Stelco CEO warns of US steel strike risks

Labor negotiations at integrated US steelmakers could break down and lead to strikes as inflationand a tight labor market bolster union negotiating power, the chief executive of Canada's Stelco warned yesterday.

Integrated steelmaker Stelco's chief executive Alan Kestenbaum did not mince words when talking to a large steel industry group at the SMU Steel Summit in Atlanta, himself fresh from last-minute negotiations with the United Steelworkers (USW) that led to a new contract and avoided a strike.

Kestenbaum does not think many steelmakers understand that they need to address everyday problems such as inflation costs and rising interest rates that employees are having to bear.

"I'm not sure that everybody gets that in this industry," Kestenbaum said. "There's a lot of proud people on both sides of the table and I wouldn't be surprised if you see a couple work stoppages here or there and there's no question that the labor forces have received a lot of negotiating power and we need to respect that."

In the US, integrated steelmakers Cleveland-Cliffs and US Steel are in the midst of negotiations with the USW over contracts that expire at the end of August.

At Cleveland-Cliffs, the USW said approximately 12,000 members are covered by the contracts that apply to the former ArcelorMittal USA assets that Cleveland-Cliffs acquired in December 2020, including its integrated mills in Burns Harbor and Indiana Harbor, Indiana, and Cleveland, Ohio. At US Steel, the negotiations cover approximately 11,500 USW members at 10 sites, including all of its integrated steelmaking operations and its iron ore mines in Minnesota, according to the company.

Kestenbaum had to personally intervene last week to save his own company from a work stoppage, coming to an agreement with his hourly unionized workforce just days away from when they could have launched a strike.

"If you're spending $100 on a single tank of gas, it matters. These people that work for us, they're pretty well paid, but they're not making hundreds of thousands of dollars a year so they really are impacted by inflation," Kestenbaum said. "You have to have the human understanding of where their anger comes from. They're seeing companies making billions of dollars in profits, and these guys are struggling to make ends meet with rising mortgage rates, rising gasoline expenditures and so forth."

In 2021, the four publicly traded steelmakers in the US and two in Canada combined made more than $19bn, compared to a combined loss of more than $300mn in 2020.

He added that a strike, while eventually resolved, could exacerbate the issue of labor shortages.

"They have choices. If you're an electrician, if you're an electrical engineer, your skills are in massive short supply," Kestenbaum said. "The skills that we need in our facilities, they are in short supply. They can go work in construction, and they can go work for an oil company, and they can do all kinds of things that don't involve a steel mill."

"If they go on strike, you might not have workers," he said.

By Rye Druzin