Union Has Little to Celebrate on Its Birthday

There won’t be many champagne corks popped by members and leaders of the United Steelworkers of America this year to observe the union’s 50th anniversary: They have little to celebrate.

In the past four years, the USW lost half of its 1.4 million members--the most devastating reduction ever suffered by any major union in this country in such a short time.

No one knows how many of the 700,000 former members have found other jobs or how much money they’re now making.

But spot checks by the union and some industry sources indicate that well over 200,000 are still looking for work. And many of those who have found jobs are earning substantially less than the $12 to $15 an hour, and more, that they made as USW members.

Also putting a damper on an anniversary celebration are this year’s contract negotiations, which will be as difficult as any the union has ever faced in its history. Significant contract concessions by the union seem inevitable.

Bargaining talks have started, or will soon, between union negotiators and representatives of the nation’s steel, copper and aluminum industries, among others.

The union and its remaining members know that they are not bargaining from a position of strength. Strikes are being lost by unions more and more frequently these days and many of the companies that the USW will negotiate with are either losing money or making only small profits.

Where there is a spirit of labor-management cooperation, concessions by labor may come without strikes. In return, though, the workers want some guarantees that they will share in any future gains and that they and their unions will have a significant voice in companies’ decision-making processes.

Something of a precedent along those lines may have been set in the steel industry by last year’s agreement between the USW and Wheeling-Pittsburgh Steel Corp.

There had been a prolonged strike by workers determined to resist the demands of the firm’s confrontational chairman, Dennis J. Carney, who insisted that they accept a cut in the value of their wage and benefits package from $21.40 to $15.10 an hour. He offered nothing in return.

But financier Allen E. Paulson bought control of the firm, adopted a non-adversarial relationship with the union and got rid of Carney and two of his aides by, among other things, giving them $2.3 million in severance pay--not too bad a deal for a man who was certainly no financial savior for the company and had insisted that its workers take drastic pay cuts.

The company did seek protection under Chapter 11 of the U.S. Bankruptcy Code, but then, spurred by the cooperative spirit that Paulson developed, the workers accepted wage and benefit cuts of about 16%, dropping the cost of the package to $18 an hour, instead of the $15.10 that had been demanded by Carney. The workers were also given more authority to help run the company and when Paul D. Rusen, the union’s chief negotiator with Wheeling-Pittsburgh, retires in March, he is expected to become a member of the firm’s board of directors.

The Wheeling-Pittsburgh agreement will not be an exact pattern for other steel firms now starting their own negotiations because the industry no longer bargains on an industrywide basis. And it is clear that the union is going to resist giving prosperous firms the same concessions that it grants to those in financial trouble.

But the union has already had what it calls constructive preliminary talks with executives of the Bethlehem, Armco, Inland, National and LTV steel companies, and that is raising hopes that those firms can reach settlements without strikes.

However, giant U.S. Steel so far has not joined the “let’s cooperate” crowd and there could be serious problems if the union, to avert a strike, gives U.S. Steel more concessions than it offers the other, more amiable firms. In that case, the other companies will expect similar concessions.

Far more ominous for USW members, though, are the demands made last week by Kennecott Corp. that its workers, who are represented by the steelworkers union, accept wage and benefits reductions of 33%.

The union is acutely aware that Kennecott, like most of the rest the copper industry, spends more to produce a pound of copper than it can sell it for but insists that it will strike to resist the company’s demands.

Labor costs may be part of the problem for copper, as they are in other industries. But when, for instance, it costs 80 cents or more to produce a pound of copper that sells for only about 60 cents these days, even drastic labor cost cuts obviously are not going to save the U.S. copper firms. Just five years ago, copper was selling for $1.40 a pound, and labor costs had nothing to do with the dramatic price drop.

There are many issues other than labor costs that are complicating the efforts to find a solution for firms such as Kennecott, which has lost $600 million since 1981:

- Kennecott’s real decision-makers are in London. Kennecott is a wholly owned subsidiary of Standard Oil of Ohio, and Sohio is owned mostly by the London-based conglomerate British Petroleum.

