The nine case studies in this working paper were commissioned as part of the preparatory work for a tripartite meeting on The iron and steel workforce of the twenty-first century: What it will be like and how it will work, held at the ILO in Geneva in October 1997. Elements of these case studies are included in the report that was prepared for that meeting.2
Throughout its long history, steel has continually demonstrated its seemingly infinite capacity for development. It remains a material of major strategic importance and a basis for industrial development. Steel can retain this leading position and continue to provide cost-effective solutions to new engineering and production challenges provided the adjustments that are necessary are carefully planned and implemented.
The transformation of steel mills from fairly basic, product-oriented operations to ones that are high technology and market-oriented is either complete or irretrievably underway throughout the majority of the industry. The changes required have been both wide and deep, necessitating a radical shift in steel-making culture. They have not been easy and they are by no means over. The creation of a results-driven, improvement- and innovation-oriented organization where a hierarchical functionally directed bureaucracy existed beforehand has often proved difficult and time-consuming. The successful introduction, operation and growth of a new style organization require considerable commitment by all concerned -- and not just in the short term. It is far easier to change technical structures than it is to modify, let alone transform, entrenched social structures and attitudes that are linked to long-standing work organization, qualifications and payment systems.
While product quality and service become the major determinants of market position, the widespread technical capability to deliver steel of a given quality means that price is still important. Not only must the steel industry's workforce deliver the right product in a timely and reliable way, it must do so in an increasingly competitive market. The impact of a variety of external factors on the steel industry has led to and is continuing to require not merely incremental changes in work, but step changes.
Manual, experience-based process operations are being replaced by knowledge-based monitoring and control. Operation is largely automatic and, in order to avoid costly buffer-stocks of material, processes are even more closely linked that was the case even ten years ago. The steelworker of tomorrow will require a full understanding of the logic of the entire production process in order increasingly to exercise judgement. The importance of logical, abstract and analytical thinking abilities in the workforce is increasing rapidly compared to requirements for manual skills. The impact on training and work organization is already being felt, but the impact on pre-employment education is taking longer.
Notwithstanding the major cuts in the steel workforce that took place in many industrialized countries in the late 1980s, downward pressure there is still strong. Elsewhere, reductions in the steel workforce have been somewhat less radical, but the end result is likely to be the same -- cuts in the workforce of at least 50%.
The winners in the next millennium will be the steelmakers who focus on product quality and environmental management; who meet customers' schedules; and who train and motivate their workforce to see quality production and environmental responsibility as the means to job security and advancement in a progressive enterprise.
The fact that the output of many steel producers is from large, integrated steel works puts a floor under their costs. Also, the product quality advantages of integrated steel mills are being steadily eroded as mini-mills increasingly compete on quality as well as price. Failure to react to these changes will result in some companies being priced out of segments of the steel market, possibly even their domestic market. This is why all steel producers are seeking increased competitiveness and many are sourcing at least part of their production from their own mini-mills.
The achievement of sustained and lasting improvements in competitiveness will require not only change but a process of continuous change. For workers, the challenge consists of being able to increase their skills and make a greater commitment to the future of the enterprise with very different requirements from their employer than they were accustomed to. From the standpoint of the enterprise, the challenge is how it can become a skill-generating enterprise that creates and maintains the necessary conditions for a process of learning and belonging among its workforce. An important step has been the recognition of the need to overcome individual and organizational inertia.
Practices that have contributed to improved performance and competitive position are focused on continuous improvement in quality, service, costs and productivity. Continuous improvement programmes put the destiny of employees and the company in the hands of those who work the machines and ship out the steel. The devolution of responsibility downwards is a noticeable effect of establishing small polyvalent work teams. It is no less important that authority be similarly treated.
