Labor: Steeling for Trouble

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The bargaining aim of the United Steelworkers of America, said President I. W. Abel last week, is to win "what people need in order to live." Steelworkers, like everybody else in these inflationary times, seem to need more and more. As his union, whose contract expires July 31, formally opened negotiations in Manhattan with eleven major steel producers, Abel's effort confronted the U.S. with the threat of its first nationwide steel strike since 1959.

During steel's last labor negotiations three years ago, a national strike was averted only by the Johnson Administration's last-minute intervention. Brought to the White House to bargain, the two sides finally agreed on wage increases amounting to 3.7% a year. Since then, however, Steelworkers have seen those gains largely wiped out by an 8.8% jump in consumer prices. With living costs still climbing, the union is now seeking, as Vice President Joseph P. Molony puts it, "whopping" wage increases.

Poor Lighting. Steel companies have experienced economic problems of their own. Hurt by the cost of new equipment, competition from foreign imports, and the slowdown of the economy during last year's first half, most steelmakers suffered sharp earnings declines in 1967. Sales of United States Steel Corp., the industry leader, dropped 8% to $4.07 billion; profits were down by 31% to $172.5 million. Business at most companies has perked up in recent months, but that is partly because of customer stockpiling in anticipation of a strike. Inventories built up by steel users now stand at 30 million tons—6,000,000 tons more than at the same time last year.

The industry is particularly concerned about inroads made by foreign steelmakers, which have increased their share of the U.S. market from 12.5% last year to an anticipated 15% in 1968. One advantage for foreign companies, particularly Japanese, is lower labor costs. In the early 1950s, U.S. steel companies paid $2 an hour more in wages and fringe benefits than their Japanese counterparts. Today, with the average steelworker receiving wages and benefits totaling $4.93 an hour, the gap has grown to about $3.50.

Though bargaining for a wage increase on an industry-wide basis, the steelworkers have also raised thousands of local issues—ranging from demands for cleaner toilets to complaints about poor lighting in plant walkways—that could impede a settlement. But money, says Abel, "is the most important matter"—and the union has some important precedents to lean on. At the very least, it is likely to insist on wage-and-benefit increases approaching the 6% gain won last year by the United Automobile Workers in its settlements with Detroit's Big Three. Larger still is the 6.5% increase that the Steelworkers themselves won two weeks ago in coming to terms on a new contract with the aluminum industry.