By KEVIN NEVERS

ArcelorMittal’s invoking of the WARN Act on Friday—when the company announced the “potential” layoff in January of 2,444 employees at its Burns Harbor facility—is “a gun held to the head” of United Steelworkers (USW) Local 6787,  an attempt to coerce the membership into accepting permanent monthly concessions of $11 million.

That’s the view of Local 6787 President Paul Gipson, who told the Chesterton Tribune on Sunday that should ArcelorMittal actually implement the layoff as announced, it would be doing so in clear violation of Article Eight—the Earnings Security provisions—of the collective bargaining agreement.

Gipson also warned ArcelorMittal of the risk it runs in losing business down the road from customers who specifically want Burns Harbor, not East Chicago, product.

For its part ArcelorMittal cited production cuts, necessitated by the global economic crisis, in its announcement of the potential layoff. “ArcelorMittal recently announced that it has reduced production in North America 40 percent,” the company said in a statement released on Friday. “This is in line with the temporary global production cuts of approximately 35 percent announced as part of the company’s third-quarter earnings on Nov. 5. As a result, ArcelorMittal has notified the United Steelworkers (USW) and other required stakeholders—in accordance with the Workers Adjustment and Retraining Notification (WARN) Act—about the potential for an indefinite layoff of 2,444 employees at its Burns Harbor facility effective beginning the second half of 2009.”

“Potential workforce reductions are a direct result of the extraordinary economic environment we are facing and the company hopes to return workers to their jobs as market conditions warrant,” ArcelorMittal added. “This development is in no way a reflection on the professionalism and dedication of our Burns Harbor employees. ArcelorMittal appreciates their efforts and assistance during this challenging period.”

The WARN Act requires companies with 100 or more employees to give their workers a 60-day notice in advance of mass layoffs which do not result from a plant closing but will result in an employment loss at the plant during any 30-day period for 500 or more employees.

A layoff of 2,444 would constitute approximately 71 percent of the Burns Harbor facility’s represented workforce of 3,450.

In fact, Gipson said, Local 6787 has been in discussions with ArcelorMittal for some time, in an effort to find a mutually acceptable way to minimize or avoid any layoff. And Local 6787 did agree to one of the company’s stated requirements “to reduce costs and conserve cash”: the amending of three local agreements:

•Local 6787 agreed to suspend the Shops Agreement—which allows certain work to be contracted outside the plant in exchange for a guarantee of 56 hours of work per week for the Shops worker—but insisted on being notified of the work to be contracted.

•Local 6787 agreed as well to amend the two local agreements which guarantee certain levels of overtime and incentive earnings to steelmaking employees during the “Round Out Project” and to blast-furnace employees during the re-line, provided that the company review with the union the contractor work not yet completed.

But, Gipson said, ArcelorMittal made numerous other demands to which Local 6787 was unable to agree:

•A unilateral right to assign employees across departments and seniority units.

•A reduction of all incentives to a maximum of 20 percent and without a minimum, including the elimination of red circles.

•While Local 6787 did agree to canvas the plant in an attempt to achieve 500 voluntary layoffs from among its membership, the company refused to “share the sacrifice” and implement a similar program for 100 non-union employees. Gipson estimated the total management workforce at Burns Harbor at around 700, or nearly double the 380 in the days of International Steel Group.

In short, Gipson said, ArcelorMittal would be in violation of Article Eight of the collective bargaining agreement if it were to pursue the 2,444 layoffs, in particular the provision which requires “a meaningful program of shared sacrifice by management, including senior management.”

Would a judge agree that ArcelorMittal would be in violation of the contract? “I think so,” Gipson said, “I think a judge would say the contract is clear.” He added that he is seeking legal advice from the USW International legal department “regarding our rights under Article Eight.” Local 6787 will continue to negotiate, he observed, would submit its dispute with the company to arbitration, but “I also think this is something for the courts.”

More to the point, Gipson expressed the belief that ArcelorMittal is using the economic downturn as a “burning platform” to force Local 6787 to make permanent concessions. “This is an opportunity to get what they wanted in contract negotiations,” he said. “They want $11 million worth of monthly concessions from us. Eventually the market will come back and then the company will be in a position to make a lot of money. I look at the concessions we’re willing to make as a temporary loan. We’d need a measuring stick. We’d be willing to take a look every 30 days, 60 days, and see if we’re back to certain levels of production.”

A layoff minimization plan could be crafted, Gipson said—which no one at Local 6787 would particularly like but would nevertheless accept both its necessity and legality—yet ArcelorMittal is being intransigent. “They don’t want to manage. It’s like it’s too difficult for them. With the amount of money we’ve made the company in the last two years, you’d think they’d be a little more cooperative.”

“We’re not trying to be hard-nosed,” Gipson also said. “You’d have to be a complete idiot not to recognize that there’s a big problem with the economy. But I guarantee (ArcelorMittal Chair and CEO Lakshmi Mittal) won’t post a negative profit in the fourth quarter.”

“He’s not the only steelmaker in the country,” Gipson added, “but he’s the only one taking such drastic actions at a modern integrated plant.”

If a mass layoff is truly necessary, Gipson remarked, “the human, the right, thing to do” would be to spread it across ArcelorMittal’s other North American facilities, including the former Inland facility at East Chicago. But Burns Harbor’s cost per ton is higher than East Chicago’s, he said—formerly Burns Harbor could take deliveries of iron ore, coal, and scrap cheaper at the Port of Indiana more cheaply than East Chicago could but that differential is now one of a few cents—and so the company is targeting Burns Harbor. “It’ll be a swinging plant, the first to go down, the last to go up.”

Gipson, however, doubts whether East Chicago can make a quality of product as high as Burns Harbor’s, and he doubts too whether ArcelorMittal’s customers who have traditionally purchased Burns Harbor product will think so either. A layoff at Burns Harbor would not only “be bad for the steelworkers and the community,” he said. “It would be bad for the relationship with our customers and future customers. They’re not going to like this. They’re going to be pissed.”

Gipson did say that no one should expect a miracle if Congress were to enact a bailout package for the Big Three automakers. “It will help but it wouldn’t be immediate. It would take three months for the impact to take effect. As quickly as this came on top of us, it’s not going to leave that fast. Anything we touch anymore is made of steel. It’s bad.”

“The impact this is going to have on Porter County and LaPorte County will be horrible,” Gipson concluded. “We’re the largest employer.”

In the event of a layoff, Gipson said, any member of Local 6787 with two or more years of service would be entitled to a minimum of $250 per week sub-pay as well as state unemployment benefits and would still receive health care.

Posted 11/24/2008