Steelworkers Experimental Agreement

United States 1973

Synopsis

After decades of using nationwide strikes as a collective bargaining tool, the United Steelworkers of America (USWA) in 1973 entered into an "Experimental Negotiating Agreement" with the major U.S. steel companies. Under this agreement, the union forfeited the right to strike nationwide in favor of binding arbitration. The steel companies on their part agreed to a yearly 3 percent wage increase and to end stockpiling products. This was the first time a key labor union and an entire industry agreed on their own to settle bargaining conflicts through arbitration. The agreement occurred at a time of growing foreign competition in the steel industry. Despite the perception of increased job security, some rank and file USWA members criticized the secrecy with which the agreement was enacted. The agreement preceded a major depression in the steel industry.

Timeline

• 1958: China's Mao Zedong proclaims the Great Leap Forward, a program of enforced rapid industrialization that will end a year later, a miserable failure.
• 1963: Assassination of President Kennedy in Dallas on 22 November.
• 1968: Communist victories in the Tet offensive mark the turning point in the Vietnam War, and influence a growing lack of confidence in the war, not only among America's youth, but within the establishment as well.
• 1973: Signing of peace accords in Paris in January ends the Vietnam War.
• 1973: As the Watergate scandal grows, White House advisers H. R. Haldeman and John D. Ehrlichman resign, and Nixon fires counsel John Dean. Later, Vice President Spiro Agnew resigns. Then, in the October "Saturday Night Massacre," Attorney General Elliot L. Richardson resigns, and Nixon fires special prosecutor Archibald Cox and Deputy Attorney General William D. Ruckelshaus.
• 1973: Overthrow of Chile's Salvador Allende, the only freely elected Marxist leader in history, who dies in the presidential palace. According to supporters of the new leader, General Augusto Pinochet, Allende committed suicide; but Allende's supporters maintain that he was killed by Pinochet's troops.
• 1973: Attacked in October, during their Yom Kippur religious festival, the Israelis defeat the combined forces of Egypt, Syria, Iraq, and Jordan. Three weeks later, Arab nations impose an oil embargo on the United States to punish it for its continued support of Israel.
• 1973: United States launches Skylab, its first space station.
• 1973: Completion of the twin towers of the World Trade Center in New York City, built at a cost of $750 million. The 110-story buildings are the world's tallest, but by year's end they will be eclipsed by the Sears Tower in Chicago.
• 1978: More than 900 members of the People's Temple, led by Jim Jones, kill themselves in Jonestown, Guyana. Also dead is Congressman Leo Ryan, who was visiting the Guyana compound and was presumably murdered.
• 1983: A Soviet fighter plane shoots down a Korean Air Lines 747 that had strayed into Soviet airspace. All 269 passengers, including 61 Americans (among them U.S. Congressman Larry McDonald), are killed.
• 1988: A terrorist bomb aboard a Pan Am 747 explodes over Lockerbie, Scotland, killing 259 people on the plane and 11 more on the ground.

Event and Its Context

Striking Tradition

From its beginning, the United Steelworkers of America used the threat of strike as their main leverage in collective bargainingwith the steel companies. By stopping both production and shipping, the union was able to create financial pressure on the companies to bring them to the negotiating table. From the end of World War II through 1959, USWA members joined in simultaneous strikes nationwide. Often exempted from these strikes were a handful of smaller companies that were allowed to continue operation on the condition that they would accept the agreement reached with the major steel companies. Contract negotiations during this postwar period were accompanied by four major steel strikes. The last one, in 1959, was the longest in USWA history, lasting 116 days (before a Taft-Hartley injunction was granted) and affecting 540,000 workers; strikers questioned changing labor conditions and the steel industry's prerogative to abolish unilaterally the standard work practices. With the threat of steel imports, however, the balance of power began to shift away from the unions; the threat of nationwide strike was losing its earlier effectiveness.

As steel industry experts Garth Mangum and Scott McNabb noted in their book The Rise, Fall and Replacement of Industrywide Bargaining in the Basic Steel Industry, the 1959 strike "planted the seeds of eventual dissolution" of industry-wide collective bargaining. The event nonetheless would "not have been pivotal had it not been for its interaction with product-market and technological developments just then emerging in the worldwide steel industry." During the 1959 strike, U.S. customers began importing steel from Europe and Japan. There were no more nationwide strikes after 1959, but the mere threat of one hurt U.S. steelworkers in the marketplace. In the 1960s two major strikes drove domestic buyers to seek foreign steel and domestic manufacturers to stockpile steel. It became increasingly apparent to the union that it needed alternatives to the industry-wide strike.

