Are you tired of the endless
election campaigning? Do you enjoy the dinnertime robocalls
asking for contributions? Aside from pollsters, television
pundits and newspapers, it is hard to see who benefits from
two-year-long election campaigns. Of course, there is a lot of
money spent--but it is certainly not spent productively. We
would be well advised to legislate the permissible duration of
campaigning, rather than focus on the money spent campaigning.
The endless repetition of hackneyed political cliches does not
change minds, despite what the experts apparently advise. OK,
we all hate the rich and we are all in favor of the
middle class. Now where do we go?
We are afflicted with a similar
syndrome in the United Steelworkers union-represented steel
industry. U.S. Steel Corp. and ArcelorMittal USA Inc. just
settled three-year labor contracts with the union. Should this
be cause for jubilation, or is something more pernicious going
on? With RG Steel LLC and its assets now offline due to
bankruptcy, about 8 million tons per year of USW capacity just
disappeared. This occurred after many years of continuous
decline; unionized mills once accounted for essentially all of
the 100 million tons of annual capacity. This has now slipped
to about 40 million tons.
Almost simultaneously, about 5
million annual tons of union-free finishing capacity appeared
on the market. The ultimate fate of ThyssenKrupp AGs
facility in Calvert, Ala., is not yet determined, but it is
unlikely it will ever become classified as USW capacity. The
march of union-free steel continues unabated, to the obvious
detriment of U.S. Steel, ArcelorMittal, AK Steel Corp., Cliffs
Natural Resources and, particularly, the union.
incrementalism will assure the ultimate triumph of union-free
steel production and, thus, the ultimate withering of both
unionized companies and the USW unless something changes
radically on both sides. Of course, radical change is sometimes
best accomplished incrementally. But absent radical change,
there is an inevitability to the march of events. Short-term
labor contracts that are more of the same are an exercise in
kicking the can down the road.
What is needed to change the
inexorable procession we are watching? We need imaginative
longer-term thinkers on both sides. U.S. Steel and the USW both
have leaders who qualify. ArcelorMittal is an enigma; their
bargaining tactics were inexplicable, maybe European. At any
rate, they have now learned that major progress cannot occur
under the searing lights and publicity of end-of-contract
bargaining. It is amazing that such a sophisticated company can
be so tone-deaf when it comes to their U.S. investments.
What should these imaginative
leaders do? They should form a joint long-range committee
comprising younger managers charged with producing
recommendations to tackle the alarming loss of
share occurring to their businesses.
The initial meetings of this
group will yield predictable posturing. The failures of all
failed companies were management failures. Of
course they were--now what? The management of companies were
grievously handicapped by restrictive union practices; of
course they were.
But what kind of symbolic
triumph is it that at RG Steels facility in
Sparrows Point, Md., union workers were still cutting the grass
outside the office when the lights went out?
Thomas C. Graham is a founding member of T.C. Graham
Associates. He is a former chairman and chief executive officer
of AK Steel Corp., president and chief executive officer of
Armco Steel Co. LP, chairman and chief executive officer of
Washington Steel Co., president of the U.S. Steel Group of USX
Corp. and president and chief executive officer of Jones &
Laughlin Steel Co. His column appears monthly. He invites
readers comments and can be contacted at