only make the import situation worse, despite multiple unfair trade cases filed by steel companies in recent months, he said.

“I think given the challenging market conditions, companies are doing their best to cut costs wherever possible,” he said.

John Tumazos, an analyst and CEO of Very Independent Research in Holmdel, N.J., said the surge of steel imports into the United States isn’t slowing.

“In the end, the interest of the employees will best be served by maintaining the viability of the company,” he said.

Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or [email protected].

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