Steel Workers Demand Higher Pay as Tariffs Lift Profits
Bob Tita 12 septembre 2018 à 17h40
Strike authorized as employees look to get piece of 30% rise in U.S. steel prices this year
Workers at two of the biggest U.S. steelmakers are demanding higher compensation as tariffs on foreign metal push prices and profits to their highest point in years in a buoyant economy.
Leaders for some 30,000 members of the United Steelworkers union say United States Steel Corp. and ArcelorMittal SA aren’t passing those benefits to their workers, who have gone without raises in recent years even as wages have started to climb more broadly.
President Trump has said the 25% tariff his administration placed on steel imports earlier this year aimed to bring back good-paying blue collar jobs.“The steel industry is one of the great things to be talking about,” Mr. Trump told a crowd in North Dakota last week. “The manufacturing jobs are back.”
U.S. steel companies are some of the clearest beneficiaries of the Trump administration’s tariffs on foreign goods. The trade action has enabled them to raise prices in a strong economy that has boosted orders for steel.
The union’s demands could put a damper of the sector’s newfound fortune. Higher costs for wages and benefits would pressure steelmakers’ profit margins that are only beginning to improve after many years of being squeezed by cheap imports
U.S. manufacturers in general are facing rising costs, even as they benefit from lower corporate taxes. Higher input prices, including for steel, have weighed on their business. Also wages are rising across the U.S. workforce as factories compete for a shrinking pool of available labor. Inflation is also picking up after years in low gear, putting pressure on employers to pay workers more.
“We feel we need some recognition and to share in the profits of the company,” said Michael Young, president of the union local for U.S. Steel’s Midwest Plant in Portage, Ind.
The United Steelworkers union is in a contract standoff with both companies. Workers have authorized union leaders to call a strike against U.S. Steel, and say they could do the same at ArcelorMittal if an agreement isn’t reached soon. Contracts for both companies expired Sept. 1.
U.S. Steel said it doesn’t anticipate a strike. “Talks are ongoing, and we continue to work diligently to reach a mutually agreeable conclusion,” the company said. ArcelorMittal declined to comment on the strike threat.
U.S. Steel and ArcelorMittal account for 40% of the U.S. production capacity for flat-rolled steel used throughout manufacturing for products ranging from tin cans to car doors. The price of steel has risen by more than 30% this year, as the Trump administration’s tariffs on foreign steel have taken effect.
U.S. Steel has forecast a more-than-60% increase in adjusted pretax income this year, compared with 2017. ArcelorMittal, which has mills throughout the world, doesn’t issue a profit forecast for its U.S. operations.
A strike at either company could push domestic steel prices even higher, putting pressure on equipment and vehicle manufacturers—such as Deere & Co. and Winnebago Industries Inc.—that have already raised prices this year to cover higher costs.
Industry analysts say U.S. Steel already has higher labor expenses and older, more complicated production processes than competitors such as North Carolina-based Nucor Corp., where the workforce isn’t unionized.
The contract negotiations give U.S. Steel executives an opportunity to restrain rising benefit costs, such as health insurance coverage, and align pay more closely with profits and demand, said Philip Gibbs, an analyst at KeyBanc Capital Markets.
“U.S. Steel wants and needs more labor flexibility to deal with the volatility in the industry,” Mr. Gibbs said.
U.S. Steel workers agreed to forgo raises for three years when the recently expired contract was negotiated in 2015. The Pittsburgh-based company had been losing money amid a slump in the steel industry.
This year U.S. Steel has proposed a six-year contract with a raise of 4% in the first year and 3% in each of the next two. Annual raises would drop to 1% in the last three years, with the addition of new bonuses pegged to pretax profit. The lowest annual base wage, excluding profit-sharing and other variable pay, would rise to $71,726 in 2024 from $63,516 this year.
Union negotiators want U.S. Steel to provide bigger pay increases or drop a demand that workers pay part of their health-insurance premiums and higher copayments.