The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

Steel Concessions:
The Steel Bosses Take the Money and Run

Apr 30, 1983

At the beginning of March, the USWA (United Steelworkers of America) bureaucrats ratified a renegotiation of the USWA contract with the seven major steel companies. It was the first time that the USWA agreed to contractual wage cuts in basic steel.

According to the Bureau of Labor Statistics, the average hourly wage of steelworkers was $13.74 in November of 1982. The new contract will cut this back by $1.31 an hour in the coming year, permanently give up a holiday, and see overtime pay for Sunday reduced. All together the cuts in wages and benefits will average from $4,000 to $5,000 per steelworker over the next year.

With 60 per cent of the steelworkers on layoff, the contract has no provision to bring those people back to work. And the steel industry itself estimates that 90,000 of them will never work in the mills again. In addition the pact provides no job guarantees to those who are still working.

The contract is an ominous sign. If these new and brutal cuts can be made against steelworkers who are among the highest paid and most protected sections of the working class, what does it mean for other workers? Just as the Chrysler contracts of 1979 and 1980 initiated a round of attacks against all workers, no matter what the state of their own industry, so now this new steel contract stands as a warning of what the whole bourgeoisie intends for all the workers in 1983-1984.

The Unions Show More Concern for the Steel Industry Than for the Steel Workers

Helping out the steel bosses is nothing new for the leaders of the USWA. The USWA leadership has always accepted the idea that the interests of the workers are tied to the interests of the steel bosses. That is, they accept the bosses’ argument that it is the state of the industry that determines what the workers can expect to earn. This can only mean finally that the state of the industry must come before the plight of the workers. Since the early 1970s the policy of the USWA has been to defend the industry at the workers’ expense. In 1973, they pushed through the ENA (Experimental Negotiating Agreement) which tied the workers to an automatic no-strike pledge at the end of each contract. Such an agreement gave the bosses the possibility to impose more easily what they wanted without the risk of a strike. It also meant that the workers saw less and less that what happened to them depended on their own activity. It reinforced the idea that everything was in the hands of the union bureaucrats and the bosses. And under the ENA, the union took joint responsibility with the companies for enforcing productivity in the mills.

The USWA leaders were helped in enforcing these policies on the workers by the existing union structure. Steelworkers have no direct vote on their contract. It is decided instead by the Basic Steel Industry Conference made up of the presidents of the steel locals. Such a system not only prevents the workers from having a direct say, but it further limits democracy by giving a local with 200 members the same vote as a local with 5,000. And the smaller locals are far more dependent on the International, whose staffmen, for example, often represent them at union conventions.

Given their past policies, it was no surprise to see what the USWA leaders did in the recent contract negotiations. But it must have been surprising to some people that in spite of the opposition movement within the USWA in recent years led by Ed Sadlowski, there was no real organized opposition to this contract. Sadlowski, who recently helped negotiate a takeaway agreement in his own district, declined to put himself forward as a pole of attraction against the concessions.

During the 1970s, Sadlowski had put himself at the head of steelworker discontent. He opposed Lloyd McBride for the union presidency in 1977. His campaign focused around opposition to the ENA, and for the extension of union democracy. His campaign won a sympathetic response in steel mills all around the country. Perhaps even more enthusiastic than the workers were the leftist groups who jumped on the Sadlowski bandwagon. They proclaimed that a vote for Sadlowski was the way to have a union that was run by, and that would stand up for, the workers.

But actually Sadlowski never broke with the framework of a unionist conception. Sadlowski offered little perspective to the workers except to vote for him. While he called for the right to strike to be restored, he never posed the possibility that the workers could bypass the ENA and go on strike if they chose to. If anything Sadlowski probably contributed to a certain demoralization on the part of those union militants who looked to him and joined the opposition. He told them to put their faith in union elections, and when he lost, neither he nor they had any other place to go.

Whether the left cares to see it or not, Sadlowski accepts the same limits for the workers as the other union officials propose, that is, that the interests of the workers are tied to the interests of their own industries. It is why in the current situation, he has no other perspective than they do to offer.

Will These Concessions Save Jobs?

The USWA leaders say that modernization of the steel industry is necessary, if the workers’ jobs and interests are to be protected. The contract they signed linked the concessions to the steel bosses’ promise to reinvest their savings in the modernization of the industry.

Certainly no one will dispute that the U.S. steel industry is in bad shape as an industry. For the last four months of 1982, steel output averaged below 40 per cent of capacity. Company financial losses in 1982 were 3.3 billion dollars. Several of the weaker companies are on the verge of bankruptcy.