British Petroleum recently put up $400 million to modernize its U.S. copper production, mostly in Arizona. But the corporate executives in London are not going to fool around long with Kennecott unless the investment starts paying off.

Those executives may feel a twinge of conscience or two when they are told that a few thousand workers in hot, dusty Arizona desert mines may be economically crushed if Kennecott accepts a strike in order to get its 33% reduction in labor costs. But the twinges are likely to be quickly forgotten when the executives in London turn their attention to British Petroleum’s other, more successful interests.

Ken Hochstetler, a Kennecott spokesman, said that, despite all the problems, the firm can compete on the international market when the modernization of its mining operations is completed and if the workers accept major wage and benefit reductions. But he isn’t giving any guarantees, of course.

- Kennecott’s real owners will be looking at the bitter, tragic strike of copper miners at Phelps Dodge Corp. in Arizona, seeing, perhaps, an example they just might want to follow.

On July 1, 1983, Phelps Dodge workers struck when the company refused to go along with the contract settlement reached between the USW and the rest of the copper industry.

Although the strike is still going on, the firm says it is beginning to show a profit from production by strikebreakers. Hard-nosed Phelps Dodge, then, and not the more cooperative Wheeling-Pittsburgh, could set a pattern for such firms as Kennecott.

- Even if U.S. copper miners accept 50% wage cuts, they still could not compete with the mines in such countries as Chile, where copper is produced for about 38 cents a pound, less than half the cost in the United States.

The World Bank, U.S. banks and other financiers, encouraged by the U.S. government, have helped Chile’s copper production with substantial loans that may never be repaid.

In other words, with the help of the U.S. government, Chile, one of the world’s major copper producers, is putting thousands of American copper workers out of work. And Chile’s military dictatorship, headed by Gen. Augusto Pinochet, has crippled all efforts by Chilean trade unions to boost wages of miners there.

There may be no long-range solution to America’s problem of foreign competition in an era when many companies are multinational conglomerates whose owners often regard themselves as citizens of the world--seemingly more concerned with bottom-line profits than with the future of U.S. workers or even with that of the United States itself.

But a start toward solving those problems might be made by at least experimenting with some form of the often maligned concept of an “industrial policy” that would bring representatives of the U.S. government, industry, labor and others together to help save this country’s hard-pressed industries with, for instance, government-backed loans.

Also, more federal encouragement and help is needed to get other companies to develop programs that involve workers in the corporate decision-making process. Worker participation plans are not panaceas. But an extension of democracy to the workplace might reduce destructive industrial conflict, as it seems to be doing at Wheeling-Pittsburgh, General Motors, Ford and other companies that are trying it.

A Hollow ‘Victory’

Unions over the years have been able to attract members most effectively by pointing to the relative gains that workers make when they carry union cards. But these days, more and more unions are being forced to advertise the advantage of membership by noting the economic losses that the unions have managed to avoid.

One recent example: John Sweeney, president of the Service Employees International Union, declared the other day that “by defeating the building owners’ demands for massive take-backs, we demonstrated that concession bargaining with no economic justification cannot and will not succeed in this industry.”

Sweeney was referring to a two-month battle between the relatively prosperous Office Buildings Assn. of Pittsburgh and SEIU janitors, who balked at management demands for a 25% wage cut and major benefit reductions. Management finally “gave in” and allowed the janitors who had been locked out of their jobs to return to work.

The workers’ victory, however, was, as Sweeney noted, the industry’s agreement to a pact that required the janitors to accept a wage freeze and allows the firms to pay newly hired workers lower starting wages, bringing them up to current wage levels only after three years.

Obviously, the pact is better than the one that workers resisted for two months and management fought so hard to obtain. But it is a sad time for labor when contracts providing for wage freezes and lower starting pay can be regarded as a “victory” for workers and their unions.