NAFTA's great divide Bethlehem Steel managers favor pact that workers fear


BETHLEHEM, Pa. -- The $383,333-a-year chairman of Bethlehem Steel has read the North American Free Trade Agreement cover to cover and says the deal is good for his customers, good for his company and good for his country.

"The important thing is for American employers to seize the day," Curtis H. Barnette says.

The $19-an-hour machinist at the Sparrows Point steel plant has followed the national debate and now follows her union in opposition to the accord because she says NAFTA is bad for workers, bad for her company and bad for her country.

"If this bill passes, what kind of industry are we going to have left in America?" Sandy Wright says.

The NAFTA debate at Bethlehem Steel mirrors the intellectual and political struggle played out by American business and union workers in the final days before the U.S. Congress votes on the trade package.

Virtually every major corporate leader has lined up to support the trade deal. And standing in opposition are a united front of labor unions.

American businessmen look south to Mexico and see opportunity, while American workers also look south and see the competition of a low-paid work force threatening to take their jobs.

Which view of life with NAFTA is correct?

The answer may not be known for years, even though the debate simmers in board rooms and on shop floors.

But come to Bethlehem Steel, once the very symbol of U.S. economic might, and the philosophical divide between management and labor takes shape and focus.

The two sides are not discussing the past.

They are debating the future.


From his executive suite atop a steel gray 21-story office tower in Bethlehem, Mr. Barnette has a grand view of late fall in the rolling Lehigh Valley.

But these days, the chairman's gaze is cast continent-wide, as he awaits the vote on NAFTA.

According to Mr. Barnette, Bethlehem Steel is poised to reap benefits from a free-trade deal that binds the United States, Canada, and Mexico.

The target of opportunity, Mr. Barnette says, is Mexico, a country on the verge of massive infrastructure investment, the likes of which hasn't been seen in this hemisphere since the United States began construction on the interstate highway system in the 1950s.

Mr. Barnette talks of autos, heavy equipment, light building materials, even tin soup cans washing over Mexico, all made with steel manufactured from places like Sparrows Point.

"We can compete," says Mr. Barnette, a member since 1989 of the presidentially appointed Advisory Committee on Trade Policy and Negotiations.

"We can be low-cost and high-quality. We can hold our business in this country."

At first glance, there is a certain irony in Mr. Barnette's support of NAFTA and free trade.

Mr. Barnette worked for 25 years in Bethlehem Steel's legal department and played an instrumental role in lobbying the federal government for import quotas that kept overseas competitors at bay while bolstering the U.S. steel industry in the late 1980s.

Back then, import quotas were a means of survival for Bethlehem Steel.

From being the broad-shouldered linebacker of a brawny American industrial economy, the corporation was ravaged by overseas competition and lack of innovation, forced to endure a painful restructuring that saw plants close and employment shrink from 122,000 in 1974 to 21,000 today.

Mr. Barnette says he is "for fair trade," explaining the Voluntary Restraint Arrangement quota system that expired in March 1992 was needed because U.S. steel producers were competing against government-subsidized overseas companies.

"In NAFTA we preserve U.S. trade laws," he says. "We will have fair trade with Mexico and Canada."

Fair trade in North America, Mr. Barnette says, will mean big business for Bethlehem Steel, even though exports now account for only 5 percent of the firm's overall business.

The reason for the NAFTA boom is simple, he says: Bethlehem Steel's domestic customers want the agreement.

"There is no job security for any company in the U.S. unless we have customers," he says. "Our customers are telling us they want NAFTA passed and they want U.S. products."

But Mr. Barnette says he understands the concerns of his employees, men and women who have seen first-hand the affects of American deindustrialization and now fear that NAFTA will lead to a further loss of U.S. manufacturing jobs.

NAFTA, he says, will be a job creator in America.

"Reasonable people can have different points of view," he says.

TC In Mr. Barnette's view, it will be U.S.-made steel in U.S.-made products that will flow to Mexico.

Mr. Barnette says that not even the lure of a low-paid work force would entice steel companies to make the billions in capital investments to move south of the border.

"You just don't spend $100 million and make tin plate," he says. "Or a billion dollars to make coated sheet products."

In the end, he says, NAFTA is good, very good, for America. "Mexico is going to change," he says. "It is going to change with us or without us. I want it to change with us."


Sandy Wright, two of her co-workers and two of her union leaders are gathered inside the Dundalk headquarters of local 2610 of the United Steelworkers of America.

They are discussing NAFTA, listing, as if by rote, all the objections the AFL-CIO has toward the agreement:

* That NAFTA will lead to the loss of 500,000 manufacturing jobs in the U.S.

* That labor wages in the U.S. will be depressed.

* That the environment of America's southern border will be further exploited by Mexican factories.

But beneath the carefully crafted objections there is genuine anger and fear.

"Where are the people going to go to get a job?," Mrs. Wright says. "Are we going to go to Mexico to live? I hope not."

With 17 years' experience at Sparrows Point, Mrs. Wright has lived the downsizing of Bethlehem Steel.

She hears business leaders and politicians extol the virtues of NAFTA. She is not impressed.

"It would be OK if we could all be bankers or senators or congressmen or presidents," she says.

"We're the American worker. What are we going to do? Will this be the elimination of the working people of America?"

Bernie Brennskag, an electrician who has worked 21 years at Sparrows Point, is even blunter.

"Who says Sparrows Point has to last forever?" he says. "We make tin sheet for cans. What if the can industry goes south? Then what?

Harry Spedden, a union staff representative, says that initially, Sparrows Point and Bethlehem Steel may enjoy a resurgence in business if NAFTA is passed and the Mexican economy booms.

"But we would be taking a loss, a big loss later on," he says. "We have learned management will do anything to make a quick buck a short quarter."

More hopeful for the future is Joe Butler, a maintenance technician who started work at Sparrows Point in 1955, when the mill employed more than 30,000.

Now, he's one of the last of the old-timers, still on the payroll with 5,500 others.

"I believe we can make the steel mill a world-class operation and compete against anyone," he says. "We have the manpower and the skill. We're innovative and flexible. We don't check our brains the clock house anymore. We bring our brains in the plant with us."

Skill, guts and U.S.-made quality, those are ingredients Mr. Butler says can keep one plant alive, can help U.S. workers retain their jobs in an ever-changing economy.

Dave Wilson, District 8 director of the USWA, takes another view of NAFTA, though. It's political. He is counting votes in Congress, trying to get the deal killed.

While he is not surprised that the Bethlehem chairman is on the NAFTA bandwagon -- "Barnette is not anti-American; he's pro-business," he says -- Mr. Wilson is more than a little disgusted with any Democrat who dares vote for the agreement.

Mr. Wilson said he tried to get that message across to two Maryland congressmen, Thomas McMillen and Benjamin L. Cardin, in the summer of 1992. The union leader said both men appeared to be leaning toward support Mr. Wilson's union then refused to support Mr. McMillan, who lost his bid for re-election.

Just last week, Mr. Cardin announced his support for NAFTA.

"I told them both, them, to go to Mexico, to get the people of Mexico to vote for them," Mr. Wilson says.


For management, for labor, the NAFTA vote is serious, serious business.

Mr. Barnette will go to Washington this week to rally support for NAFTA.

A win, he says, means that "strategically, we will know that a new era has arrived."

Mrs. Wright will be at the Sparrows Point plant, working and waiting and worrying.

"The future is in Mexico," she says. "It is in cheaper and cheaper labor."

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