To increase competitiveness more quickly, integrated steel producers are increasingly going to have to team up with the most competent partners they can find in various specialized fields. Also, the successful steel producers in the next century will be those who have mastered information systems in every area of their business -- research, process management, marketing, sales, accounting, finance, and overall management. Steel firms and workers must recognize both the opportunities and the powerful discipline of an increasingly competitive world steel market. It is only then that a modern and robust steel industry will be able to master the 21st century.
The integration of HR issues into business plans has not been widespread and the sharing of information with workers is a relatively recent phenomenon in the steel industry in a number of countries. Similarly, the incidence of consultation and cooperation on technical change has been insufficient in the eyes of some trade unions. In countries where the unions have been strong and where the HR function has had little strategic importance in decision-making it has proved difficult suddenly to introduce radical workplace change without workers being extremely sceptical of "management gimmicks". It is not until management demonstrates a genuine desire to involve workers and unions in decision-making that progress has been smoother and quicker, particularly when coupled with workers' enthusiasm for new work practices that promised potential for greater autonomy and career advancement. But the unions' response to work reorganization was often slow, at least initially. It was not a key issue for them until employers began aggressively to pursue it, specifically employee involvement, job reclassification and consolidation, job rotation and teamwork.
Many enterprises are developing new HRM policies that are an integral part of business strategy and long-term planning. Changes in technology, modernization and rationalization of manpower mean that each employee is responsible for a wider range of more complex equipment. This makes it vital to recruit people with relevant knowledge, skills, attitude and potential. These are the ones who can benefit from appropriate training.
Rather than hiring according to narrow job specifications, employees who fit the strategy and culture of the organization, or have the potential to do so, are being selected. At the same time, performance-planning and appraisal systems, incentive schemes and training and career development programmes are being linked -- with increased employee participation and more cooperative labour-management relations -- so that the organizational changes required for a competitive industry can be achieved.
In the highly capital-intensive and increasingly automated steel industry, the need for continued emphasis on human resource development is becoming as important as any other aspect of running a steel plant. Changes in the job requirements of production and maintenance workers, coupled with the introduction of new technologies and a greater emphasis on quality assurance -- particularly in the light of the spread of ISO quality standards, have necessitated much greater emphasis on training, including more formal training of production workers. In the future, additional computerization of production processes and control will lead to increased demand for computer and numeracy skills among those recruited to and promoted within the steel industry. Steelworkers in turn will be more highly trained than hitherto, and be more likely to operate in multi-functional teams, performing a wider range of tasks and carrying greater responsibility for quality assurance.
Attitudinal change, the optimal use of existing human resources by redeployment and multi-skill training, preparing employees for modernization projects, enhancing efficiency, safety and pollution control and quality improvement are the major targets of training. A variety of skills and aptitudes will have to be imparted and absorbed if the objectives of training are to be achieved. This variety reflects a combination of technical and systemic elements which point to a change in the function of the operator from the mere carrying out of set tasks towards having the capacity to master a work process in which the worker has to carry out simultaneous and alternate activities combining routine tasks, the assimilation and evaluation of information and unexpected tasks. To do this the worker will have to use this series of skills and aptitudes in a systematic way, having fully assimilated them.
The criteria for fulfilling training objectives should not be the amount of training provided, rather they should reflect growth in steel output and labour productivity. But, without evaluation and follow-up, it is not easy to find out whether and to what extent the additional investment of time and other resources had led to new skills or increased performance.
New investment, sometimes in conjunction with new ownership, has been the engine of change in many steel plants. Also important are a set of related changes in quality, work organization and skill. Six integrated developments are relevant here: devolution to single business units with related changes in management status and function; total quality control; new technology; the move from seniority to competence-based job structures; broader but more specific job classifications and descriptions; and related skill formation activities. The significance of these developments is only apparent in the context of steel industry traditions of hierarchical management, production driven systems, low automation, seniority-based job structures, narrow skills and skill acquisition through experience. These were the hallmarks of steelworks for generations. Although some changes to managers' and steelworkers' jobs started nearly 20 years ago, many did not occur until much later. The late starters have required large step changes in work organization rather than taking an evolutionary path.