Experimental Negotiating Agreement

In the late 1960s U.S. steel production faltered. The 1970s brought economic recession and labor unrest. Rather than resorting to the industry-wide strike, the USWA and the major producers of Big Steel entered a ground-breaking agreement. In 1972 USWA President I. W. Abel addressed the union convention, declaring that the time had arrived for the steel industry to sit down with the USWA to explore the "practical advantages and social benefits of smoothing out the production cycle so that, once and for all, we can get rid of the needless boom and slump that now attends our contract negotiations."

In 1973, under Abel's leadership, labor and management wrought the so-called Experimental Newotiating Agreement (ENA), which brought voluntary and final arbitration for unresolved bargaining issues facing the industry in the 1974 negotiations. In exchange for agreements governing job security for steelworkers, the USWA pledged an end to industry-wide lockouts or strikes (though individual plants could address grievances over unresolved local agreements by striking). Moreover, steel companies agreed to end the practice of stockpiling. From that point on, industry-wide issues would be submitted to binding arbitration. After the successful conclusion of the 1974 negotiations, the parties agreed that the ENA would also apply to contract negotiations for 1977. As in 1974, the USWA and the steel companies' coordinating committee would in 1977 and 1980 agree in advance to automatic wage increases of at least 3 percent annually. Moreover, a one-time bonus of $150 was awarded to every worker hired as of 1 August 1974. In addition to wage increases, workers would receive cost-of-living increases based on the rate of inflation. This was to occur regardless of the companies' financial outlook; the increases were derived not from increases in steel company productivity, but rather from national increases in productivity. As a result, the real wages of steelworkers between 1970 and 1980 grew by 29 percent. A precedent in labor history, the ENA marked the first time that a whole industry and a major union agreed to binding arbitration as a means of settling disputes. The 1974 agreement also continued the joint advisory committees on productivity, which were responsible for improving productivity at individual plants. In keeping with the agreement section on "Employment Security and Plant Productivity Committees," committees were to promote the use of American steel, promote harmonious relations at plants, and achieve "prosperity and progress" for the firm and its employees.

At the time, American steel companies were selling all the steel they could produce, so the goal of undisrupted supply seemed a win-win solution. Although both the steel companies and the USWA were attuned to the threat of foreign competitors, the industry counted on a protectionist strategy. Under the list-price system, the big steel companies (generally led by U.S. Steel) published lists that kept steel prices high enough to ensure both high wages and big profits. Most companies followed the price lists, thus allowing a declining industry to show profits even with inefficient, outdated furnaces. Rather than innovate to fight the challenge of foreign steel imports, the steel industry hoped to keep it at bay by lobbying the government for Voluntary Restraint Agreements and similar measures designed to curb steel imports. High U.S. steel prices nonetheless "begged foreign competitors to enter the field."

This alliance between Big Steel and the USWA limited the goals and actions of both parties. Although the steel companies temporarily respected the wages and benefits that had been negotiated with the steelworkers' union, the USWA leadership limited its "ability, willingness, and preparedness" to challenge management plant closings began in the late 1970s. The "unspoken conditions" of the ENA arguably included an unwillingness to discuss true market conditions and thus precluded USWA leadership from questioning the business sense behind plant closures. Moreover, challenging Big Steel "would undermine the joint contention of the steel corporations and the USWA that cheap imports were to blame for industry woes."

Labor's Temporary Gain, Industry's Loss

This unprecedented labor agreement called the ENA proved to be temporary relief for workers in a declining industry that was increasingly threatened by foreign competition. Although the ENA helped prevent strikes and their consequences, some historians contend that wage and benefit gains among American steelworkers contributed to the industry's loss of efficiency and massive decline in the early 1980s. Steel wages rose 179 percent from 1972 to 1982, but productivity did not keep pace. Big Steel, whose productivity grew at a slower rate than that of overseas competitors, faced growing threats from increased productivity abroad. In 1975 Japan surpassed the United States in steel productivity. Where U.S. firms took 10.9 manhours to make one ton of steel (a modest drop from the 13.1 hours needed in 1964), the Japanese could produce the same quantity in 9.2 hours (a spectacular improvement over the 25.2 hours required in 1964). The higher costs generated by domestic plants thus brought more imports. Moreover, massive integrated steel mills in the United States faced domestic challenges in the phenomenal growth of mini-mills. Rising from a mere 3 percent share of the U.S. market in 1960, mini-mills (which were generally more efficient and boasted greater output per man-hour) would capture 18 percent of the U.S. market share by 1982.

