Union Negotiations Begin for Steelmakers Amid Weak U.S. Market

Talks began last week between executives at U.S. Steel and leaders of the 30,000-member United Steelworkers Union. Circumstances in the American steel industry make this negotiation especially high-stakes.

According to the Wall Street Journal, U.S. Steel is one of only two American steelmakers on the list of the top 50 steelmakers in the world. The other is Nucor, a non-union operation that last year became the country’s biggest steelmaker by production capacity.

The business model at Nucor has led to consistent profits while U.S. Steel has lost money five of the last six years.

Nucor and U.S. Steel produce about the same amount of steel each year—2.4 million tons—but Nucor has about one-third as many workers.

The companies’ differences are practical and cultural. They use different furnaces to make steel, for example. Nucor has an unofficial no-layoff policy and offers incentive pay; U.S. Steel has about 2,500 workers currently laid off. The Nucor culture is characterized in the Journal article as “tough-talking” and “fast-moving” compared to a slower culture at U.S. Steel.

While labor leaders find the Nucor approach troubling, executives admire it, including U.S. Steel CEO Mario Longhi. As Longhi seeks to right the company’s bottom line, he said he intends to learn from Nucor. He also told the Journal that “everything is on the table” in an attempt to save the 114-year-old company, including more layoffs and changes in production. Workers have begun construction of a $230 million electric arc furnace at U.S. Steel.

The United Steelworkers Union includes employees of U.S. Steel and U.S.-based employees of ArcelorMittal, which is headquartered in Luxembourg.

It has been nearly 15 years since the companies and union negotiated a contract during a down market. Union leaders expect Longhi to ask for significant concessions. s