Steelworkers, USX Reach Tentative Pact
The United Steelworkers and USX Corp. reached a tentative settlement in their 170-day labor dispute early today, union officials announced.
If the tentative accord is approved by local union officials and rank-and-file members, the settlement will bring an end to one of the most bitter disputes in the history of the American steel industry.
No details of the agreement were immediately available.
One union official said the local union presidents who represent 22,000 workers at USX, formerly U.S. Steel, will vote on the new contract Sunday at a meeting in Pittsburgh, Pa. If the pact is approved, the union then will release the contents to the public, the official said.
“We accomplished our goals,” another union official said, adding that “there are some unique and surprising components of the agreement. We don’t think our members will be disappointed.”
Corporate officials had no immediate comment.
The USX walkout, termed a lockout by the steelworkers, is the first major labor dispute in the steel industry since 1959.
The company and the union have been under mounting pressure in recent days to reach a settlement.
Unemployment benefits expire at the end of January for workers in most states where USX has facilities and where state officials agreed that the dispute was a lockout by management. Without such benefits, rank-and-file union members will find themselves under mounting financial pressure and may find it increasingly difficult to continue their walkout.
At the same time, USX, the nation’s largest steelmaker, must restart its steel mills soon if it hopes to recapture lost business by the upcoming second quarter, when the biggest customer orders for steel go out each year. USX spokesmen have said that a settlement would have to be reached sometime in mid-January if the company is to gear up in time to handle second-quarter orders.
The walkout began when the union rejected USX’s demands that it agree to steep wage and benefit cuts, similar to those the union had earlier granted to smaller steel firms. In particular, USX sought a contract similar to one the union agreed to with LTV Corp., the nation’s second-largest steel firm, which is in bankruptcy proceedings.
USX executives said the firm could not compete against domestic rivals paying lower wages, but union officers argued that the industry giant should not be granted the same concessions given to a firm in bankruptcy.
Wage Cuts Seen
Still, the union has expressed a willingness to grant some wage cuts to USX, and some industry observers believe the two sides have already agreed to slash wages and benefits by about $2 an hour. But, in return, the union wants the company to agree to limit its practice of hiring low-wage subcontractors to perform jobs previously handled by union members.
The union has charged that the company repeatedly violated the old contract by subcontracting out union work and has demanded that thousands of workers laid off because of such practices be reinstated under any new accord. Along with the 22,000 active workers who walked off their jobs last August, there are an additional 23,000 steelworkers on layoff from USX.
Union and company spokesmen have acknowledged that the subcontracting issue has been one of the main stumbling blocks in the negotiations.
Firm Posts Losses
Although USX has become highly diversified in recent years, with energy operations now accounting for more than half of its business, the walkout in steel has proved costly on the corporation’s bottom line. USX posted a net loss of $183 million in last year’s third quarter--the first period to be affected by the dispute--and analysts estimate that it lost an additional $250 million to $300 million in the fourth quarter.
At the same time, the USX dispute has occurred in the midst of the worst slump in the steel industry since the Great Depression of the 1930s. Total employment in the steel industry has plunged nearly 55% in the last five years, from 391,000 in 1981 to 177,000 by late 1986. Industrywide losses from steel operations rose in the first nine months of 1986. And, through the first 11 months of 1986, the steel industry operated at less than 64% of capacity.
Meanwhile, imports grabbed 23.1% of the market during the same period, despite the Reagan Administration’s 2-year-old import quota program, which is supposed to limit foreign steel to just 18.5% of the market.
Plants May Be Closed
With the market for domestic steel so depressed, some industry observers now believe that USX will announce permanent closings of some of its mills soon after the labor dispute is settled. Although some of the biggest plant closings may not be announced immediately, analysts say that USX’s mills in Provo, Utah, Fairless Hills, Pa., and Lorain, Ohio, appear especially vulnerable.
Still, the long shutdown of USX’s mills has provided some relief for the rest of the domestic industry. It has temporarily reduced the glut of domestic steel-making capacity and has helped stabilize steel prices, which have been deeply discounted for years.
