AFL-CIO says Nucor should make commitments before getting tax breaks

SEASIDE, OR -- The Oregon AFL-CIO is asking state and county officials to require a notoriously anti-union steel company to sign a "good corporate citizen" pledge in order for it to qualify for property tax waivers, income tax cuts and other incentives -- by far the most generous in Oregon history, when measured in relation to the number of jobs it will create. Delegates to the state labor federation convention passed a resolution agreeing with that request.

North Carolina-based Nucor Corp. Inc., the seventh-largest steel company in the U.S., would be exempt from paying an estimated $228,000 in taxes for each of the 250 workers it said it will hire if it builds a steel mill in Coos Bay or at the Port of St. Helens near Clatskanie. The company's state income tax liability would be capped at $1 million a year for 15 years. On any taxes due above that amount, Nucor would receive tax credits that it could apply over a 20-year period. Nucor's estimated savings would be $57 million over the next 20 years, according to the Oregon Economic Development Department.

The new tax-break law passed in a hurry by the Oregon Legislature in the waning days of the 1997 session was literally written for the company, said Brad Witt, secretary-treasurer of the state labor federation. The new law establishes 15-year property tax exemptions for investments in non-urban enterprise zones in counties with chronic unemployment. The investments must be more than $50 million; made by 2002; and the business must hire at least 100 full-time employees at an average wage at least 50 percent above the average wage in the county. The legislation also establishes corporate income tax credits for firms meeting the above criteria at 75 percent of the payroll, benefits and other employee costs.

A new steel mill in either Clatskanie or Coos Bay would qualify for the enterprise zone benefits (18 rural counties would be eligible statewide) with Nucor the first company on line. Nucor wants to build a $280 million plant to produce rolled coils of steel from scrap metal for customers on the West Coast and in Asia. It wants to start construction by mid-1998 and complete the plant in 2000. It says it will hire as many as 250 workers and pay an average annual wage of $54,000.

At public hearings last month, Witt and representatives of the Steelworkers Union, Paperworkers, Carpenters, and Columbia-Pacific Building Trades Council, asked commissioners of Columbia County and the Port of St. Helens to require Nucor to sign a four-point "good corporate citizen" pledge that includes a neutrality agreement in the event of a union organizing campaign, compliance with state and federal safety and health laws, compliance with environmental protection standards, and agreeing to pay prevailing wages and benefits.

"They are offering to provide relatively decent-paying jobs in those areas," Witt conceded, "But they aren't offering a comprehensive benefits package. Their 401(k) plan is invested heavily in the company, which means an employees' retirement future hinges on the success of the company. Then you have to look at their record on safety and health and the environment. At what human cost are we willing to pay?"

Mike Cole, president of the Southwestern Oregon Central Labor Council in North Bend and a member of the Oregon AFL-CIO Executive Board, said his council initially was excited about the project. "We signed some stuff (supporting) on it in a rush, rush during the July 4 weekend," Cole said at an AFL-CIO Executive Board meeting Sept. 21. "Some research showed the company had a real bad safety record and the council also found out that Nucor prides itself on operating non-union.

"I and a lot of other people don't care if they come to Coos Bay or not," he said.

Most of Nucor's 15 "mini-mills" and steel fabrication operations are located in small towns with high unemployment where it has been able to negotiate the best possible tax exemptions. The company avoids employing workers from large cities or those with union backgrounds. Chief executive officer Kenneth Iverson has long been a critic of organized labor.

Employees' base salary is roughly half of a union steelworker's wages, but they can more than double the $8-an-hour base pay with extra production by their "teams." But a review of court and safety documents and interviews with former and current employees by the Wall Street Journal indicate that Nucor's go-go ways have a human cost. Employees who count on the incentive bonuses seem to do just about anything to keep production going. If one person is absent or refuses to work for any reason, the entire group can be penalized. Current and former employees claim that is why some are willing to work even when there are unsafe working conditions.

Which could also be why Nucor likes to set up shop in states where workers' compensation benefits are generally low. Its largest plants are in South Carolina, Arkansas, Indiana, Utah, Texas and Nebraska.

The Wall Street Journal reported that Nucor's worker death rate is the highest in the steel industry -- more than double the average at 23.4 per 100,000 workers. Since 1980, 11 Nucor employees have died as a result of accidents. Five more people died in accidents building Nucor plants, in which the company acted as the general contractor.

Nucor has been fined several-hundred-thousand-dollars since 1989 for violating safety and pollution laws and for exposing workers to lead levels 41 times the legal limit in North Carolina.

A Nucor mill in Arkansas was slapped with the fifth-largest fine in that state's history -- $185,000 for violating air pollution laws.

"These are states with not real stringent environmental records," said Witt.

Conversely, Oregon has a reputation for strong environmental laws protecting salmon, cutthroat trout, estuaries,white-tail deer habitat and more. In fact, the federal government has allowed Oregon to come up with its own plan to protect salmon.

"One irresponsible action could push a species over the brink and invite the federal government to come in and tell us how to protect our environment, which will affect all other businesses in this state," Witt said.