Analysts Call Settlement A Win For Solidarity
Their slogan was “One Day Longer.” They used it 718 times.
After the longest lockout in recent labor history, the United Steelworkers of America are celebrating last week’s settlement with Kaiser Aluminum that sends their members back to work at Kaiser’s five plants, including two in Spokane.
Scholars of labor politics say the hard-fought contract is a major victory because Kaiser was unable to break the union while gaining some wage and productivity concessions.
From the neutral arbitrator that settled the final contract details, the Steelworkers also got a first-ever successorship clause that keeps them in the plants for five years even if Kaiser sells some of its assets.
“The message to companies like Kaiser is, don’t underestimate the Steelworkers,” said Kate Bronfenbrenner of Cornell University, co-author of a 1999 book on the 700,000-member union.
“They haven’t lost one of these yet. They are fighters. If anyone knows how to take on a global employer in this economy, it’s them,” she added.
The Kaiser settlement is part of a recent five-year string of labor victories that contrasts sharply with 15 previous years of losses, said political science professor David Olson of the University of Washington’s Center for Labor Studies.
“I’m not saying capital caved to labor. But the solidarity the Steelworkers showed over an extended period is a matter of national importance. You’ve got to chart this up as a huge labor victory,” Olson said.
Kaiser President and CEO Ray Milchovich said he isn’t putting a lot of energy into tallying wins and losses in the 24-month labor war.
“Were they able to hurt the company? Absolutely. We had to do what we did to protect the viability of Kaiser long-term,” he said.
Both sides can claim wins in the new contract, said David Foster, the union’s lead negotiator. “There are very few labor agreements that are one-sided,” he said.
The Steelworkers will now work to return Kaiser to profitability. “These are our members’ jobs, and now that we’ve got them back, we want the company to succeed,” Foster said.
Families suffered
Among the union’s rank and file, reaction to the settlement is mixed.
Spokane’s 2,100 Steelworkers are proud of their unity during the 24-month strike and lockout. They are happy to be going back to work. But the financial and emotional scars from their long battle won’t heal soon.
“It was terrible to go through, but in the long run, it is beneficial to us,” said Mike McIntyre, a member of the Trentwood local. “The people hung together, and the union’s still here.”
With nearly $40 million in strike benefits from dues paid by the Steelworkers’ members, most of the 2,900 Kaiser workers kept their houses and cars, as union leaders had promised.
But workers’ families suffered. Some couples divorced or left town. About 200 workers plan to retire immediately. And now that they’ve seen their new contract, some say the union’s gains seem modest.
“It’s definitely not as good as what we had before the strike,” said Wes Beck, president of the union local for Trentwood, where 288 jobs will be lost.
When they return to work over the next month, they’ll be working in streamlined plants where work rules have changed. Their hourly pay increase is small - $1.83 immediately and $2.30 an hour over five years. But pension benefits are up 30 percent.
Although Kaiser had initially proposed cutting up to 700 jobs from their ranks, they’ll be working with about 500 fewer coworkers.
The international union flexed its muscle in the Kaiser dispute, but its members didn’t fare as well, says a Texas firm that tracks private-sector labor unions for corporate America.
“From our perspective, the workers really took it on the chin and the company came out pretty well,” said Stuart Keene, president of PRI Labor Research Inc. of Houston.
The workers lost an average of $60,000 by being out of work for two years, and Kaiser saved $15 million by eliminating 500 jobs, Keene said.
But “this wasn’t just about money,” said Larry Strom, a 42-year-old union shop steward who plans to return to his job at the Mead smelter.
During the lockout, Strom worked on the international union’s broad “corporate campaign,” taking the labor dispute to Kaiser’s customers, shareholders and political allies.
He helped lobby Congress and the White House for a “good corporate citizen clause” in future Northwest power contracts that bars any company that locks out its workers from getting low-cost federal electricity. The Clinton administration agreed to the clause in August.
Al Link, the Washington State Labor Council director who calls himself a “Kaiser brat,” agrees the workers took a financial hit, but says the company took a bigger one.
Link’s dad worked for Kaiser. He lived near the Mead smelter and worked for Kaiser for 30 years before moving to a labor leadership post in Olympia.
“I don’t know if you can call this a victory for the individual workers. But it’s not nearly the loss that the company took,” he said.
Kaiser took a $60 million charge in 1998 for the labor dispute and will take another $30 million to $40 million charge this quarter. That will be offset by $40 million in electricity sales as Kaiser idled potlines at Mead and Tacoma, the company told Wall Street analysts last week.
Kaiser’s good name also has been tarnished, Link said.
“I told one of the Kaiser officials this week, there isn’t anything I can do to help Kaiser get its good name back. They’ve done a lot of bad things they have to live with,” Link said.
Milchovich agrees Kaiser’s image was tarnished. He blames the Steelworkers.
