Arbitrator sides with union in Gerdau back-pay case

When Gerdau-Ameristeel acquired ownership of the North Star Steel plant in Calvert City, Ky., on Nov. 1, 2004, it assumed the labor agreement that had been in place with United Steelworkers (USW) Local 9447-5 since March 2002. The agreement required profit-sharing to be paid, based on 4 percent of before tax profits. However, Gerdau claimed the profit-sharing program was discretionary and refused to pay it, indicating that it wanted to treat its union work force the same as workers in its non-union plants.

Arbitrator Jerry Fullmer's ruling July 24 said that Gerdau's refusal to pay the profit-sharing was a violation of the labor agreement. Back pay, estimated at more than $2 million, must be paid to the 120 USW members within 60 days. Fullmer also ruled that Gerdau must also cease and desist from violating the contract any further by refusing additional profit-sharing payments.

"Our members are ecstatic with this victory," said Brian Graves, president of the local union. "We worked hard to make these profits and Gerdau tried to deny our share. Our members have never been more proud to be part of this union. This decision, more than anything, shows the difference in union workplaces and non-union shops."

"We have had nothing but problems with Gerdau's management since they have acquired steelmaking properties in the United States," said USW International president Leo W. Gerard. "They've attacked contract provisions at many locations in a vicious attempt to break our union. We've beat them in Kentucky and we will come out on top wherever they present us with a challenge."

"The one thing that Gerdau knows is that the USW will fight for its members," he said. "We will get our due and we will keep up the fight until we get fair and equitable settlements at all locations where talks are being held."

USW labor agreements have expired at seven Gerdau locations, including three Sheffield Steel plants recently acquired by the company. Workers at each location continue on the job but may strike if bargaining fails to reach settlements.

"Gerdau has played the same game with our profit-sharing at other locations," said Jim Stewart, lead negotiator for the union. "This money belongs to our members but the company refuses to pay it. Gerdau's management holds the money as ransom, telling our members that it will be paid as soon as new labor agreements are settled. Our members are not fooled by this tactic. They know the money belongs to them. Now, with this victory in Calvert City, we will go to arbitration at other locations if we have to."

The seven locations where contracts have expired include Beaumont, Texas; St. Paul, Minn.; Wilton, Iowa; Perth Amboy, N.J.; and the three Sheffield Steel plants at Sand Springs, Okla.; Joliet, Ill., and Kansas City, Mo.

The USW represents some 3,000 Gerdau employees at 13 locations in North America.