In a closely worded 111-page decision, Judge Albert Metz ruled that Rocky Mountain Steel is in violation of more than 100 federal labor laws. He ordered Oregon Steel, the mill's Portland-based parent company, to reinstate the strikers and reimburse them for all lost wages going back to December of 1997.
The ruling comes three years after the union steelworkers went on strike, claiming the company wasn't negotiating with them in good faith. The strikers offered to return to work several months later, but in violation of federal labor laws, the company refused to reinstate them and the workers subsequently sued.
"This is a major decision and a great victory for 1,000 union workers and their families," said a jubilant Ernie Hernandez, president of USWA Local 2102, one of two union shops that sued. "This strike has been closely watched by both the corporate world and America's 13 million union workers. This ruling will strengthen union morale throughout the U.S."
The victory, however, could end up having a hollow ring for the Pueblo workers. Oregon Steel has vowed to appeal the ruling to the furthest extent of the law, a process that could drag out the dispute another five to seven years.
USWA officials claim the NLRB ruling makes Oregon Steel liable for $121 million in back pay, with that amount increasing at a rate of $1 million per week. In going the appeal route, they say, Oregon Steel could end up accumulating back pay liabilities in excess of $300 million -- a high-risk strategy, given that federal appellate courts uphold NLRB rulings in 80 percent of the cases that come before it.
"I don't understand their thinking," said national USWA spokesman John Duray. "Prior to the strike, Oregon Steel was in spectacular shape. They had a good product mix and profits in excess of industry standards. They were one of the better-positioned steel companies in the U.S. and the Pueblo mill was accounting for 70 percent of their profits.
"Since the strike," he continued "that mill has lost $63 million, a unit of the operation has been sold, the work force has shrunk from 1,100 to around 500, and Oregon Steel stock has crashed from $28 to as low as $1.84 a share," he said.
"What's sad is that they could have settled early on for a fraction of the $120 million they owe now and spent the past three years making money hand-over-fist," he added. "Why stockholders haven't demanded their heads is beyond me."
Everyone's a loser
Oregon Steel spokesperson Vicki Tagliafico dismissed Duray's assessment as "union propaganda," blaming recent losses on a depressed steel industry.
"The strike hasn't had any affect on plant operations," she insisted. "What's happened is that the markets for rail and rod have been severely depressed by high levels of imports. Rod prices alone have fallen $60 to $70 a ton, the entire profit margin of that part of our operation."
Tagliafico doggedly maintains, meanwhile, that Oregon Steel will never have to pay a penny of back pay because the company will prevail in appellate court. "The facts overwhelmingly support our position," she insisted.
Regional National Labor Relations Board director Allan Benson took issue with Tagliafico's assessment, however. "This is a detailed, closely worded and well-written decision that came after six months of exhaustive hearings and deliberations," he said. "The judge upheld the plaintiff on almost every point, and federal court rarely overturns NLRB rulings."
The NLRB is the federal agency that mediates disputes between employers and unions.
Tim Brown, an analyst with D.A. Davidson, a Portland brokerage firm that has closely followed the Oregon Steel saga, agreed that the company's back pay liability is likely to be substantially less than the amounts projected by USWA officials.
"It's hard to say how much it will up be," he said. "But there's no question that the situation is a huge drag on their stock and makes it impossible for them to sell the company. They'd have been a lot better off settling early on.
"It's a terrible business situation and dragging it out for five, six, seven years is not a pretty prospect. The company, the union, the shareholders are all losers."
Talk of bankruptcy
Brown said there's been "some talk" that the company would declare bankruptcy to avoid paying the fines and back pay, but he doesn't see that as a strong likelihood.
"Chapter 11 could become an outside possibility were there a huge final judgement against them," he said, "but I think, based on the current situation, that that route is highly unlikely."
So does Duray. "There are far too many downsides to using bankruptcy as a strategy for getting out of back pay liability," he said. "You lose control of your company. The creditors appoint trustees who scrutinize operations of the business and make all sorts of investigations into finances. They can sell the company, or parts of it. And even were they to declare bankruptcy, our workers would be first in line for payment."
Tagliafico vowed that the displaced Pueblo strikers will not get their jobs back any time soon, NLRB order or no.
"We fully intend to defend our right to retain the replacement workers," she said. "They're the most productive in that plant's history and we need them to implement our strategic plan as we move into manufacturing specialized products."
Both sides profess eagerness to negotiate a "fair and reasonable settlement," even while accusing each other of sabotaging that possibility.
"We'd certainly negotiate with them were they to make an overture," said Terry Bonds, director of USWA District 2, which covers the Southwest from Arkansas to California. "But they've never indicated the slightest interest in negotiating a truly fair and reasonable settlement. If they had, we'd never have gone on strike."
"We're willing to sit down with the union any time, anywhere," countered Tagliafico. "But to demand full reinstatement, back pay and an extremely expensive pension plan is ridiculous. It's a lot better for us, economically speaking, to fight than to settle on those terms."
A short-term resolution may come by way of a court injunction.
"I'm optimistic that the regional NLRB will ask for a temporary injunction to force Oregon Steel to put the strikers back to work," said Hernandez. "Management has vowed that they'll never do that, but there's such a thing as contempt of court."
Hernandez, meanwhile, exudes quiet confidence. "This is the zenith of three years of struggle," he said. "We're right and we're winning."
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