“There has definitely been damage done. I’d agree we have some work to do,” he said. Last week, Kaiser took out full-page ads in The Spokesman-Review with the message: “Let the Healing Begin.”
Gaining strength
After the strike became a lockout on Jan. 14, 1999, the Steelworkers’ international geared up its corporate campaign against Kaiser.
That fight-on-all-fronts strategy is a rational approach to threats of job losses, said Daniel Kruger, professor of industrial relations at Michigan State University.
“When jobs are threatened, people do all kinds of interesting and creative things,” Kruger said. Cornell University’s Bronfenbrenner studied the Steelworkers’ strategy as it developed in the early 1990s.
Her book, “Ravenswood,” chronicles the union’s victory at a former Kaiser plant in Ravenswood, W.Va., where the new owners hired permanent replacements in 1990 and locked out the union for 19 months.
The Steelworkers won at Ravenswood after mounting a sophisticated international campaign against the plant’s new owner, fugitive American financier Marc Rich - even picketing his chateau in Switzerland.
In the Kaiser dispute, the union zeroed in on Charles Hurwitz, the controversial Texan who bought Kaiser in a leveraged buyout in 1988 - and who sold Ravenswood in 1989 to a consortium controlled by Rich.
The Steelworkers mounted an unsuccessful proxy fight against Hurwitz’s Houston company, Maxxam Inc., which controls 63 percent of Kaiser’s stock and gets 87 percent of its revenues from Kaiser.
Wall Street was also critical of Maxxam; Fortune Magazine recently ranked its board among the top 10 worst in America because of its control by Hurwitz associates.
Hurwitz said he was leaving all decisions in the Kaiser dispute to Kaiser’s managers. During the 24-month labor battle, Maxxam stock lost more than half its value.
Despite his claims of being “hands off” during the Kaiser dispute, Hurwitz’s motives were clear, said the UW’s Olson. “Hurwitz’s intention was to bust the union,” he said.
Arbitration brought an end
Kaiser’s labor problems were compounded by a string of accidents and fines during the lockout.
A despondent Kaiser manager killed himself after losing most of his fingers in a “degloving” accident at Trentwood. Several replacement workers were injured in the early weeks of the dispute.
On July 5, 1999, Kaiser’s Gramercy, La., alumina plant exploded while being run by replacement workers.
Kaiser is recouping most of the $200 million cost of rebuilding the plant from insurance, but the company’s legal problems continue.
Kaiser lost a legal battle after the explosion to have the federal Mine Safety and Health Administration removed from the Gramercy investigation. The MSHA has fined Kaiser $533,000 and may refer the incident to the U.S. attorney in New Orleans for possible criminal charges, an agency investigator said last week.
Since June 1998, Kaiser has been fined $620,500 for environmental violations, many unrelated to the labor dispute. The Steelworkers capitalized on the fines by circulating a pamphlet on Kaiser’s environmental problems earlier this year.
Despite these tactics, momentum at the bargaining table remained slow for months. That changed after the National Labor Relations Board announced in April it would file two unfair labor practice charges against Kaiser.
The NLRB board made it clear that if Kaiser didn’t end the labor dispute, they’d seek an injunction to end it, Foster said.
“They would have gone to federal court and asked a judge to end the lockout and send the Steelworkers back to work under the old contract. It would have been a messy situation,” Foster said.
“We were aware that was a possibility,” Kaiser spokesman Scott Lamb said Friday.
An NLRB trial on the charges is scheduled Nov. 13. If the union prevails, Kaiser could be forced to repay wages lost during the lockout. The union estimates back-pay liability at $337 million; Kaiser disagrees but says the amount “could be significant.”
Last week, both sides were talking settlement.
On June 30, the same day the NLRB charges were filed, the company and the union announced a plan to submit unresolved contract issues to binding arbitration. In July, union members approved arbitration.
“Getting arbitration was itself an incredible victory,” Bronfenbrenner said. “When an employer is out to break a union, arbitration is a loss.”
Milchovich denies that was Kaiser’s intent. “The Steelworkers’ economic demands were 8 percent a year, and that would have crippled the company. We simply had to do this, but we wanted the union back,” he said.
The Steelworkers’ strategy also included an alliance with environmentalists to take on Hurwitz over the clearcutting of California redwoods and union jobs.
Maxxam spokesman Josh Reiss called the alliance “an extraordinary marriage of convenience” doomed to self-destruct. It hasn’t, Bronfenbrenner said.
Now labor will return to its traditional alliance with Kaiser to try to get good power rates for the electricity-dependent smelters in the Northwest, the Labor Council’s Link said.
Kaiser’s union work force will pitch in, Strom said. “We’ll work things out. We want to make the company profitable again,” he said.
Staff writer Hannelore Sudermann contributed to this story.