Steelworkers contract talks test strong market

This month contract negotiations opened between the United Steelworkers of America and two big steelmakers, U.S. Steel and ArcelorMittal.

Already, the union says the two sides are far apart.

Workers hope for a better outcome than the last labor negotiations in 2015. That contract froze pay and added costs to retirees. However, it also held steady out-of-pocket health care costs and increased profit sharing. U.S. Steel had pushed for a large increase in out-of-pocket costs to workers.

But there’s one big difference between then and now. In 2015, mines and steel mills reeled from an industry downturn. Steel imports were up. Mines across the Mesabi Range were idled due to oversupply.

In 2018, all the mines on the Range run hot. U.S. Steel reopened its mill in East St. Louis. The Northwest Indiana Times reported that a ton of flat rolled steel sold for just more than $400 in 2015. This year, the same material sells for more than $1,000 per ton.

The upturn for the mining and steel industries began with an increase in domestic demand that started in 2016. Then President Trump first hinted at and then finally delivered tariffs on foreign steel.

Opponents of tariffs argue that they will slow the economy by passing costs on to consumers, essentially functioning as a regressive tax. Obviously, tariff supporters will point to the strength in steel production.

But that raises an important question. Will this windfall for the big steelmakers also reach the workers? Or will companies continue to push against organized labor, hoping to reduce legacy costs and benefits.

In a sense, the whole thing provides a true test of the strength of the recovery in steel. Perhaps even in the broader American economy.

Here in Northern Minnesota, U.S. Steel owns and operates Keewatin Taconite and Minntac, the state’s largest iron ore mine. ArcelorMittal owns and operates the Minorca Mine in Virginia, Minnesota. Both companies are part of the mixed ownership of Hibbing Taconite, which is operated by Cleveland-Cliffs.

Cleveland-Cliffs will also negotiate with the United Steelworkers this year. Cliffs produces raw materials, not finished steel. Their Minnesota mines include United Taconite in Eveleth and Hibbing Taconite.

Cliffs’ other mine, Northshore in Babbitt and Silver Bay, is non-union.

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