United Steelworkers and U.S. Steel begin labor talks in Pittsburgh

With the global industry in crisis, iron and steelworkers from Minnesota and across the country scrambled to Pittsburgh this week to begin labor negotiations with U.S. Steel in the hopes of securing an agreement before the current United Steelworkers (USW) contract expires Sept. 1.

Bargaining begins at a difficult time and many observers expect that U.S. Steel could seek concessions from workers as it battles big problems that include surges in cheap imported steel and the global collapse of prices for taconite iron ore, the key ingredient to steel.

Steelworkers from Minnesota's Iron Range said the first few days of talks will deal with regional labor issues before diving into the key issues of wages, benefits, safety, health care and pensions.

"It's clear that the current state of the steel industry, especially the effects of unfair trade, will make for a difficult summer of bargaining," said officials of USW Local 1938 in Virginia, Minn., in a letter to members posted online this week. "If we all work hard, remain patient and stick together, we are confident we can reach a fair settlement."

U.S. Steel did not respond to requests for comment.

This spring, the company laid off 800 workers at its Minntac and Keetac taconite plants in northeast Minnesota. Last month, U.S. Steel lobbied for and won a 26 percent rate reduction on the mineral royalties it pays Minnesota to mine ore on state-controlled land. U.S. Steel and Minnesota's other large taconite plants also recently won the right to petition for lower electricity rates.

Such breaks help, but may not be enough to weather this latest cycle of turbulent times for a boom-and-bust industry.

Global prices for taconite iron ore fell this week to about $45 a ton. That's the lowest level since 2009 — half the price from June 2014, and one-third the price seen in 2013.

Ore prices plunged dramatically in China, Brazil and Australia. Making matters worse for U.S. steel producers is the rise of steel imported into the United States from China, South Korea, India, Saudi Arabia and other countries.

Nine nations were accused by the U.S. Commerce Department and U.S. steel companies of unfair trade and illegal steel dumping, which undercuts demand for U.S.-made steel. China's large-scale dumping has captured headlines of late.

Calls for sanctions and more stringent legislation are slowly making their way through Congress and the International Trade Commission. Against this backdrop, labor talks are beginning in earnest in Pittsburgh.

Mark Phillips, commissioner of Minnesota's Iron Range Resources and Rehabilitation Board said that the state will be watching to see how talks progress. He said he was heartened that his last meeting with U.S. Steel found company officials focused on cutting mining royalties and electricity costs, not wages or benefits.

If U.S. Steel does pursue the latter, "It would be a concern," Phillips told the Star Tribune Thursday. "But we will have to wait and see what they propose."

He noted that any agreement reached by U.S. Steel is likely to have a broader impact in Minnesota because steelworker labor talks are also starting at Cliffs Natural Resources and ArcelorMittal as their contracts also expire Sept. 1.

ArcelorMittal, which owns the Minorca mine in Virginia, Minn., employs 13,000 workers at 11 facilities around the country.

Ohio-based Cliffs Natural Resources operates the unionized Hibbing Taconite plant in Hibbing and United Taconite plant in Eveleth. Cliffs also operates the nonunion North Shore Mining facility in Silver Bay, Minn., and the Tilden and Empire ore mines and plants in Michigan.

In May, Cliffs laid off about 100 salaried workers in Minnesota. That month, it also announced that it would idle a Michigan ore facility.

In Minnesota, Keetac and Minntac plants were idled as was Magnetation's iron ore plant in Keewatin. Magnetation filed for Chapter 11 bankruptcy protection in early May. Soon after, Steel Dynamics laid off 200 workers and idled Mesabi Nugget in Hoyt Lakes and Mining Resources in Chisholm.

Even with this noisy background, "Our goal this summer is to get a labor agreement, but not at any cost," United Steelworkers Bargaining Committee Chairman Tom Conway told union members earlier this month. "We are coming together at a difficult time. There is no denying that. But there is also no denying that we have been through situations like this before."

Dee DePass • 612-673-7725