On Monday it was announced that a U.S. Steel and United Steelworkers Union deal has been reached as a “tentative agreement”. The consensus has helped to avoid a steelworker strike that would involve more than 14,000 steelworkers in tubular operations, domestic flat-rolled steel, and ore mining facilities throughout the eastern United States.

a picture of a plant where steel plant a steelworker strike could have taken place if not for recent headway in contract negotiations.

Steelworker Strike Update

Details of the agreement are under wraps while the proposed four-year contract is still under reviewed.

U.S. Steel President and CEO David Burritt released a written statement in which he described the agreement as “fair and in the best long-term interests” as it pertains to U.S. Steel’s and its employees’ futures. Burritt’s stamen goes on to say “Together, we’ve agreed on terms that will create certainty and stability for our many stakeholders, enable our company to implement our long-term business strategy, which includes continued, responsible investments in our people and plants, and position U.S. Steel to remain a leader in the highly competitive global steel industry.”

According to USW Local 1899 vice president Jason Fernandez, Local presidents are returning from negotiations in Pittsburgh and will take time to deliberate with union members on the best course of action. The eventual voting process will be planned to accommodate workers schedules, so it may take up to a week before a decision is made regarding whether to accept U.S. Steel’s proposed contracts or not.

Steelworker Strike Background

Negotiations have been taking place since July, leading up to the September 1st expiration date of worker contracts. Things became heated when it seemed clear that U.S. Steel would not make good on a pay raise that workers had done without over the course of three years in the interest of the company’s future. As company profits reached into the billions over the last three years, workers grew incensed that upper management showed no signs of reciprocation for the hit workers took during the last round of contract negotiations. A steelworker strike was authorized by unions across the eastern US, but never fully enacted.

ArcelorMittal, the largest steelmaker in the US, remains in talks with the USW over contract negotiations and a strike is still possible for the company’s near 16,000 steelworkers.

Steelworker Strike Effects On 2016 Midterm Elections

It has been speculated that the turmoil in the US steel industry will have a significant effect on the outcome of the midterm elections.

While president trump has imposed tariffs on aluminum and steel imports as an effort to drive demand to U.S. producers, not everyone has enjoyed the renewed activity. Jeff Astle, an employee of Universal Stainless and president of Local USW 9531, asserts the contract recently signed by his chapter to be the best he’s seen in 23 years. When asked about what’s changed, he stated, “There was once upon a time I was only working 40 hours a week, barely, but now business is thriving – we are working so many hours it’s not even funny.”

While that may be the case for a veteran of the industry, low-level workers lament that record profits of steel producers, like U.S. Steel and ArcelorMittal, have failed to trickle down. These workers represent a substantial voting bloc for the incumbent and the Republican party. Without the support of these steelworkers, an air of uncertainty hangs looms as the November elections draw near. Talks of walkouts are circling and more than 31,000 steelworkers have granted union negotiators the power to activate a strike that would affect the country’s two largest producers, U.S. Steel and ArcelorMittal. The two companies account for nearly half of all steel produced in the United States.

Material handler at Universal Stainless Henry Polite finds himself between a rock and a hard place, stating “I’m proud to be a steelworker, but I would just like to see more concern for the underdog [the workers], than just the higher-ups.”

The United Steel Workers Union summed up the sentiments of neglected workers in a statement that alleges, “Top company officials have given themselves more than $50 million in pay and bonuses since 2015 while the hourly workforce has not received a wage increase over the same period.”

When it comes to how these resentments could manifest at the polls, Soren Fanning, a history professor at Robert Morris University, alluded to 2016, when the presidential election was all but sold as, ‘we are bringing the steel industry back to Western Pennsylvania, back to America,’. Trump won by fewer than 80,000 votes in the region. Fanning suggests that “People vote their frustrations [And] right now what you’re seeing amongst steelworkers is a real sense of urgency that these promises of better conditions, more purchasing power, more health care get fulfilled and, if they don’t, they are going to go with the party of change.”

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Last week, the United Steelworkers Union (USW) voted overwhelmingly to authorize a strike if new contract negotiations can’t reach a compromise. The USW will meet in Pittsburgh to address steelmakers’ substantial profits in the face of worker wages remaining stagnant. Locals including Gary Works, East Chicago Tin, and the Midwest Plant in Portage are among the largest involved and all voted unanimously to strike. The proposed work stoppage will affect nearly 16,000 workers at locations including Clairton Works (Pennsylvania), East Chicago Tin (Indiana), Fairfield (Alabama), Fairfield Southern (Alabama), Fairless Hills (Pennsylvania), Gary Works (Indiana), Granite City Works (Illinois), Great Lakes Works (Michigan), Keetac (Minnesota), Lone Star Tubular (Texas), Lorain Tubular (Ohio), Midwest Plant (Indiana), Minntac (Minnesota), and Mon Valley Works (Pennsylvania). If enacted, the strike will be the largest such stoppage in the US steel industry in more than 30 years.

