And the Wolf Finally Came: The Decline of the American Steel Industry.

In Pennsylvania, workers forged steel and a separate culture. Now both are almost gone.

One sad footnote to the troubles of industrial America is the decline of a proud specialty in American journalism: the labor reporter. In the old days covering unions was like covering the American dream, and it attracted some of the country's best and wisest reporters: John P. Moody at The Pittsburgh Post-Gazette, A.H. Raskin at 7'he New York Times, Frank Swoboda at The Washington Post, and the last three managing editors of The Wall Street Journal-Fred Taylor, Larry O'Donnell, and Norm Pearl stine-who all cut their teeth as newspapermen in Detroit.

What a job! And what an assault on the liver! Labor reporters and their sources closed saloons up and down the Monongahela River, along the shores of Lake Erie and Lake Michigan, at the resorts where unions invariably went for their conventions-Las Vegas, Atlantic City, Bal Harbour. One veteran labor reporter gave me some earnest advice when I began covering the beat in the mid-1970s: Always keep a bottle in your hotel room for when the bars close.

Our expense accounts included some bizarre items: trip to dog races in Miami with source, visit to strip joint in Las Vegas with source, champagne for bar girl and source in Chicago. Improbable as it sounds, on my first date with my future wife, in 1977, I took her to a professional wrestling match in Wheeling, West Virginia, where one of my best sources-the president of a Jones & Laughlin local in Pittsburgh--was wrestling under the name "Jumpin' Johnny DeFazio."

The danger for reporters in those days-other than alcohol poisoning-was that covering labor was like covering the home team. Unions were as American as apple pie, as American as piroshkis and kielbasa. Most reporters remained skeptical of the union leadership, which was often corrupt and sometimes tyrannical. But many journalists doted on union dissidents, like the Steelworkers' Ed Sadlowski and the Mineworkers' Arnold Miller. And even the best reporters tended to be sentimental about the workers themselves. Rare indeed were stories in the 1970s warning that the workers in the steel and auto industries who were winning huge wage increases might be pricing themselves out of jobs.

Among the best of the labor reporters in those days-and one who consistently avoided the mistakes of so many of his colleagues-was John Hoerr of BusinessWeek. Nobody had better sources, and nobody tried harder to cover both sides of the story-labor and management-fairly and accurately. I remember the anxious feeling when BusinessWeek arrived at my office in Pittsburgh each week, as I waited to see whether Hoerr had scooped us again. But even Hoerr, I suspect, did not fully appreciate the forces that were transforming the labor movement and smokestack America in the 1970s.

Now, in a remarkable piece of reporting* and writing, Hoerr has tried to tell one of the great stories of our time: the rise and fall of the American steel industry. And he has told it with the richness and compassion that could come only from someone whose roots are in the mill valleys of western Pennsylvania. Here's the way Hoerr remembers thescene at Musulin's Cafe in the mill town of McKeesport, Pennsylvania when he was a boy in the 1940s:

"At the age of ten or so, I knew nothing about steelmaking, but I learned to identify men by their jobs. The jobs carried social status. At the bottom of the heap were common laborers, often grizzled old fellows with gnarled hands who spoke broken English. Men of the cast-house crew were big and tough. Millwrights, riggers, and bricklayers were independent characters. Open-hearth workers tended to swagger and show their strength, especially 'second helpers' who performed most of the hard work on the furnace. . . .

"One man I came to know only by sight at Musulin's was a quiet, older man who always sat by himself at a small table next to the wall. He would put his hat on the empty chair and sip one shot of whiskey-no more-while reading a newspaper. I remember someone telling my father, in a low voice that impressed me with a sense of importance, that the lone man was a first helper. He seldom talked to anybody, and the other men kept a respectful distance. Old John Musulin, the white-moustached proprietor, addressed him as 'Mr' In terms of social status, the first helper was rivaled only by rollers on the blooming and bar mills."

As this marvelous passage suggests, steel in the old days wasn't simply an industry. It was an entire culture, with its own richly embellished social structure. In this book Hoerr shows how this all-American social system produced an utterly disastrous outcome-in which workers didn't work, managers didn't manage, and an entire industry slid year by year toward disaster.

Hoerr's account isn't perfect. It's longer than it needs to be, and tends too often to jump back and forth in time and place. But the book triumphs by never losing sight of the larger story of how the wellintentioned folly of labor and management led to the wave of plant closings in the 1980s.

On the union side the tragedy began with the United Steelworkers' first president, Philip Murray, whose views were conditioned by the bitter struggle to organize low-paid steelworkers in the 1930s. Though he was initially interested in labor-management cooperation schemes, Murray decided that the union's job was to raise wages and fringe benefits, rather than to participate in the larger task of running the enterprise for the good of all.

The union succeeded beyond Murray's wildest dreams. By the early 1980s, American steelworkers were the best-paid industrial workers in the world. From 1967 to 1979, total hourly employment costs in the steel industry rose 180 percent, or an annual rise of 12.1 percent-while the industry's productivity grew barely 2 percent a year. When this cozy, anticompetitive world was punctured by lower-cost foreign steel, the union had only one answer: import barriers.

Steel management comes off even worse than labor in Hoerr's book. Managers made a series of foolish strategic decisions: they continued to build huge open-hearth furnaces in the 1950s, after other countries began to adopt the more modern oxygenfurnace technology; they spent vast sums to produce "Pelletized" iron ore from their North American mines (which were no longer producing high-grade ore), rather than import foreign iron ore at about half the cost; and they vastly overestimated (by as much as 100 percent) the demand for American steel during the 1980s.

Worst of all, says Hoerr, was the poisonous relationship that developed between workers and management, especially at the industry's largest company, U.S. Steel. He quotes one steelworker explaining the decline in m"In the 1950s, it was a pleasant place to work. . . .The people in the personnel office spent their lives there and knew workers personally." Then, in the 1960s, "the company brought in college grads as supervisors and sometimes paid them more than the general foremen who had come up the old way. This helped destroy working relationships. In the early 1970s, they began hiring attorneys to run personnel services. Most of them used it as a stepping stone and became tough bastards. 'If you want something, arbitrate!' they told us."

In this climate of bitterness and suspicion, workers lost any remaining concern for the efficiency of the enterprise. Recalling his own summer jobs in the mills as a young man, Hoerr notes that "on the night turn, 11 p. m. to 7 a.m. , more people may have been sleeping in National Tube than in all the hotels of McKeesport. It was a mark of esteem, the 'macho' thing of the day, to brag about sleeping on company time."

The message of this book (other than the obvious point that wages shouldn't rise faster than productivity) is that the steel industry might have remained competitive if union and management had adopted the sort of cooperative worker-management relationships common in Japan.

But steel's problems may actually reflect too much cooperation between labor and management, rather than too little. This was the industry, after all, where in 1973 labor and management reached the breakthrough Experimental Negotiating Agreement, banning national steel strikes. What ENA really represented was an alliance between labor and management against imports.

Hoerr may also be understating the economic benefits of tough, cost-cutting management. U.S. Steel's approach to labor relations may be neanderthal, but the company (and its workforce) will gain significant long-run benefits from management's effort in the 1980s to regain control of its plants. Its steel work force has fallen from more than 100,000 in 1980 to less than 20,000 this year. Meanwhile, productivity has increased so sharply that it now takes just 3.8 man-hours per ton of steel shipped, compared to 10.8 man-hours in 1983.

The sad truth is that by the 1980s it may have been too late for steel to avoid catastrophic cutbacks like those seen at U.S. Steel. With the union's help, Big Steel got enough protection to delay the day of reckoning. But as Hoerr says in his title"the wolf finally came."