Unions diversify, make concessions to survive the '90s

September 02, 1991|By John H. Gormley Jr. and Leslie Cauley

At Micky's Game Room Lounge, near the entrance to Bethlehem Steel Corp.'s Sparrows Point mill, the regulars gather around Formica-topped tables after work to wash down snacks with a Coors or a Bud.

It's the kind of place where patrons disagree about a lot of things. But they seem to agree on one issue:

They're lucky to be working.

"Everything I own, I owe to Beth Steel," said George Robbins, a 42-year-old steelworker who began at Sparrows Point when he was 20. Married, with four children ages 12 to 21, he said, "The kids that get out of high school, what can they do now? Where's the future?"

Preserving their own futures did not come without cost to these men. Much of the new, high-tech production equipment at Sparrows Point was funded largely through concessions, including reduced wages and more liberal work rules, made by union members in the early 1980s. In return, Bethlehem pledged to modernize its facilities to make them competitive and to preserve jobs.

The 1980s were hard times for unionism in the United States, a period marked by concessions, decline in union membership and jobs and loss of political clout. In 1980, about 23 percent of the work force belonged to unions or employee associations, according to the U.S. Labor Department. A decade later, the figure had dropped to just over 16 percent.

On Labor Day, 1991, two questions cry out: Were the concessions worth the sacrifices made by union members? And can the union movement prosper in the future?

The experience at Bethlehem Steel suggests that in some cases concessions work well, helping both the company and union members. And other unions, such as the Communications Workers of America, have found creative ways for coping with today's hostile environment.

In the early 1980s, the steel industry was buckling under the effects of back-to-back recessions and a torrent of foreign steel. Bethlehem, saying its existence was at stake, demanded and got concessions that saved the company about $500 million from 1983 to 1989.

In the past decade, the company has poured more than $1 billion into modernizing the Sparrows Point plant. About $250 million was spent on the plant's continuous caster, state-of-the-art machinery that produces steel slabs.

But a steel slab is a low-profit commodity. Corporate headquarters had to be convinced that Sparrows Point was productive enough to justify an additional huge investment in facilities to convert the slabs into more finished products, such as the sheet steel used in automobiles.

Sparrows Point and its workers made their case. Several years ago it took seven to eight hours of labor to produce a ton of steel. Now it takes a little more than four hours, according to G. Ted Baldwin, a spokesman at the Sparrows Point plant.

Convinced that Sparrows Point did have a future, corporate management agreed to invest $200 million in modernization of ++ the plant's hot strip mill, where steel slabs from the caster are turned into the sheet steel sold to makers of consumer goods.

"The modernization of the hot strip mill saves 3,000 jobs," or almost half the jobs the plant now provides, Mr. Baldwin said.

When Harry J. Spedden, director of the Steelworkers' union subdistrict in Maryland, started working at Sparrows Point in 1953, the plant employed more than 30,000 people. Today, fewer than 6,000 unionized steelworkers work there.

Given the huge loss in jobs, were the sacrifices worth it? Mr. Spedden believes the concessions saved the industry. But each union member has to answer the question individually, he adds. "People who have survived think it was worth it; for the people who got laid off, it wasn't," he said.

The question will elicit very different answers from industry to industry and from plant to plant, according to Gary Burtless, a senior fellow at the Brookings Institution in Washington.

Concessions generally make sense only for workers at relatively modern plants, he argues. If the technology is too old and the plant very inefficient, "no matter what concessions you make, the plant will be closed down," he said.

That view has very serious implications for all unions, Mr. Burtless believes, because it makes it very hard to maintain solidarity. The interests of workers in an efficient plant may be at odds with those of workers at less efficient ones.

And as industries come under greater pressure from foreign competition or because of deregulation, these divisive forces among workers may become even more pronounced.

For example, deregulation set loose huge changes in the telecommunications industry.

The court-ordered breakup of the Bell System in 1984 created eight new companies -- American Telephone & Telegraph Co. and the seven regional Bells -- overnight, forever changing the competitive landscape of the U.S. telecommunications industry. Upstarts like MCI Communications Corp. and US Sprint did not readily embrace the concept of unionization, a sentiment shared by other spinoffs that divestiture created.

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