USX Labor Talks Near Deadline

STEELWORKERS CONTRACT

NEGOTIATORS here are trying to hammer out the most important labor contract in the steel industry at a time of deep uncertainty. War and an economic slowdown would make any labor negotiator jittery. Talks between USX Corporation and the United Steelworkers of America are further complicated because the company may sell its steel operations soon.

Analysts are unsure whether the two sides will be able to reach a new agreement in time. The current contract expires at midnight Thursday.

Peter Marcus, steel analyst with PaineWebber Inc., puts the odds of an agreement at 50-50.

``I think the company is still taking a very hard-line stance,'' adds Christopher Plummer of the WEFA Group, a consulting firm. And ``the union is prepared to take a long strike.''

The last time USX and the Steelworkers tried to negotiate a contract, they precipitated a bitter, six-month walkout - the longest steel strike in US history.

Union officials say relations with the company improved somewhat under the new USX chairman, Charles Corry. But when the two sides agreed to early negotiations in October, they failed to come up with a contract by their self-imposed deadline of Nov. 10. Talks resumed Jan. 7 and continue in intensive fashion, according to USX and union officials.

Sources on both sides say one of the major sticking points is uncertainty over the company's future direction. Rumors have been flying for many months that USX would sell its steel unit and concentrate instead on its energy unit, Marathon Oil Company. Already, the corporation earns twice as much from energy as it does from steel. Furthermore, the steel industry faces trouble ahead as sales of cars and other steel-intensive goods tumble.

The USX board further raised expectations Oct. 30 when it allowed the corporation to make its steel unit a wholly owned subsidiary. The move makes it easier for USX to sell its steel operations.

Worried by these moves, the union is pushing for contract provisions that would protect workers' pensions and other benefits from a sale or restructuring.

The possibility of a sale is a wild card in these talks, analysts say. On the one hand, the company might want a quick settlement if it thought there were prospects to sell the steel unit.

``Our sense is that if the steel division is to be sold, then USX would need a contract,'' says Dick Fontana, a union spokesman.

The current contract gives USX a pricing advantage over other US steelmakers which signed union contracts starting in 1989. Analysts suggest USX might do everything possible to hold onto that price advantage, which could make the operation more attractive to buyers.

ACCORDING to the union, USX workers earn about $1.50 less in their basic hourly rate than their colleagues at other major steel companies. Union negotiators are pushing to eliminate that gap.

The union also wants two improvements to benefits that it got in contracts with other steelmakers: 1) additional payments to widows and widowers of retired steelworkers, 2) a 50 percent payment by the company for medical insurance premiums - an optional benefit for the workers.

USX is not averse to raising wages and benefits somewhat. In a Nov. 27 letter to Steelworkers, the company detailed its offer, which was rejected during the early bargaining with the union. Besides boosting wages and improving some pension and insurance provisions, the company offered a quality improvement program. Under this plan, workers could earn extra pay if they met certain production targets.

The program is roughly similar to the compensation incentives of nonunion steel companies in the US. Even British Steel, long a heavily unionized and uncompetitive company, has introduced incentive payments. It is now the most efficient, lowest-cost integrated steel producer in the world, Mr. Plummer says.

US companies and unions have approached such plans gingerly, since they often require cooperation, whereas both sides have long fought each other.

Labor and management officials are not commenting on their progress. USX union members are expected to authorize a strike in the next few days.

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