Changing work practices are the latest in a series of initiatives to increase productivity through work reorganization. Multi-skilling and teamworking have had the greatest effects. After a lifetime of rigid occupational structures based on semi-skilled production workers and skilled maintenance workers, the steel industry has done away with many single-skilled occupations, such as welders, boilermakers and bricklayers. Skills made redundant by computerization are being replaced by a need for computer and diagnostic skills. Greater functional flexibility has been the death of demarcation and skilled workers are now multi-skilled.
With the arrival of microelectronic technology, work processes began to change, shaking the foundations of traditional work organization. Historically, on-the job-training had been central to most core production processes in the iron and steel industry. Senior foremen who controlled workforces of several hundred workers, had moved through the traditional hierarchy of classifications which would have been recognizable to a nineteenth century steelworker. The non-trades hierarchy was mirrored by that of the skilled trades, each with its own set of traditional practices and benefits as workers moved up the ladder. New technology, with its requirement for precision, overturned these traditions. For example, where the temperature of steel or the amount of alloys to be added had previously been gauged by rule of thumb, computer technology offers greater precision but demands different skills. The owners of these new skills are both technically educated and trained on the job. The internal labour market based on seniority and on-the-job skill acquisition gave way to job structures based on competence. Fewer promotion possibilities with a shrinking of classifications and grades means that progress must be marked in another way, such as through obtaining higher levels of skill and acquiring more autonomy.
Rapid technological change means that experience is no longer the best criterion for selecting workplace supervisors -- training, qualifications and adaptability are often more relevant. Having already made large cuts in the workforce it is necessary for management to look harder for further rationalization. Making fuller use of a worker's time and having groups of workers become more self-supervised and take more responsibility (e.g. for quality inspection) has led to further savings in employment. An added benefit of having workers more responsible for the quality of their production is the savings arising from not having to re-work material that failed to meet quality standards.
Accompanying the focus on customer relations and service is substantial investment to deliver higher quality output. New technology has not only improved quality, it has also eliminated many dirty and arduous tasks, reorganized the way work is done, reduced the number of operators needed and changed the nature of the workforce. An increasing proportion of workers became responsible for operating costly equipment at the same time the market demanded improved quality. As facilities and equipment becomes more advanced, production becomes more dependent on their condition. Consequently, work teams must be well-versed in process logic, diagnosis and mechanics. The maintenance function of work teams can be critical to their successful operation of complex processes.
Along with team work, job rotation, greater employee involvement and responsibility, employment security and broader jobs, work reorganization needs to include good job design and extensive training and retraining opportunities. Workers are seeking more authority, not just extra responsibility; opportunities to learn more skills, not just to perform additional tasks; and more mobility in the workplace, rather than just being moved around.
That new work organization has been widely and successfully implemented at many steel plants is often a tribute to the extent of labour-management cooperation from the start of the process.
The human dimension is the key to the future. Technical advances are short-lived and new procedures are developed at an increasing rate. Managerial demands for higher quality, commitment and flexibility are often being pursued against a background of job insecurity in the industry. Successful steelmaking in the 21st century will depend more than ever on an enduring but responsive and flexible partnership between the enterprise and its workforce. The loyalty of the workforce to the goals of the enterprise and the competence and determination they show in achieving them must be matched by a commitment from the enterprise to increase the skills, responsibility, authority, job-satisfaction and job security of the workforce. In the long term, management may be best able to secure increased commitment and flexibility by linking its demands to guarantees, such as no compulsory redundancies within a given period. The introduction of such exchanges could extend the degree of labour-management reciprocity.
