Steel talks failure: costs mount for workers, firms

The failure of steel unionists and major steel producers to come to terms on new contracts with lower labor costs could turn out to be one of the costliest bargaining setbacks for American industries and unions in half a century.

It's becoming clear that as a result of the collapse of early negotiations last month:

* The steel industry, already deep in a depression, will be further weakened, according to financial analysts. US steelmakers are likely to lose further ground to imports.

* Problems stemming from a growing rift between the United States and Europe over steel exports could grow more serious. US steelmakers accuse Europeans of selling steel at unfairly low prices in the US. The threat of a US steel strike, following the breakdown in negotiations, could increase in the flow of European steel into the US.

* More steel mill cutbacks appear inevitable; some mills will close.

* More steelworkers face layoffs; already some 110,000 are idle.

* A bargaining failure, blamed by steel unionists on the industry's hard-line position demanding concessions, has led to a further serious deterioration of relations between steel management and labor; this could lead to a national steel strike in 1983.

Major steel companies interpret their ''tough'' bargaining procedure differently, as vital for the future of the industry. J. Bruce Johnston, senior vice-president of the United States Steel Corporation and chief negotiator for the union, warned that the combined pre-tax losses for the industry, nearly $700 million in the second quarter, indicate the need to effect major savings for the future security of the industry.

''Steelworker employment costs are the single largest factor in our competitive vulnerability,'' Mr. Johnston says. He adds that ''ever increasing wage costs are pulling against any sustained recovery for domestic steel.''

Steelworkers were averaging about $23 an hour in wages and benefits before new increases went into effect Aug. 1. The average for other US industries is $ 13.68. Steel officials say it is ''mandatory'' to control labor costs to revive the industry.

Both sides were ''disappointed'' by the collapse of negotiations aimed at new contracts one year before the expiration of present agreements. Afterward, there were indications that employers negotiating jointly and the United Steelworkers (USW) would have been willing to accept compromises -- and that with more time a settlement might have been reached. However, time ran out. Wages and benefits went up automatically on Aug. 1 under contracts negotiated in 1980. Now neither side talks of bargaining until next year.

The imminence of wage increases and cost-of-living adjustments (COLA) Aug. 1, raising labor costs another 84 cents an hour, created a deadline for a settlement on new three-year contracts. The increases raised industry costs by an estimated $410 million and, assuming an 8 percent inflation rate for August 1983 COLA, could add that much more to the highest labor costs in the world market.

Eight major companies bargaining jointly had argued for months for ''mandatory'' concessions from USW -- in effect calling for a virtual freeze of wages for three years and sharp limitations on COLA. In return, companies proposed to increase unemployment benefits by $100-to-$200 a week.

USW negotiators say they were asked to give up $6 billion in future wages, COLA, and benefits. They say they were willing to give up $2 billion in raises due Aug. 1 and limiting gains in wages, benefits, and COLA to 14 percent over three years. The union said that it could not agree on a settlement with ''practically nothing'' for working unionists over three years.

The industry turned down the USW's $2 billion proposal, obviously believing it could win more (but not all) of what it wanted by forcing USW to choose between more concessions or inevitable further job losses. Lloyd McBride, president of the USW, says the industry ''adopted an inflexible position'' and that a major consequence could be a steel strike in 1983.

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