Union Calls Initial Meeting “Unacceptable” – August 31st is the Deadline

On August 31, 2012 the union contract between ArcelorMittal and the United Steelworkers Union will expire. Negotiations have started and the Company did not make any new friends with their preliminary proposal.

The following is the content of a letter from the United Steelworkers (USW) to the membership regarding the ArcelorMittal contract negotiations which began late last week. Below is the content of the USW letter:

On Wednesday, May 29, 2012 your negotiating committee met for the first time with ArcelorMittal Management to reach a new Basic Labor Agreement. Without a formal update on the state of the business, the Company proposed to reduce wages and benefits by more than $28.00 per/hour, including a proposal to make further cuts if they determine it to be necessary due to a future down turn in the business cycle. In addition, the company also proposed the following changes:

Labor Grades/Incentives

o Redesign incentive plans and Labor Grades which will drastically reduce earnings and lower incentive opportunities.

Health Care

o Eliminate retiree healthcare for employees hired after 9/1/2012.
o Discontinue all VEBA contributions and increase healthcare premiums for current and future retirees.
o Require the Union to waive the right to bargain over retiree healthcare in the future.
o Reduce active employee benefits to the same level as salary benefits including contributions to the health care program and elimination of vision coverage, and allow the company to change our health care benefits at any time.
o Reduce life insurance coverage for retirees and actives.

Pension

o Freeze the Inland Pension Plan with no future increases.
o Allow the Company to withdraw from the Steelworker Pension Trust (SPT) retirement plan.
o Employees hired after 9/1/2012 will no longer have a pension plan and would only receive 401K matching contributions.
o Eliminate Surviving Spouse Special Payment.
o Discontinue the $10,000 special payment to SPT eligible retirees.

Other Economic Issues

o Reduce SUB payments by 20% across the board.
o Eliminate Voluntary Lay Off options.
o Give the company the unilateral right to cut wage rates during periods of reduced operation.
o Increase the SUB eligibility to 5 years.
o Eliminate the minimum SUB payment.
o Reduce S&A Benefits to 60% of Base Pay only.
o The company wants the right to unilaterally schedule 32 hour work weeks.

Management also made proposals that would in effect eliminate seniority on the job and restrict our transfer rights. They would also reduce some maintenance Labor Grades and require Labor Grade 5 positions to be craft qualified. They propose to eliminate all shops and be able to have discretion to contract out any work they deem appropriate.

Your Negotiating Committee made it clear to Management that their proposals were unacceptable and that if they continue to insist on rolling back our contract, after all the contributions we have made to build this industry, we would not be able to reach an agreement. We also reminded them of the $3 billion dollars in capital commitments and $3 billion in repair & maintenance capital that was committed to us during 2008 negotiations, and that if they had lived up to these commitments they would have performed far better over the last 4 years.

We have developed a strategy to obtain a fair and equitable contract that respects our past and secures our future. We are committed to bargain a successful labor agreement that provides for the sustainability of our facilities and protects our standard of living. Your support and solidarity is the foundation of our success and we will keep you updated as we continue bargaining.

USW Negotiating Committee

David McCall, Chairman & Jim Robinson, Secretary

ArcelorMittal Response:

A spokesperson for ArcelorMittal responded to Steel Market Update request for information regarding the negotiations and their position with the following statement:

ArcelorMittal USA is committed to working with the United Steelworkers (USW) to reach a fair agreement that creates a sustainable future for the Company and its workforce. Together, ArcelorMittal USA and the USW issued a publication to the workforce in August 2011 describing the challenges facing the parties in today’s industry, with a joint call for change.

In order to close the competitive labor cost gap between ArcelorMittal USA and non-union mini-mills, enable the business to become sustainable through the entire business cycle, and attract investment, the Company has identified the following four areas to be evaluated during the negotiations process:

•    Increasing shop floor flexibility and employee engagement
•    Transitioning to a lower and more variable cost structure
•    Implementing changes in benefit programs
•    Maintaining industry-leading pay through industry-leading performance

ArcelorMittal launched a publicly accessible website that provides factual information about the industry, ArcelorMittal USA and predecessor companies, and the opportunities and challenges facing the business at www.TransformingArcelorMittalUSA.com.