Contracts between three giant mining companies on the Iron Range and the United Steelworkers of America will expire at midnight Friday, and an apparent stalemate threatens to set in motion a strike that could disrupt the nation's steel supply.
The five mines employ about 3,000 union workers and one, Cliffs Natural Resources, has already made arrangements for temporary replacement workers in the event of a strike.
The company operates three of the big six traditional iron ore mines on the Range. NorthShore Mining is non-unionized. But Hibbing Taconite and United Taconite in Eveleth together employ nearly 1,100.
"In our efforts to continue that commitment, we have a contingency plan in place, and that does include temporary workers to keep our operations going in the event of a work stoppage," said Sandy Karnowski, a spokeswoman for Cliffs Natural Resources' Minnesota operations.
She said the company is committed to providing iron ore to its customers and has trained replacement workers on stand-by.
Details on the specifics of the contract dispute were not available, as the three companies involved — Cliffs, US Steel and ArcelorMittal — all declined to provide details.
Union officials at Steelworkers Local 2705 report that food trailers arrived in Hibbing yesterday for replacement workers. Leaders of the local declined to comment, but in a message to members yesterday, President Frank Jenko accused Cliffs of trying to intimidate the union by lining up replacement workers.
Jenko also wrote the company has rung up hundreds of millions of dollars in profit in recent years, and quote, "they are making every effort to screw you out of your much deserved benefit and pay increases."
Karnowsky said the steelworkers have shared in that success through the company's profit sharing plan. But she said the new four-year contract has to reflect the inevitable ups and downs of a volatile industry.
"We need to come up with a cost structure in this contract that can be supported in some of the more difficult times within what is historically a cyclical industry," Karnowski said.
The taconite industry in northeast Minnesota has enjoyed a renaissance in recent years. Booming construction in China and India have fueled near-record prices for iron ore, investment and job growth on the Iron Range, and huge profits for mining companies.
Although the boom has tapered off over the past year as overseas demand for steel has slowed, the industry on the Iron Range remains healthy, said Tony Barrett, an economist at the College of St. Scholastica in Duluth.
"It's sort of a modern success story the way the mines have become incredibly productive," Barrett said.
Barrett said the unions and management generally get along well.
"But this is a union contract, and it's always a wild card as to what's actually going to happen," he said.
But a strike may not be imminent. Wayne Ranick, a spokesman for United Steelworkers International in Pittsburgh, said the union has not yet authorized a walkout at any of the companies.
"That generally requires the bargaining committee teams to go back to their home location, to conduct membership meetings, talk about the status of negotiations, give a complete update, then ask the rank and file at their local whether they would authorize a strike if need be," he said.
Ranick said negotiations are progressing well with US Steel, which employs more than 1,500 people at its Minntac and Keetac mines on the Iron Range. But Ranick describes discussions with ArcelorMittal as much more contentious. The steel giant's Minorca Mine in Virginia employs 310 union members. While that's the smallest labor force among the Iron Range plants, the company is a major supplier of steel in the United States.
Dave Phelps, president of the American Institute for International Steel, said a work stoppage at ArcelorMittal would result in a severe shortage of steel in the U.S. market.
"It would be a very, very big deal, and depending on how long the strike goes, there is capacity around the world that could step in and fill the gap," he said. "But you're talking about a minimum of 10 to 12 to 14 weeks before that steel starts to come into the US market."
Phelps said he's optimistic there won't be a strike. He predicts labor and management will extend the old agreement to work out their differences, if they can't reach a new deal by midnight Friday.
Ranick, of the steelworkers union is similarly hopeful.
"It almost takes a deadline to get you really focused," he said.