Steel deal cools it on pay

Proposed contract would trade big raises for improved pension

A win for the company?

July 17, 1999|By William Patalon III | William Patalon III,SUN STAFF

Unionized steel workers at Bethlehem Steel Corp. and the U.S. Steel Division of USX Corp. are being asked to forsake the high raises they traditionally get in return for better pension benefits, according to a tentative contract proposal obtained by The Sun.

The proposed five-year deal would cover 10,000 Bethlehem workers, including about 3,800 at the company's Sparrows Point Division in Baltimore, and roughly 15,000 U.S. Steel workers. All are members of the United Steelworkers of America.

Though the current contract expires at midnight July 31, and the tentative agreement was reached last month, mail-in ballots still haven't been sent out to Bethlehem employees. Ballots for U.S. Steel union members were sent out yesterday, according to a Steelworkers official in Washington. Union leaders hope to have the contract ratified by Aug. 6.

For Wall Streeters, who months ago had feared a strike, the proposed agreement is viewed as a coup for Big Steel, particularly since the bulk of the raises would come later rather than sooner.

"It was a win-win-win for the company," said Waldo Best, steel-industry analyst for Morgan Stanley Dean Witter in New York. "With the exception of the pension benefits, I have a problem seeing anywhere where the union won."

If they vote to ratify, steel workers would see their hourly rate rise $2 per hour over the contract's five-year life. Analyst Charles A. Bradford, of Bradford Research in New York City, figures that's an aggregate increase of about 10 percent, or roughly 2 percent a year.

Though the hourly wage varies significantly at Sparrows Point -- low for truck drivers and clerical workers and high for those who work dangerous jobs in the mills -- a typical steel worker makes between $17 and $20 per hour, sources and analysts say.

Even though the new contract would take effect in August, steel workers wouldn't get their first raise -- 50 cents an hour -- until Feb. 1, the proposed contract document states. Union workers would get a second raise of 50 cents an hour on Aug. 1, 2001, and $1 an hour on Feb. 1, 2003.

In return, proposed minimum monthly pension benefits would jump dramatically -- in most cases doubling between now and Aug. 1, 2002, the document shows.

Speaking privately, since both sides agreed not to discuss the contract, Bethlehem Steel insiders and union officials contend that the hefty pension increases would more than make up for what one analyst labeled as "anemic" pay increases. However, some union members, already unhappy about the low pay raises, contend that the new manner of calculating pensions actually will squeeze their payout when they retire. The reason: Most steel workers have so much time on the job, and work so much overtime, that they already would qualify for more than the minimum pension payout.

"I'm going to vote against it," said one steel worker, who requested anonymity. "And there's not one person in [my] crew" who said they would vote for it.

Several insiders say it's possible that union members are misinterpreting how the pension will work.

A Bethlehem spokesman declined comment on the contract proposal, citing a June 25 statement that the firm would "defer any comments" until after the union voted. But Billy Thompson, director of United Steelworkers of America's District 8, which represents Sparrows Point workers, said, "Membership from Day One wanted increases in the pension benefit. We weighed all considerations and tried to improve pensions and wages and spread the money out among all the workers."

Should the contract pass, analysts say, it would be a big boost economically for U.S. Steel and Bethlehem: The pay increases are modest and the contract is for five years, guaranteeing some stability to what has been a very unstable business for the big steel companies.

"Peace is good," said Bradford, the Bradford Research analyst.

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