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USX contract ends 6-month strike.

USX contract ends 6-month strike

The longest work stoppage in the history of the U.S. steel industry ended when USX Corp. and the United Steelworkers union settled on a 4-year accord. The vote by 22,000 active and 11,000 laid-off (for less than 2 years) employees was 19,621 to 4,045. The 6-month stoppage was viewed as a lockout by the United Steelworkers and as a strike by USX. (The stoppage was ruled a lockout by courts in some States, enabling involved employees to draw unemployment benefits. Courts in other States ruled it was a strike, precluding payment of such benefits.) It began August 1, 1986, after bargainers were unable to settle peacefully.

In the months prior to the stoppage, it became increasingly clear that a showdown was coming, although earlier in 1986, the Steelworkers reached agreements with some other major steel producers without work stoppages. In 1985, the major companies ended coordinated bargaining with the union, contending that a change to company-by-company and even mill-by-mill bargaining was vital to assure that settlements were tailored to address the problems of each company.

Steelworkers' President Lynn Williams responded that the union would press for similar settlements at the individual companies, subject to variations warranted by valid cost and production problems. The USX accord was patterned after the June 1986 settlement at Bethlehem Steel Co. at the suggestion of Sylvester Garrett, an arbitrator in the industry, who assisted the parties in ending the bargaining stalemate.

The Steel workers said that the contract changes favorable to USX will save the company about $300 million over the term, which runs to January 31, 1991. As at Bethlehem, all wage and salary rates and incentive calculation rates were reduced 8.09 percent, amounting to an average cut of $1.12 an hour. This, plus the following changes in compensation, amounted to about $2 an hour:

Suspension of the provision for automatic cost-of-living pay adjustments and termination of the existing 4-cent-an-hour allowance.

Reduction of the Sunday work premium to time and one-fourth pay, from time and one-half.

Elimination of 3 of the 10 paid holidays.

Revision of the vacation pay calculation to exclude the effect of shift differentials and overtime and Sunday work premium.

The parties also agreed on cost reductions that apply only during part of the contract term:

During the first year, employees eligible for 3 weeks or more of paid vacation will give up 1 week.

During the first 2 years, shift premiums will be reduced one-third, to 20 cents and 30 cents an hour.

During the first 2 years, an additional paid holiday will be inoperative.

Part and possibly all of the employees' permanent and temporary sacrifices could be offset from distributions under a new profit-sharing plan. Under the formula of this plan, the annual distributions will equal 10 percent of the first $200 million of USX pretax income, plus 20 percent of any amount in excess of $200 million. In any case, employees will be guaranteed minimum distributions based on the payouts to employees covered by the stock ownership plans the union negotiated with Bethlehem and LTV Steel Co. The provision for minimum payments is designed to keep USX's profit-sharing plan at the same cost level as the stock-sharing plans at Bethlehem and LTV. According to the union, the minimum payout to employees will equal 20 percent of their compensation sacrifice if the prices of LTV and Bethlehem stock stay at current levels.

Payouts to USX employees will be proportionate to their annual earnings and will not exceed their sacrifice for the year. Also, unpaid employee sacrifices in one year will not carry over for possible payment in the next year.

A feature of the settlement favorable to the union was new provisions intended to reduce the number of jobs lost as a result of contracting out work. The provisions are comparable to those negotiated earlier at the other companies, generally providing that all work that can be done by members of the bargaining unit shall be done by them. The new rules specify that work contracted out according to a "consistent practice' established before March 1, 1983, may continue to be contracted out. Work contracted out according to a consistent practice established after that date now goes to bargaining unit members unless USX can prove that contracting out is warranted according to a "reasonableness test' consisting of 11 factors, such as the desirability of recalling laid-off employees and the impact of contracting out on the number of jobs in the plant. USX is required to notify the union of all proposed contracting out and the parties agreed on special accelerated arbitration procedures to resolve any disputes.

The new contract permits USX to eliminate 1,346 jobs, but two "special pensions' (with $400-a-month supplements until age 62) will be granted for each of the lost jobs. Also, one laid-off worker will be recalled to work for each special pension granted. Other changes in pensions included a $1 increase in the normal monthly computation rate, bringing it to $18.50 monthly for each of the first 15 years of service, plus $20 for each of the next 15 years, plus $21.50 for each additional year.

Health insurance changes included a doubling of the lifetime major medical coverage to $100,000; adoption of a prescription drug mail order plan; and a cost-containment program financially penalizing employees who do not follow requirements for precertification of hospital stays and second medical opinions prior to surgery.

Another aspect of the settlement is a company commitment to modernize its Monongahela Valley, PA, and Fairfield, AL, facilities. The work, to be started during the agreement period, is expected to cost nearly $1 billion. USX also agreed to keep its Fairless Hills, PA, works in operation at least through the agreement period and to join the Steelworkers in a study of ways to improve prospects for the Geneva, UT, works.

In 1983, when USX and the other major producers settled jointly with the Steelworkers, the parties agreed on a $1.31 an hour pay cut, including $1.25 that was restored to the workers in stages during the agreement term; elimination of some possible quarterly cost-of-living adjustments and limits on others (the employees actually received adjustments totaling 4 cents an hour); and temporary and permanent cuts in benefits.

After the 1987 settlement, a controversy erupted when USX placed four plants on "indefinite idled status,' meaning that 3,700 union-represented employees would not be recalled in the foreseeable future. Steelworkers' President Williams said that, during the contract negotiations, the company assured them "that all facilities operating before the lockout would resume operations on an orderly basis as work became available.' USX Chairman David Roderick said that early in the negotiations, company officials warned union leaders that some plant closings might be necessary if a lengthy work stoppage occurred.

The plant closing affected 250 workers at two plants in the Pittsburgh area, 750 in Baytown, TX, and 2,700 at the Geneva works.
COPYRIGHT 1987 U.S. Bureau of Labor Statistics
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Publication:Monthly Labor Review
Date:Apr 1, 1987
Previous Article:Productivity gains continued in many industries during 1985.
Next Article:Deere contract protects employees against layoffs.

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