But the problems for the workers lie elsewhere. In the first place, modernization doesn’t save jobs. For argument’s sake, assume that concessions would really mean that the steel industry was going to modernize. Technological improvements in steel have always meant the loss of jobs. As a result of new and improved coke batteries, coke employment was cut in half. New blast furnaces at Bethlehem Steel’s Sparrows Point plant resulted in the use of three instead of seven furnaces – a cut in jobs. The new rail mill proposed for U.S. Steel’s Southworks creates between 300-400 jobs but results in a cut of about 1,200 jobs at two other steel mills. Continuous casting in place of the traditional ingot route reduces employment by half. With the new technology most of the jobs that will be created are technical or supervisory jobs, not production jobs. Overall since the early 1970s, steel employment has been reduced from around 400,000 to 152,000. If the steel companies had modernized even more in the past, the odds are that the cut in jobs would have been even higher.

In fact, however, nothing indicates that the bosses intend to modernize. The contract lays out in formal, precise terms what the workers are expected to give. But the intentions of the bosses to modernize are put in the vaguest terms. And according to the American Iron and Steel Institute, a real modernization in steel would take ten years and cost on the scale of 70 billion dollars. This would translate to sacrifices of about $10,000 per year per steelworker, more than double the present level. In fact the one sure thing the talk of modernization indicates is that the steel bosses intend to come back for a new round of concessions. Within a month of the signing of the contract, they are again asking for new concessions from 10,000 steelworkers. The talk of modernization is a convenient pretext which allows them to demand concessions.

Steel Bosses Take Their Money Elsewhere

Everything we see from their past investment policies shows us that modernization does not depend on whether or not they have money.

After World War II, the European and Japanese steel industries, which had been destroyed by the war, were rebuilt at the most modern technological level. To do this they had the assistance of the U.S. government and their own states. But if this explains an initial advantage they had over U.S. steel, it doesn’t explain what followed. Europe and Japan continued to invest and to modernize their steel industry, while the U.S. steel industry chose not to.

For example, the U.S. originally led in formcoke technology, but the technology was taken over abroad and used even more there. In ironmaking, the Japanese led initially but the U.S. has done little to catch up; it trailed behind both Europe and Japan with only six giant blast furnaces as compared to 17 in Europe, and 37 in Japan. The same pattern can be seen with the BOF (Basic Oxygen Furnace). It was first pioneered in 1951, but not introduced in the U.S. until 1966. By 1981, only 61 per cent of U.S. capacity was using this process as compared to 75 per cent for Japan and 80 per cent for West Germany. Japan began continuous casting in 1960, but the U.S. did not attempt it until 1967 and continued to lag behind ten years later. The U.S., with its older facilities and outdated technology, is also behind the other steel industries in energy efficiency and use of raw materials.

Instead of a major modernization at home, the U.S. steel companies chose to close their oldest mills, proceed with a selected modernization where it was the most profitable, and reduce their overall capacity. Present U.S. capacity is about five million tons below what would be needed in a fairly good year for steel. It means that if there were a recovery, the U.S. steel industry would fall short of being able to meet its own needs. And yet it is predicted that there will be an additional reduction in capacity by 20 per cent over the next few years. In making these decisions, the U.S. steel industry was ready to give up a certain amount of its market to Europe and Japan.

If patriotism is used as propaganda by the bosses to convince the workers to make sacrifices in the “national interest” it certainly does not mean that the bosses accept these same national limits when it comes to their own interests. We have seen examples of this even as the concessions were being pushed through. Right after the new contract was signed, U.S. Steel Corporation announced that it was negotiating an agreement with the British Steel Corporation to buy semifinished steel from them on a long term basis. Since then, there has been talk of British Steel Corporation buying an interest in one of the U.S. Steel Corporation’s mills in the U.S.

For the steel bosses it was not a question of lack of capital in the past that determined their investment policies. They didn’t invest in steel production even in the good times, because they chose to put their capital elsewhere.

This is the logical result of the way the capitalist system functions. Capital is drawn to where it can make the highest profits. And as David Roderick, the Chairman of the Board for the U.S. Steel Corporation, put it, “U.S. Steel is not in the business of making steel. It is in the business of making money.” Thus, the U.S. Steel Corporation, the largest U.S. steel company, has invested in oil, chemicals, manufacturing, transportation and utilities.

If this was true when they had a lot of money available to them, then this tendency has been even further exaggerated by the crisis. In 1978, 74 per cent of the U.S. Steel Corporation’s revenues came from steel, while by 1982, steel accounted for only 28 per cent. Other companies followed this policy to a lesser degree. Between 1979 and 1981 non-steel investments increased by 44 per cent, while steel investments dropped by nine per cent. In the last year, they invested only 2.1 billion dollars in capital expenditures in steel, and it is predicted that they will spend even less in 1983.

The concessions in steel are not designed to save jobs nor to modernize the steel industry. They have as their purpose simply to put more money in the hands of the steel bosses. That money will be invested where they can make the most profit, and today it seems that it is not in steel. The only real calculation about how much the bosses will ask in concessions is what they think they can get away with, without facing an active resistance in the mills.

