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AEIF weighs talks on AK competitiveness

By Joseph Roberts, Journal Staff Writer, E-mail:

Leaders of the Armco Employees Independent Federation next week will begin discussing a request from AK Steel Corp. to enter talks that could change the workers’ contract.

AEIF President Ed Shelley said that the union is interested in avenues to help the company be more competitive that do not involve the contract, but he said changes are possible.

“We’re not looking for concessions,” he said. “We are looking for ways we might be able to help.”

An industry analyst said such requests are uncommon, but he was not startled by the overture.

“I don’t think we should see this as a surprise,” said Leo Larkin, who is an equity metals analyst for Standard & Poor’s. “It’s very unusual, but less so in this current environment,” he said.

Larkin said that recent mergers and acquisitions in the steel industry have allowed AK’s competitors to lower their labor costs. He said AK must do the same to stay a viable competitor.

“They have to lower their costs. They have to at least be as low as their major rivals,” he said.

AK Steel Vice President of Public Affairs Alan McCoy agreed that acquisitions out of bankruptcy have lowered the costs of other steel companies.

“Much of our competition today is operating assets that they acquired without the burden of legacy costs” such as pensions and health care for retirees, he said. “We have to find a way to be more competitive.”

However, McCoy said he did not think the request was a rare one.

“I don’t think it’s unusual that companies, whether they’re steel or auto or airlines ... would seek dialogue with their unions and other employees to talk about being more competitive,” he said.

Shelley cited AK’s issues with the federal and state environmental protection agencies as an example for possible collaboration.

“Maybe lending some support there could be a possibility,” he said. “There are areas I think we can look at.”

Shelley recalled an incident with a customer, which occurred in around 1991, when the union and the company had worked together to resolve a problem.

“We were producing a quality product, but it wasn’t the improved quality our customer was looking for,” he said. The AEIF had encouraged AK to send its employees to visit the customer’s workers and to speak with them directly.

“From that we have become even better,” Shelley said. “We lead the industry in the quality of our steel. We’ve become a very quality-conscious workforce.”

Shelley said the AEIF’s 12-member executive committee — of which the president is a member, though he only votes as a tie-breaker — will first discuss the request.

“I think that we should give this request full consideration,” he said. “I am certain that will occur.”

The committee then decides whether to enter discussions with the company, and informs union members and AK of the choice. Shelley said the talks, if embarked on, likely would take place during the summer.

Shelley also said the union and the company would have to agree that the current contract would stay in place unless both parties agreed to changes. Any revisions, he said, would be presented to the workers’ approval for a vote.

“Should we make any changes, it would be subject to ratification,” he said. Shelley said other initiatives not involving the contract “could possibly be taken for some form of approval.”

Larkin said he could not recall an instance where a union agreed to reopen a contract, but said he believes the AEIF will have to consider entering talks with AK.

“I don’t think there’s any choice,” he said.

Published 06.07.03



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