The whole situation is rooted in a decision made three years ago, when U.S. Steel was on the verge of bankruptcy. Workers conceded to a wage freeze and reduced work hours in the hopes that the company would rebound from dire straits. In short, it did. U.S. Steel is now expecting profits to exceed $2bn, the highest in 10 years.

According to a union spokesperson, “Angry USW members conducted strike authorization meetings at each U.S. Steel local over the past week.”

United Steelworkers’ Unrest  

Among the chief complaints from steelworkers is having undergone three years of work without pay increases, which comes at a time when US Steelmakers are reaping significant gains. For perspective, hot-rolled coil steel is currently selling for $900 a ton, according to the metal pricing website SteelBenchmarker. To put that into perspective, steel prices have more than doubled from the low of $412 on Dec. 14, 2015. Roughly the same three-year period in which workers state they have not experienced a pay increase.

To add insult to injury, USW claims that CEO David Burritt and U.S. Steel upper-management have endowed themselves with more than $40 million in compensation since 2015.

Proposed Changes To United Steel Workers’ Contracts

After three years with no pay increases, the USW is coming to the negotiating table seeking raises. However, the Pittsburgh-based steelmaker is looking for concessions that include more out-of-pocket health care costs, reduced retiree benefits, and a commitment to no raises in the latter half of a proposed six-year contract.

According to US Steel, the contract includes a $4,000 signing bonus, at least $6,000 in profit-sharing, and wage increases over the first 3 years of the 6-year contract. On top of the proposed terms, US Steel says that employees will gain $0.15 per hour towards their 401(k) retirement plans.

A picture of a steel production plant Like those where US Steel workers are considering organizing a strike.

According to a statement issued by the USW, “Our committee will be returning to Pittsburgh next week to resume negotiations with U.S. Steel management to reach an honest and fair settlement. As you know, management’s proposals so far have been completely unacceptable, particularly in light of the company’s projected profit this year of nearly $2 billion. We will be sure to keep all members informed of any progress we make at the table next week and of whatever next steps we anticipate.”

Consequences Of A United Steelworkers Strike

The consequences of a USW strike, at least on the US manufacturer, will depend on the size and scale of operations and whether or not a manufacturer has a stockpile of materials to work with. Make-to-order manufacturers will be at the highest risk of disruption and may find fulfillment increasingly difficult if the supply of raw materials is cut abruptly. when it comes to manufacturers who are not a level-one priority for raw steel, the result is having to choose to cut production or pay the import fees on steel from outside the US and pass the cost on to their customers. If the latter is the case, those manufacturers run the risk of losing customers as a result of higher prices for their manufactured goods. On the customer-facing end, higher steel prices may be on the horizon.

US Steel And The United Steelworkers Strike Of 1986

U.S. Steel was involved in a strike/lockout situation more than 30 years ago in 1986. During this work stoppage, about 22,000 steelworkers brought about the longest steel industry work stoppage in US history. The strike/lockout lasted from August 1, 1986, to January 31, 1987.

The effects included disrupting deliveries and expensive and unplanned plant-idling operations. To continue running at a diminished capacity, management-level employees began loading trucks and trains with previously-produced steel kept in inventory themselves and shipping it to customers. The result was violent clashes between management with striking workers.

USW Facts

USW forms the largest industrial labor union in North America with 860,294 members. Their current rate of dues is equal to 1.45% of total earnings, plus $.02 per hour.  This tops out at a maximum of 2.8 the average steelworker’s hourly rate, plus $.02 per hour. Minimum dues are $5.00 per month.

Relevant US Steel, US Steel Steelworkers, And USW Union Salary Information

US Steel Corp executive salaries

US Steel Corp 2018 Proxy Statement 

USW staff wages

• US Steel employee salary data according to Glassdoor, Indeed, and Payscale.

• Average structural iron and Steelworkers salary according to the US Bureau of Labor Statistics.

About Encompass Solutions

Encompass Solutions is a business and software consulting firm that specializes in ERP systems, EDI, and Managed Services support for Manufacturers and Distributors. Serving small and medium-sized businesses since 2001, Encompass modernizes operations and automates processes for hundreds of customers across the globe. Whether undertaking full-scale implementation, integration, and renovation of existing systems, Encompass provides a specialized approach to every client’s needs. By identifying customer requirements and addressing them with the right solutions, we ensure our clients are equipped to match the pace of Industry.