Behind the Steel Companies Stand the Bourgeoisie

If the trade union leaders argue for concessions it is certainly not because they are too stupid to understand the facts. It is because they accept the framework of the capitalist system and have nothing else to propose.

In good times perhaps the bosses are willing to throw the workers a few crumbs. Of course, this depends not primarily on the unions, but on the general state of the economy which the unions have no possibility to control. But in a time of crisis, such a unionist policy means accepting sacrifices for the workers that the capitalists don’t accept for themselves. The capitalists have no loyalty to the steel industry, only to their profits.

Right now the steel industry is in bad shape, but this doesn’t mean that the workers couldn’t find the ways to protect themselves, nor that the resources to do it don’t exist. The steel capitalists are not simply isolated and dependent on steel resources alone. They are among the leading members of the ruling class, which controls all of society’s capital. It means that the steel bosses have more than enough funds available to them.

A brief look at a few of the steel industry heads makes this quite clear. David Roderick, the Chairman of the Board of the U.S. Steel Corporation is also, for example, on the Board of Proctor and Gamble, Aetna Life and Casualty Company, the third largest property-casualty company in the U.S. He is also a member of the Morgan Guaranty International Council. Donald Trautlein, Chairman of the Board of Bethlehem Steel, the second largest U.S. steel company, is also a director of the Chase Manhattan Bank, the third largest bank in the U.S.

The steel companies have also received financial help from the government both under Carter and Reagan. Their taxes have been cut, their depreciation allowances have been increased and they have been excused from spending money to meet environmental and safety standards.

The steel bosses have access to funds all right. But whether those funds are available to the steelworkers is another question. And that depends not on whether the steel companies modernize. It depends on what the workers are willing to do to force the steel bosses to give up some of that money.

The Workers Need to Break with the Unions’ Policy

We can see signs over the past year that the workers are not so easily taken in by the arguments of the trade union officials. A sign of this was the level of discontent manifested by the Chrysler workers in their recent contract negotiations. The maneuvers that the steel union bureaucrats themselves felt they had to make to get themselves off the hook are an indication that they were worried about the attitude of the steelworkers, even though the steelworkers had no direct ratification of the contract.

The USWA began contract negotiations almost a year before the contract expired. In July of 1982 the companies were demanding a wage cut of $3.00 an hour which the whole union apparatus opposed. The second proposal was made in November. In response the top union leadership okayed it, but the BSIC, no doubt feeling more closely the attitudes in the mills, voted it down 231 - 141.

After dragging out the negotiations, the union suddenly speeded everything up. And the companies increased their scare tactics; publishing their huge losses for the fourth quarter, cutting white collar employment, threatening to close more mills and lay more workers off. The steel purchasers, especially GM, which accounts for seven per cent of the domestic market, threatened that if a contract were not signed by March 1, they might make their steel purchases elsewhere.

Finally, the union got a contract through the BSIC in March, by a vote of 169 - 63. But to do this they had to reduce the number of locals voting and they also took a secret ballot, protecting the local presidents who voted for the concessions.

Now a new contract is theoretically in place until 1986; if the workers accept to be bound by it, they will certainly suffer more losses in the future.

The workers cannot defend their interests by accepting the corporatist policies of the unions. In fact, just the opposite policy is necessary. The bourgeoisie is a class, and it fights as a class to defend its interests. So must the workers fight as a class to defend theirs.

But to make such a fight means that the workers must get out of the straightjacket put on them by the union leaders. It means that they must stop accepting that their interests are tied to the bosses. It means that they must refuse the limits put on them by bourgeois legality. To make a fight the workers would have to decide on their own terms, their own way, depending only on themselves. They would need to make the bourgeoisie fear the cost of trying to take away any more from them. Their goal would not be to get the bosses to reinvest in their own industry, but to force them to repay what they have stolen from the workers.

Once any group of workers decides to fight back in a determined way, the possibilities begin to open up. It isn’t a question of just what the steelworkers or any other group of workers can do, but what the working class as a whole can do if it uses its power. It is when the bosses hear, see, and feel the workers’ anger not only in the separate plants, but also in the streets, and in the financial centers that things can change.

And such a fight would have been possible for steelworkers to have initiated last year, even with the crisis and the other difficulties that they faced. Suppose, for example, the workers at U.S. Steel Corporation’s Southworks in Chicago had decided to fight against the concessions. Chicago and Gary are steel centers. It is certainly possible that other steelworkers in the area would have joined them. And what about the steelworkers in Pittsburgh or Birmingham? Or what about the other workers in all of these cities which are also working class centers? All the other workers are also victims of the crisis and the bosses’ policies. And what about the auto workers? The independent truckers? Even the farmers?

There is no guarantee that if steelworkers began their fight that they could have attracted the others, and even more that they would have won. But it is guaranteed, and we can see it from the provisions of this contract, that when the workers accept to let the bureaucrats tie them to the bosses, the workers always lose. This round of steel concessions will not be the last that is asked for unless the workers decide to fight in the future.