Buddy Buddy At The Steel Smelter

The view from the United Steelworkers building in Pittsburgh seems as grim today as it did in the 1980s, when the union's membership shrank by 50%, to 560,000. To the south and west, nonunion minimills led by Nucor Corp. are setting world-level efficiency standards. Meanwhile, major steelmakers and their Japanese partners are opening nonunion shops, too, such as a spanking new USX Corp. joint venture with Kobe Steel Ltd. in Leipsic, Ohio. A new global standard is emerging in steel--with a distinctly nonunion look.

To stave off a further decline, USW President Lynn R. Williams is taking a revolutionary approach in contract talks covering 48,000 workers. At negotiations now under way with four major steel companies, the union is soft-pedaling wage demands and proposing a bold partnership with management.

In return for job guarantees and no concessions, the USW has offered to expand the shop-floor teams and worker empowerment systems that management wants to boost productivity. If the two sides agree, it would be one of the first times that an industry has set up a cooperative labor system. "The only way we can make a comeback is with our productivity," says Don Conn, president of USW Local 2227 in West Mifflin, Pa.

SPEEDSTERS. Williams, a Canadian who's retiring next spring, hopes to use Japanese-owned National Steel Corp. as a model. After Japan's NKK Corp. bought control of the U.S.'s No.4 steelmaker in 1984, National opened its books to the union and offered profit-sharing and job security. Now, the rest of the union is clamoring for similar deals.

This sort of sea change in labor-management relations, however, may be more than Big Steel is ready for. After tanking in the past two years and causing huge losses among the integrated companies, the U.S. market is recovering: Order backlogs have doubled in recent months, to 120 days, and a host of trade suits promises some protection against imports. Steel companies are eager to cash in. But if they agree to the USW's 10-year, guaranteed-job contract offer, they could be overstaffed if the market slows. "National can afford to run at capacity, but I don't know if the whole industry can," says Joseph Rainis, chief economist at National Steel.

Still, market forces are pushing Big Steel and the union toward new levels of cooperation--with or without job guarantees. In the past decade, minimills have pried loose one market after another. Now, Nucor is leading the charge into Big Steel's breadbasket, the vast market for flat-rolled steel. Armed with state-of-the-art technology and workers energized by fat profit-sharing bonuses, Nucor produces a ton of flat-rolled steel with less than an hour of labor. That's three times quicker than big steel companies in Germany, Japan, or the U.S.

ROUGH GOING. In response, Big Steel has ceded a growing share of the commodity-grade steel market to the minis, retreating into higher-margin specialty steels. Major steelmakers have teamed with Japanese partners, to set up new plants that already embrace much of the new labor relations, achieving higher quality. Teams of USW workers, for example, run Inland Steel Industries Inc. and Nippon Steel Corp.'s $1.1 billion joint venture in New Carlisle, Ind.--with no foremen. Workers share profits and production bonuses, and all make the same pay--about $50,000 last year. Training alone costs $70,000 per worker.

That works fine at new sites, but the experiments have had rougher going in older integrated plants. Yet such a revolutionary approach is exactly what the union has put on the table. Leading the negotiations is USX's U.S. Steel Group, though its contract doesn't expire until next January. The contracts of Bethlehem Steel, Inland, and National expire on July 31, so they will pick up the talks in April if USX and the union fail to reach an agreement by then. Entrenched interests on both sides stand ready to block a major breakthrough. But with so much cooperation on the table, plenty of smaller advances are sure to slip through.