McDonald Steel employees will receive 15 percent pay raises and won't have to pay for health insurance.
THE VINDICATOR, YOUNGSTOWN
By DON SHILLING
VINDICATOR BUSINESS EDITOR
MCDONALD -- The first union contract at McDonald Steel Corp. will change the way workers and management relate but won't alter the way they process steel, officials said.
The 39-page contract includes a grievance procedure to settle differences, but work rules will allow the mill to operate as it has since McDonald Steel was founded in 1981.
Chris Colello, president of Teamsters Local 377, said at a news conference Tuesday that the grievance procedure gives workers a voice at the plant for the first time.
Instead of interfering with the way management runs the mill, the grievance procedure should help, he said. By giving workers a way to air concerns, the procedure should lead to improved labor-management relations and productivity, he said.
Besides, nearly all concerns will be resolved at the first step, a meeting between a supervisor and a worker, he said. Unresolved grievances can be taken to other steps, the final one being a hearing with an arbiter.
Bill Clark, McDonald Steel's manager of operations, said the contract will not hamper plant operations and it may even help to have procedures clearly listed.
Thomas Kantor, company president, admitted that at the start of negotiations plant officials were concerned union officials would push for burdensome work rules.
The end result, however, will allow the company to operate efficiently, he said. The contract doesn't have work rules that limit workers to one particular job, so workers will continue to perform various jobs, he said.
Dennis Brubaker, staff representative for the United Steelworkers of America, said negotiators started with the existing employee handbook because they wanted to allow the plant to continue operating the way it had.
Fought against union
McDonald Steel, which has 130 hourly workers, had fought union representation over the years, and workers rejected unions in three votes in the 1990s. In 2000, however, they approved being represented jointly by the Steelworkers and Teamsters. Workers approved their first contract Saturday.
The deal increases wages and benefits, but Kantor said the company will benefit from the stability of having a five-year contract and the increased productivity that should result from an improved gain-sharing plan.
The contract gives workers a 50 percent split of certain increased revenues, instead of 33 percent.
The average hourly pay of workers will increase from $12 to $14 under the contract. There is a lump sum payment of between $1,000 and $2,500 in the first year and raises of 4 percent, 3 percent, 3 percent and 5 percent in the following years.
Colello said the company is increasing its payment for benefits by the equivalent of $5 an hour because of increased contributions to a 401(k) retirement plan, gain-sharing and health insurance.
By joining the Teamsters health plan, workers also will not have to pay anything toward premiums. They had been paying 25 percent.
Cost to company
The company said the contract will cost it $2 million over five years.
Despite the increased costs, Kantor said the contract should help the company return to profitability because it will help it receive bank loans for equipment purchases.
A new $6 million furnace that is planned will reduce operating costs by replacing two, 76-year-old inefficient furnaces, he said.
McDonald Steel processes steel for a variety of uses, but more than 40 percent of its products are truck rims.
Kantor said a $1.5 million bar straightening machine will help the company build up its business in making hinges for cars and trucks. The company had been doing significant business in that area but stopped because of price cuts demanded by automakers, he said. The new equipment should help the company return to that business profitably, he said.
McDonald Steel is continuing to invest despite posting its second straight money-losing year. Kantor said the company broke even on its operations in the fiscal year that ended Sunday, but accounting charges related to inventory will result in a loss about half as big as the previous year's loss of $899,000.
Kantor said he is expecting a profit of perhaps a couple hundred thousand dollars in the fiscal year that just started.