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Steel labor pact would alter staff, protect retirees
The union publicly released a summary of its contract with International Steel Group on Wednesday.
Pittsburgh-based U.S. Steel and AK Steel Corp, which are locked in a bidding war for National, have said they will need to forge a new labor pact with the union before either company can close on the acquisition. The union has said they will use the ISG contract as a model for all future negotiations.
Most notably, the contract reduces ratios to one manager for every four employees in an industry that has typically had a one-to-two management-to-labor ratio, the union said.
"What is more unproductive than having one boss standing over workers who already know what to do?" said Leo W. Gerard, president of the United Steelworkers.
Employees at Cleveland-based ISG will vote on the contract through Feb. 4. ISG was formed last year when it purchased the assets of LTV Corp.
In addition to stripping away layers of management and industry-leading wages and benefits, the new contract includes the creation of a benefit trust to provide some health-care relief to LTV and Acme Steel retirees.
"This is the first time I know of that a company has been able to restore some level of protection to retirees of a predecessor company," Gerard said, referring to the health care provisions.
Under the plan, a portion of ISG's profits would be diverted to the trust. Money from the trust would be given to LTV and Acme retirees to supplement payments they already are receiving from the government-run U.S. Pension Benefit Guaranty Corp.
However, union officials said ongoing uncertainty in steel markets made it difficult for them to pinpoint when the new fund would have enough money for payments to begin.
Other highlights of the contract include wages Gerard said were "at the top of the industry." They will range from $15 per hour for a utility person in the first year of the contract to a maximum of $22.40 per hour for a senior operating technician in 2007, the final year of the contract. Employees will be covered by a pension that will pay the $115 per month for each year of service with ISG
Gerard said a separate contract would have to be worked out if ISG completes its proposed $1.5 billion acquisition of bankrupt Bethlehem Steel, which was announced earlier this month. Gerard said the union would look to extend the existing contract with ISG to cover Bethlehem workers.
While AK Steel's bid is $75 million more than U.S. Steel's bid for National, U.S. Steel's proposal has been approved by National's management and board of directors. AK Steel also has had a tense relationship with the union over the past several years, highlighted by a three-year lockout of 600 union members at the company's Mansfield, Ohio, plant.
"We have a difficult time with the outstanding issues with us and AK Steel. Those would be a much different and more difficult set of negotiations," Gerard said. "Our obligation is to our membership and to get the best deal for our membership, whether that be a stand-alone deal; or whether that be a deal with U.S. Steel, or whether that be a deal with someone else. At least with U.S. Steel we haven't been victimized with a three-year illegal lockout of our members."
Both AK Steel and U.S. Steel will be in U.S. Bankruptcy Court in Chicago today, seeking to be named the lead bidder for National Steel's assets.
Separately, Bethlehem Steel will be in bankruptcy court today seeking approval of the ISG bid. In a conference call yesterday, Bethlehem Chief Executive Robert Miller said the company had asked its board of directors to approve the sale to ISG.
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