U.S. Steel Corp. workers negotiated a wage increase of 14% over four years, making it the highest wage hike in about six years, Reuters reported Oct. 17, citing three sources familiar with details of the talks.
In the previous contract, wages remained unchanged due to losses from falling steel prices, and under the agreement between 2012 and 2015, wages were raised by only about 1.5% per year, according to the workers' union, which began negotiating a new contract in July.
The change is accredited to U.S. President Donald Trump's restrictive trade policies, which caused domestic steel prices to rise, helping the company increase pretax profits by about 60% in the second quarter, Reuters reported. U.S. Commerce Secretary Wilbur Ross recently called on steelmakers to share profits from high steel prices with their workers.
The sources said the new contract also proposes a lump sum bonus and a share in the company's profits, while healthcare benefits remain unchanged from the previous contract.
The company's operating profit margin is still below the industry average, and the new deal could inflate cost structure, which is worrisome for shareholders. The company already has the "lowest dividend yield among major rivals," while its CapEx plans may lower the priority for dividends, Reuters quoted metals and mining analyst Seth Rosenfeld as saying.