Steel Settlement

July 7, 1971

Report Outline
Confrontation Over Prices and Profits
Federal Involvement in Steel Issues
Uncertainty About the Industry's Future
Special Focus

Confrontation Over Prices and Profits

Impact of Possible Strike on U.S. Steel Industry

Imports are challenging the domestic steel industry as rarely before, production costs are rising, and huge capital investment programs have done little to improve productivity. With stiff competition from other materials, like aluminum and plastics, the demand for steel products remains sluggish. Steelworkers complain that their past wage gains have been eroded by the rising cost of living. It is in this setting that steel companies open full-scale negotiations with the United Steelworkers of America to replace the three-year contract which expires on July 31. There is a strong current of opinion that a strike or inflationary settlement—or both—is unavoidable.

The union, stirred by the militancy of younger workers, announced early that it wanted a “substantial” wage increase plus a cost-of-living bonus and other fringe benefits. The union, having won a 31 per cent pay increase over three years for can-manufacturing and aluminum workers said that amount was the least it would accept for the 450,000 Steelworkers. Such an increase, the steel industry estimated, would cost $700 million during the first year of the contract —about 40 per cent more than the $513 million after-tax profits it recorded in 1970. In these circumstances, it seemed inevitable that a general price increase for steel would follow a wage increase. Government economists in Washington warned that a large settlement would be as bad for the national economy as a lengthy strike.

President Nixon, who persuaded steel companies to trim a price rise earlier this year, summoned labor and management negotiators to the White House July 6 in an effort to “jawbone” against an inflationary wage and price increase. The importance of the meeting was emphasized by the fact that it was the first time during his presidency that Nixon had met simultaneously with both sides in any industry prior to national contract negotiations. With their magnetic pull on the Consumer Price Index, steel price increases could touch off another round of inflation. Nixon was being told in the press that his administration will win or lose its long fight against inflation in the steel case.

ISSUE TRACKER for Related Reports
Steel Industry
Mar. 05, 1982  Rebuilding the Nation's Steel Industry
Jul. 07, 1971  Steel Settlement
Jan. 06, 1965  Steel Wages and Prices
Dec. 27, 1962  Fortunes of the Steel Industry
Oct. 24, 1947  Steel Capacity
Sep. 02, 1944  Revision of the Little Steel Formula
Jul. 18, 1938  The Price of Steel
Aug. 19, 1933  The Steel Industry and Recovery
May 01, 1930  The Iron and Steel Industry
Manufacturing and Industrial Production
Unions and Labor-Management Relations