Buffalo News (New York), November 21, 2004, Sunday

Buffalo News (New York)

November 21, 2004 Sunday
FINAL EDITION

SECTION: BUSINESS; Pg. B7

HEADLINE: HOW STEELWORKERS UNION LEARNED TO COPE WITH NEW REALITIES

BYLINE: By Fred O. Williams - NEWS BUSINESS REPORTER

BODY:
In 1985, the year Louis J. Thomas became regional director of the steelworkers union, American Brass was in trouble.
He recalls company president Joseph Goodell telling him, "Mr. Thomas, we're going to have to do something different if this place is going to survive."
Hurting from the shutdown of Bethlehem Steel's main Lackawanna mill two years earlier, the United Steelworkers of America was ready to try something different.
The result at the copper plant in North Buffalo was a contract that rewarded workers with profit-based bonuses, in return for gains in quality and productivity.
"If it wasn't the first one in the country, it was the first one that worked," Thomas says of the innovative agreement. The 450-job plant, now owned by Finland's Outokumpu, boosted quality and returned to profitability.
The once-militant steelworkers union has evolved into a more cooperative partner with hard-pressed employers, and Buffalo was a center of the change. As plants suffered, the union has taken more of a stake in improving productivity in a bid to preserve jobs. In return for cuts in wages and work rules, the union demanded a greater say in plants' future, Thomas said.
Not that union-negotiated costs weren't a factor in the decline of Big Steel. Steelworker pensions and retirement benefits contributed to the failure of companies like Bethlehem, along with rising imports, shrinking sales and other woes. Bethlehem declared bankruptcy in 2001 and went out of business last year, shifting its pension debt to a federal fund.
Thomas, 62, retired in April as head of District 4, which encompasses nine states and Puerto Rico. As the head of the Buffalo-based district for nearly 20 years, he has been an architect of the steelworkers' progressive bargaining strategy, working with company managers and with union members.
In some plant agreements, "there was language that was put in 40, 50 years ago, and it wasn't working anymore," he said.
Under pressure from global trade, the steelworkers and other industrial unions have ushered in sweeping changes in labor-management relations, said Kate Bronfenbrenner, director of labor education research at Cornell's School of Industrial and Labor Relations. Paper workers, apparel worker unions and others based in declining sectors have also changed their negotiating strategies, she said.
Some 39 percent of jobs moving overseas are unionized, putting unions' own survival at risk. "Employers have this incredible threat they're holding over (unions') heads," she said.
Success stories
While District 4, now with 32,000 members, has been battered by industrial downsizing, Thomas points to plants that survived as successes in the face of adversity.
Bethlehem's former bar mill in Hamburg was resurrected by a buyout group in 1994, despite being mothballed for two years. The buyout offer came after the steelworkers publicized that they would take cuts in wages and other concessions in return for the hiring of ex-Bethlehem workers. The union had taken criticism for rebuffing earlier offers for the plant that didn't protect workers' jobs, Thomas said.
After years of losses and ownership changes, the former AL Tech steel plant in Dunkirk is now making a profit under Universal Stainless. The steelworkers endured two rounds of concessions, under Universal and the previous owner Empire Steel, to preserve the mill, Thomas said. The Dunkirk plant now has 150 jobs -- a far cry from historical levels, but up 30 since the beginning of the year, according to the company.
Universal credits hard-working employees, and a surge in demand for steel, for returning the Dunkirk plant to profitability. The stainless steel mill had operating profit of $1.8 million for the first nine months of the year, after losing $1.7 million during the same period in 2003.
"The plant's success in 2004 has been attributed . . . to the excellent work ethic and ingenuity of our employees in the plant, to accept our method of doing business," said Richard M. Ubinger, Universal vice president of finance.
Partnering with management was often unpopular with workers, Thomas said. Among members, "it was always us-against-them; there was a lot of mistrust, and a lot of it was justified," Thomas said. But "our objective was to save the jobs. In order to do that, it can't be collective bargaining-as-usual."
International Steel Group, which bought former Bethlehem properties in Western New York and elsewhere in 2003, points to its national agreement with the steelworkers as one key to its profitable operations. Bethlehem's bankruptcy also freed the plants from its $6 billion pension obligation and other debts.
A team approach
The five-year labor agreement at ISG "creates a whole new attitude of cooperation between labor and management," said ISG spokesman Charles T. Glazer. The national agreement cut former Bethlehem wages by as much as 30 percent and slashed job classifications to five, from 35.
Rather than seeing their jobs as performing narrowly defined mechanical tasks, workers take responsibility for meeting overall production goals in their unit of the plant, using their experience to solve problems that crop up.
"A team comes in and has a meeting to decide what they're going to accomplish that day, then they go out and get it done," Glazer said.
The agreement makes ISG a model in the industry, he said, but it wasn't without precedent. Much of the national agreement's productivity-enhancing terms were anticipated by contracts at Bethlehem's galvanized steel mill on Lake Erie, Thomas said.
He recalled telling ISG chairman Wilbur Ross that "some of the things you want in that national agreement, they're already done" in Hamburg. Faced with the example of the shutdown of the main Bethlehem plant in 1982, the local representing the galvanized mill had agreed to cuts in work rules and job classifications in order to boost productivity.
A two-way street
At some plants, however, the union rejected salvage attempts when it felt management wasn't meeting labor half way. In 2001, the steelworkers rebuffed a proposed takeover of Bethlehem's coke plant by Tonawanda Coke, letting the 340-job plant in Lackawanna close instead. The buyer's non-negotiable contract offer wouldn't fly with members, Thomas said.
The plight of industrial America has also driven the steelworkers into greater political activity during Thomas's tenure, he said. Union members have mobilized to push for changes in trade agreements and import policies to staunch the loss of manufacturing jobs.
Another looming worry for labor is the federal safety net for pension obligations, Thomas said. Already burdened by the steel industry's woes, the Pension Benefit Guaranty Corp. may also face huge liabilities from the airline industry.
"I'm really concerned about the PBGC right now," he said. Fixes for pensions, trade and health care "have to be done at a much higher level than the bargaining table."