Steel Industry Consolidation
A Long-Term Solution for Success
Steel manufacturers all over the world are merging into companies that have the capacity to produce 30 to 50 million tons of steel annually. If American steel makers expect to compete, survive and thrive in the increasingly global steel marketplace, it is clear that they must undergo a similar consolidation.
In fact, the USW has been leading the push for consolidation in the American steel industry. In September 2002, the USW's Basic Steel Industry Conference adopted the following bargaining principles to serve as a roadmap for consolidation.
- Any sacrifices must be shared by all of the industry's stakeholders.
- Strong government action, including restraint of imports, assumption of legacy costs, access to capital for investment, and trade adjustment assistance benefits for those displaced by restructuring.
- Commitment by the companies to maintain their steel-making capacity.
- Substantial new participation by our members in the company's success and far-reaching involvement in the company's affairs, to be sure that the voices of workers are heard.
As a result of the USW's efforts, the American steel industry is undergoing its most significant restructuring in over one hundred years. Nearly 20 mergers or acquisitions in the steel industry have been completed or are pending, involving over 30,000 employees and 38 million tons, or 30% of domestic steel-making capacity. Some of the more significant of them are:
- International Steel Group (ISG) acquiring the assets of LTV Steel in April 2002, Acme Steel in September 2002, and finalizing its acquisition of the assets of Bethlehem Steel in May 2003, making lSG one of the nation's top steel producers.
- U.S. Steel purchasing National Steel, combining two of the nation's four largest steel makers.
- Nucor acquiring Auburn Steel in April 2001, Trico Steel in July 2002 and Birmingham Steel in December 2002.
- Steel Dynamics acquiring the assets of Qualitech Steel in September 2002 and GalvPro in February 2003.
The innovative agreements that the USW negotiated during U.S. Steel's acquisition of National Steel and ISG's purchase of Bethlehem Steel strengthened the Union's momentum in saving the American steel industry. These groundbreaking agreements significantly reduced the management workforce, provided substantial, defined-benefit pensions to retirees and greatly reduced management's ability to shift work from USW members to outside contractors.
The immediate effects of this industry-wide restructuring, coupled with the protective tariffs enacted by the Bush Administration, are encouraging. Steel prices, which had sunk to historic lows, have begun to stabilize, and the number of companies entering bankruptcy has now slowed.
However, the costs of retiree benefits and pensions stand in the way of further consolidation. So far, the Bush Administration has persistently opposed our efforts to enact legislation that would relieve American manufacturers of some of these "legacy costs" by providing a national health care system that insures coverage for all.