Final Thoughts

But the union and US Steel remain at loggerheads. A prior contract between the USW and the Pittsburgh-based steelmaker expired on Sept. 1.

USW members continued to report for work at the time this article was written. So how long can the limbo between a contract expiration and a new deal last? Quite a while if talks between the USW, Stelco and Algoma provide a taste of what’s to come in the US.

Recall that Stelco’s labor agreement with the USW expired on June 30 and that Algoma’s pact with the union expired at the end of July. The union and the steelmakers didn’t settle their differences until the end of August with the ratification of new labor agreements.

Does that mean that talks between the USW and US Steel could drag on into early October or early November before a deal is eventually hammered out? That’s possible if recent history is any indication.

Rewind to the last set of talks in 2018. ArcelorMittal USA (now part of Cliffs) and US Steel kicked off talks with the USW in early/mid-July of that year. They continued talks passed a Sept. 1 deadline. Strike votes were authorized by USW members later that month. And by mid-October the USW was threatening to strike at ArcelorMittal. 

Right around the same time—on Oct. 15, to be precise—the USW and US Steel agreed to a new tentative labor contract. Would ArcelorMittal play hardball with the union? No, or not for much longer. ArcelorMittal agreed to a new tentative agreement with the USW on Nov. 2.

Why do I mention that now? There are plenty of reasons to think that this time is different, and in some cases for reasons particular to US Steel.

The steelmaker has shifted investments away from its union-represented Mon Valley Works near Pittsburgh to Big River Steel, its non-union EAF sheet mill in Arkansas. And USW statements indicate that US Steel is not willing to match what it sees as the more favorable terms provided to the union by Cliffs.

Here is the catch: If Cliffs has a deal with the USW and US Steel does not, a strike or lockout could effectively mean handing over business to Cliffs or other mills. How long could US Steel afford to be the only steelmaker in the US and Canada with a labor disruption?

There are risks for the USW too. The steel market is not nearly as hot as it has been for the last two years. Could a strike speed the idling of facilities that otherwise would have continued operating for longer? 

I don’t know the answer to those questions. And I hope it doesn’t come to that. It’s in no one’s interest for the union-represented US steel industry to be seen, fairly or not, as an unreliable supplier.

Besides, that’s hardly the only potential labor disruption that should be on your radar. A much bigger labor conflict looms between major railroad companies and unions representing rail workers.

A “cooling off” period between the two sides ends on Friday. Congress could force everyone to continue working past that deadline. But there is no guarantee that it will.

Port congestion might finally be easing. Are we about to reinject fresh chaos into the supply chain via rail instead?

The smart money doesn’t appear to be on a major disruption. That said, if we’ve learned anything over the last two years, it’s that things (wars, pandemics, prices) don’t always go according to plan. So it will be important to keep close tabs on that one in the days ahead.

By Michael Cowden, Michael@SteelMarketUpdate.com