Notwithstanding closer labour-management relations in much of the steel industry in the 1990s, the adversarial framework is still strong, due to different interests and a perception of unequal power. Management wants to reorganize work in order to become more efficient, competitive and profitable, thereby securing the future. Unions seek better jobs through higher skills, increased worker responsibility and control over the workplace, a safe working environment, equal opportunities for all workers and enhanced job security. Clearly, enterprises have a deep and continuing interest in maintaining a skilled and motivated workforce. For their part unions have an equal interest in maintaining the economic viability of their members' enterprises and the quality of the goods they help to produce; they also want a role in deciding how to improve competitiveness and quality -- a negotiated reorganization of work. To do this effectively they seek access to similar resources, support, training and information as the employer. They also believe that necessary and sufficient training, paid by the employer, is essential for them to upgrade and develop understandings, capabilities and skills early in the process of work reorganization.
Bipartite sectoral bodies can be an effective form of joint decision-making in areas of mutual concern and a means of expanding labour's influence. Joint employer-worker initiatives can lead to enhanced dialogue, greater information sharing, shared beliefs and understanding and the identification of mutual goals and objectives. While some exclude areas traditionally covered by collective bargaining, they have contributed significantly to rational discussion on workplace issues by generating optimism and self-confidence among unions to spell out their point of view.
Privatization of the steel industry has reduced the political influence that unions could bring to bear on a nationalized industry. Also, when steelmaking was a largely national concern, the industry and its workforce were often in step regarding imports, subsidies and competition. This has changed; now privatized companies seek to ensure that State aid does not upset their market approach to competitiveness.
Technical and organizational changes in the steel industry go some way to reconciling the gap between the nature of steel production and the changing demands of a diverse market for steel products. The qualitative and quantitative impact on the workforce is likely to continue as the industry becomes more international in outlook and operation. New steelworkers are bringing a new culture to the workplace. Their beliefs about their job, the company, and work itself are far different from the shoulder-to-shoulder solidarity of the workers who backed union involvement in the past. The extent to which trade unions can influence change in the industry will depend on their offering enterprises a credible alternative to individual approaches to obtain the commitment of the workforce to achieve the level of performance and output they seek. The question remains whether, and to what extent, steel companies will generate commitment and motivation from tomorrow's steelworkers as individuals, or whether they will continue to work constructively with trade unions in the workplace.
Despite the benefits achieved and documented through labour-management partnerships, several obstacles must be overcome if they are to be created and sustained. These include: downsizing, leadership turnover, inexperience, inadequate investment of time, money and energy, and resistance to change. However, changes in work organization and the disappearing distinction between process and maintenance workers signal the need for trade unions representing these groups to consider ways of working together to establish mutually acceptable job structures and representation arrangements. Success depends on the potential rewards -- for the enterprise, and the union, and its members. These need to be identified at the start and quantified as soon as possible.
As a major industrial producer, the steel industry is also affected by broader environmental considerations such as carbon dioxide emissions and international agreements to phase out the use of ozone-depleting chemicals. Close analysis of the costs and benefits of pollution control shows that it makes good economic sense to clean up rather than fight enforcement and pay fines. Having a management and workforce that are as jointly attuned to the importance of environmental management as they are to production and quality will make it easier to master environmental management.
The importance of the "quality factor" has been widely instilled in steelworks and steelworkers worldwide, including the value for many enterprises in obtaining ISO 9000 certification for quality. Similarly, the importance of demonstrating proper care for the environment is illustrated by the increasing acceptance by steelmakers of the benefits of having ISO 14000 certification for environmental management too. It is in the long-term interest of a globalizing steel industry to ensure it maintains high environmental standards no matter where production facilities are located. This can be achieved by planning for and implementing high standards throughout the workforce through training and the development of an "environment ethic".
Environmental issues have had to become more than just controlling the performance of process equipment. They are now an integral part of the entire steel business for those steel producers that expect to meet the standards set by relevant legislation and international agreements through participation with governments and the application of economically feasible and scientifically sound methods and technologies. To do so will require the development among all employees of a full understanding of their responsibilities and ensuring they have the authority to discharge them.
1 Sectoral Activities Department, ILO.
2 ILO: The iron and steel workforce of the twenty-first century (Geneva, 1997), 110 pp.
