Two Large Unions In Industrial Sector to Merge

By PAUL GLADER and KRIS MAHER
Staff Reporters of THE WALL STREET JOURNAL

TWO OF NORTH AMERICA'S LARGEST industrial unions have agreed to merge and create an 850,000-member union, the largest dedicated to the manufacturing sector.

Manufacturing has lost millions of jobs in recent years, due in large part to consolidation and outsourcing, and has struggled with high retiree costs.

The combination of the United Steelworkers and the Paper, Allied Industrial, Chemical and Energy Workers International Union, or PACE, is the latest and largest of several mergers among industrial unions in recent years. This consolidation trend comes amid dwindling employment in U.S. manufacturing. Between 2000 and 2003, manufacturing output dropped 6% in the U.S. and manufacturing employment fell by 2.6 million jobs, according to the Department of Commerce.

"Our manufacturing jobs are going overseas. We are dealing not with just domestic companies anymore but international companies," says PACE President Boyd Young, who will be international vice president of the combined unions. The consolidation needs a simple majority approval of union delegates meeting in April and is expected to be instituted over five years. PACE has 275,000 members.

The new union will be the sixth largest within the AFL-CIO. The nation's largest union, the National Education Association, with about 2.7 million members, doesn't belong to the labor federation.

Leo Gerard, international president of the 575,000-member United Steelworkers, would be president of the merged organization, which will be formally called the United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union but will be known as the USW. Mr. Gerard has been critical in enabling troubled steelmakers to consolidate by creating trusts to help cover legacy costs, mainly health and retiree benefits, and reducing the number of job classifications at industrial plants.

The union sector is as fragmented as many parts of the industrial sector as a whole and in need of consolidation. Under Mr. Gerard's leadership, the United Steelworkers has added lumber and health-care workers. He sees union consolidation as critical given dwindling union membership and revenues.

About 15.8 million, or 13%, of America's wage and salary workers in 2003 were union members, down by 369,000 from 2002, according to the Bureau of Labor Statistics. Union membership has dropped from a high of 20% of all workers in 1983, largely as a result of changes in technology that have reduced the need for union workers, as well as the moving of plants and capital to other locations.

"Given the diminishing resources that industrial unions have to draw upon, [this union merger] makes perfect sense," says Michael Leroy, a labor professor at the University of Illinois. "It is a belated recognition of the consolidation of corporations in their respective industries. They are several years behind the curve on that." He says the benefits of union consolidation include greater funds to support strikes and more extensive databases to research contracts and labor trends.

Unions have lost members due to job losses, but they have also had difficulty organizing. "One reason is that management is adroit in avoiding unionization," says Marick F. Masters, professor of business administration at the University of Pittsburgh. Another factor, he says, is that companies frequently offer wages and benefits that are equivalent to what unions negotiate "and that discourages employees from wanting to join a union in the first place." But the merged union faces significant hurdles, in Prof. Masters's view. "A merger makes you look bigger; it doesn't make your problems go away. In some ways, you could say you've got the problems of two unions rather than one."

One big issue for the combined unions is health-care costs for current and retired workers, numbering about 400,000. "Every member of our union and every member of society needs affordable health care. It is a huge objective for our unions now and a huge objective for our merged union," says Mr. Gerard.

© 2005 Wall Street Journal