In the late 1970s and early 1980s, the economic downturn and problems facing Big Steel led to massive mill closures and unemployment for hundreds of thousands of steelworkers. Although management took the blame for weak growth in productivity (they had invested millions in outdated, disappearing technology such as the open-hearth furnace), unions were also seen as a factor. As unions fought harder for "featherbedding" rules to provide workers with seniority and greater short-term security, they were criticized for hurting the long-term economic health of employers by inhibiting use of new technology and making the workplace less efficient. Steelworkers at integrated mills found in the ENA temporary relief from a changing market, but both industry and the union were blamed for failing to tie compensation to productivity.

The steel industry's ENA nonetheless served as the touch-stone for other unions, and automatic wage increases became a common goal for big-labor contracts. Soon major contracts started including inflation indexing and cost-of-living allowances. As in the steel industry, these raises were automatic (regardless of the financial health of the companies), and union members came to expect them. "At some point, items like indexing and [cost-of-living allowances] became rituals," one labor lawyer later recalled. "We didn't even think of them as contract gains anymore—they were just rights."

Despite perceived gains for steelworkers, not everyone working in the mills was happy with the ENA. Some rank-andfile members of the USWA began to challenge the ENA, charging the union leadership with secretly signing away their right to strike. The ENA, they claimed, surrendered their right to strike before a new three-year contract (1974-1977) had been concluded and ratified, thus stripping the rank and file of their only bargaining tool: the right to leave a job. In 1974 lawyers for the Center for Constitutional Rights represented the workers against this "clear violation of union democracy." The suit of Aikens et al. v. Abel et al. was dismissed. The judicial approval of antidemocratic methods prompted the USWA and the steel companies to extend the ENA to cover the 1977-1980 contract negotiations. At this point, the dissenters abandoned the pursuit of their goals in the courtroom and pursued it in the shops.

The 1980s brought a major depression to the American steel industry. More than half the jobs in U.S. steel and iron mines were eliminated. After Big Steel companies dissolved their coordinating committees in 1985, workers at U.S. Steel and Wheeling Pittsburgh experienced lock-outs that lasted months, with the companies unsuccessfully attempting to force pay cuts. Steel companies opened their books to the USWA to prove losses, and most contracts from 1985 to 1987 included cuts. With some companies' financial straits demanding greater sacrifices than others, wages and benefits at most companies were unequal for the first time in nearly four decades.

Key Players

Abel, Iorwith Wilbur (1908-1987): Abel was an American rolling mill worker and leader of the United Steelworkers of America USWA. He was USWA district director for Canton, Ohio (1942-1952). He later served as third president of the USWA (1965-1977) at the time of the Experimental Negotiating Agreement with steel companies.

See also: Taft-Hartley Act; United Steelworkers of America.

Bibliography

Periodicals

Easterbrook, Gregg. "Voting for Unemployment." TheAtlantic Monthly, May 1983. http://www.theatlantic. com/issues/83may/eastrbrk.htm .

Other

Camp, Scott D., and Westby, David L. "Variation in Worker Protest to Plant Closings: An Extension of the Resource Mobilization Perspective." Paper presented at ASA meeting, Los Angeles, 1994 [cited 22 October 2002].<http://members.aol.com/scamp6131/sdc_dlw.pdf>.

Center for Constitutional Rights. CCR Highlights."1972-1974" [cited 22 October 2002]. <http://www.ccrny.org/about/history04.asp>

"A Retrospective of Twentieth-Century Steel." New Steel.November 1999 [cited 22 October 2002]. http:// www.newsteel.com/features/NS9911f2.htm .

Reynolds, Joy K. "Steel Industry Bargaining." Review of The Rise, Fall and Replacement of Industrywide Bargaining in the Basic Steel Industry by Garth L. Mangum and R.Scott McNabb. Monthly Labor Review Online 121, no. 5 (May 1998) [cited 22 October 2002]. http:// www.bls.gov/opub/mlr/1998/05/bookrevs.htm .

United Steelworkers of America, AFL/CIO-CLC. "Workers'Contract Negotiations in the Steel Industry of the United States." 1990, 1996 [cited 22 October 2002]. http:// www.uswa.org/resources/steelnet3.html .

Additional Resources

Books

Mangum, Garth L., and R. Scott McNabb. The Rise, Fall andReplacement of Industrywide Bargaining in the Basic Steel Industry. New York: M. E. Sharpe, 1997.

—Brett Allan King