State of Business: Statesmanship in Steel

An appropriate indication of the present mood in the steel industry lies in the date picked for the opening of 1962 contract negotiations—St. Valentine’s Day. Amid mutual professions of sweetness and statesmanship, both labor and management last week spread word that they expect no repetition of 1959’s disastrous, 116-day strike, have decided to start their talks earlier than before so that they can iron out their differences well before the current three-year contract expires on June 30. Bluff David J. McDonald. 59, president of the United Steelworkers, was jocularly casual about how he expected to start bargaining with his laconic adversary, U.S. Steel Corp. Executive Vice President R. (for Richard) Conrad Cooper. Said McDonald: “I’ll call Coop and say I think we’ve got the rooms and are ready to go.”

Looking for a Cushion. With his union’s membership among basic steelworkers down 23% since 1957, McDonald has reason to go easy. Following his lead, the Steelworkers’ wage-policy committee last week scrapped its customary pre-bargaining talk of big pay boosts and 32-hour weeks, came out instead with general bargaining goals that management officially hailed as “a more moderate approach than in the past.”

To cushion the blow of automation-induced layoffs, the union asked for higher unemployment benefits, guarantees that high-seniority workers would be the last fired and that laid-off workers would have first call on new openings, and that some of them would be retrained for other jobs within the steel industry. To spread available work, the union wanted less overtime, more holidays, longer vacations, paid sabbaticals. Higher wages were only vaguely mentioned. The union is aware that its members want job security more than raises (their pay envelopes are already fatter than those of workers in any other production industry) and would rather collect layoff benefits (which now run as high as 65% of after-tax pay) than the union’s meager strike benefits.

Carrot & Stick. The steelmakers, too, are feeling conciliatory. Remembering 1959, they do not want to be blamed again for triggering a recession that would hurt their industry more than most. They are also feeling the pressure applied by President Kennedy, who is determined that 1962’s economic comeback will not be halted by a steel strike.

Early last September, the President wrote twelve steel company chiefs, urging them to battle inflation by holding the price line, pledged that if they did so, he would urge Steelworkers to temper their wage demands. Since then, he has wooed U.S. Steel Chairman Roger Blough in private chats. Fortnight ago, Kennedy and Labor Secretary Arthur Goldberg huddled secretly for two hours one evening in the White House with McDonald and Blough. Kennedy wants 1) a quick settlement to head off any first-half splurge and second-half slump in inventory buying, 2) no increase in prices, and 3) only such wage and benefit increases as are warranted by increased productivity.

The Right Price. Productivity is a notoriously slippery statistic. For one thing, it rises abnormally fast in recoveries when production picks up more rapidly than hiring. But Government estimates of the long-term annual rise in steel productivity fall between 2.1% (for blue-collar workers only) and 1.8% (including white-collar workers). On that basis, one top steelmaker figures that “we can eat a 2% to 2½% yearly increase in labor costs without raising prices.”

Steelmen expect that a deal within that range will be closed, perhaps within a month. “It looks encouraging as hell,” said one industry spokesman. Barring an unexpected bog-down in negotiations—or some unanticipated demand by the union—peace at a reasonable price seems the outlook.