May Set Trend in Industry : LTV Workers OK Contract With Pay and Benefit Cuts

Rank-and-file union workers at LTV’s troubled steel operations overwhelmingly approved a new labor pact that includes drastic wage and benefit cuts, union officials announced late Friday. The pact may clear the way for concessionary contract talks throughout the ailing steel industry.

In the first test of worker reaction to new willingness by leadership of the United Steelworkers to grant cost savings to the industry, active and laid-off LTV workers voted 13,162 to 8,340 in favor of the 40-month agreement, union spokesman Dick Fontana said.

The approval came after Anthony Rainaldi, the union’s chief bargainer with LTV, sent a starkly worded letter to workers warning that the company might go bankrupt if they rejected the new agreement. The accord, which was hammered out March 15, will slash LTV’s labor costs by $3.60 per hour in return for employee stock ownership and profit-sharing plans for LTV’s 22,000 active union workers, as well as limits on the company’s practice of subcontracting work to supplier firms.

Watched by Other Companies

The rest of the steel industry has been watching the vote at LTV to determine whether wage cuts have any chance of gaining worker approval at other firms. Desperate for labor cost relief, five of the nation’s biggest steel companies--LTV, Bethlehem Steel, National Steel, Armco, and Inland Steel--opened early contract talks with the steelworkers last month, but so far only LTV has reached agreement.

Initially, the other four had been pushing for settlements by the end of March, in order to pacify major customers who were nervous over the possibility of a strike when labor contracts expire July 31. But union officials say bargainers for the four companies have left their talks in holding patterns, awaiting the outcome of the vote at LTV.

LTV, the nation’s second-largest steelmaker, is widely considered to be in the worst financial shape of any of the major producers, in part because it has been burdened by the highest labor costs.

Saddled with a relatively large number of retirees, LTV’s pension costs have soared, forcing its total labor costs up to $25.19 per hour this year; the new agreement will cut that figure to $21.59 per hour, just under the industry average of $22.65.

But union leaders said the LTV contract will not set the pattern for its negotiations with the rest of the industry.

“The deals they get will depend on the individual situations at each company,” one union official said Friday. Some analysts and other industry observers believe that Bethlehem, which is only slightly less ailing than LTV, may also win significant concessions, but they say National, Inland and Armco are likely to get much less.

Pressure on U.S. Steel

Watching this spring’s emergency talks from the wings is industry giant U.S. Steel, which will take on the union by itself this summer. The steelworkers union had insisted that it would open early talks only with firms that agreed to join its lobbying and publicity campaign for tougher limits on steel imports. U.S. Steel refused.

As a result, U.S. Steel, which has traditionally dominated steel’s labor talks, will find itself trying to catch up with the lower labor costs of its competitors months after they have settled.

U.S. Steel Chairman David Roderick has said that the company will demand the same concessions given to the weakest company in the industry. Steelworkers President Lynn Williams has repeatedly vowed that U.S. Steel won’t catch up. He insists that the healthiest major producer doesn’t deserve the same breaks given to LTV or Wheeling-Pittsburgh, a smaller steelmaker that has been in bankruptcy proceedings since last year.

And analysts believe that, with new agreements at all of the other major companies behind it, the steelworkers union will be in a strong position to strike U.S. Steel this summer if the company doesn’t back down on its demands before its labor contract expires at the end of July.