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A city built from sweat and steel

Companhia Siderúrgica Nacional was the initial test of developmentalism


Exactly 70 years ago, Getúlio Vargas signed the document that created the Companhia Siderúrgica Nacional (CSN) steel mill. When the mill went into operation in 1946 (without the presence of its creator, who was politically ostracized at the time), CSN became the main source of Brazilian steel. The construction of Brasília,  the Ponte da Amizade bridge that crosses to Paraguay, the subways of Rio de Janeiro and São Paulo and Atlântica Avenue, in Rio de Janeiro, are all landmarks that used the steel manufactured in the city of Volta Redonda. However, the company was not only of economic importance; it was transformed into – Brazil of the future,- the promise of the Estado Novo regime to achieve social and economic independence. “The Vargas regime wanted CSN to be a prime example of the implementation of new social welfare policies for industrial workers. Volta Redonda was to be a model of the country’s social development in the industrial era,” explains historian Oliver Dinius, from the University of Mississippi, and author of Brazil’s steel city: developmentalism, strategic power, and industrial relations in Volta Redonda: 1941-1964 (Stanford University Press), the research studies of which were supported by FAPESP. Dinius is now looking for a Brazilian publishing company to translate the book.

“The steel mill was planned as a company-town, with subsidized housing and an extensive network of urban services, which was to be the reference of Brazil’s industrial modernity and social progress. By creating CSN, the government wanted to strengthen the possibility of maintaining peaceful labor relations without any conflicts between capital and labor, encouraging the company’s directors to apply the provisions established in the Consolidação das Leis do Trabalho (CLT), the Brazilian Labor Laws, enacted in 1943. At the same time, the steel mill was the site of the first attempts to establish new labor-related control institutions as a public policy,” says the researcher. “Thus, the steel workers at the company were the agents of state industrialization, the beneficiaries of the new social welfare policies established by the Estado Novo regime, and the first targets of political control over labor.” The CSN steel mill was the “Apple of its eye”  i.e. of the Vargas Government. It was viewed as a symbol of progress and industrialization, wrapped inside a nationalistic ideology that legitimized state intervention. “CSN was designed to be a model, a reference company for the rest of the country; in addition to tons of steel, the company was also supposed to produce a new type of laborer – healthy, able, and disciplined,” says sociologist Regina Morel, a professor at the Federal University of Rio de Janeiro (UFRJ) and author of the paper A ferro e a fogo: construção da família siderúrgica.

However, as revealed by Dinius’ research, it is misleading to state that the workers of Volta Redonda were labor pawns of the Vargas Government and of corporatist unionism because of the record-breaking 43 years during which no labor strike occurred. According to Dinius, understanding the evolution of the labor force is understanding the dilemmas of national developmentalism. “The success of the development model that created CSN depended on the capacity of the State to ensure continuous and growing production at the few strategic companies that produced capital goods. This strengthened the position of the workers of Volta Redonda, placing the State within the political and economic imperative of maintaining this production. The mere threat of a labor strike was enough to generate a political crisis and provoke an immediate response to the demands of the labor union,” says Dinius.

“The case of CSN is an example in the sense that it reveals how workers working in strategic places have the power to limit the capitalistic control of work, organize a strong labor union, redefine the rules that govern industrial relations to their benefit, and protect salary increases from political pressures. They had the latent power to subvert an entire development model.” This vision gives the study an innovative character. “The sociological interpretations of the relationship between State, capital and labor movement place the State at the service of the interests of capital, using its repressive powers against the workers. This model has to be reconsidered to understand the historical moment in which the State became the manager of a huge industrial company and gained the role of mediator of the relations between capital and labor, through the implementation of labor laws, and adapted itself to a new political reality, brought upon by the people’s vote,” he explains. “The history of CSN illuminates this new complexity in the relations between the State and the labor movement in hegemonic industrial capitalism. This is not an issue of an open conflict, with labor strikes and struggles between workers and the police; this is an issue of complex negotiations between the government, the workers, and the company’s management.” According to the researcher, the labor unions of CSN were able to get extensive concessions in terms of salaries and benefits, thus bringing to reality at Volta Redonda the labor-related promise of social well-being made by the Estado Novo.


The path until the construction of the steel mill was as long and tortuous as the national steel problem which had dragged on throughout the country’s history and only began to change after the Revolution of 1930, even though during the campaign of the Aliança Liberal, Vargas had already taken on the commitment of finding a solution that would prevent Brazilians from being “at the mercy of foreigners.” This was a reference to the contract of 1920, signed by the Brazilian Government and the Itabira Iron Ore Company, owned by American businessman Percival Farquhar. According to the contract, the American company agreed to build a steel mill in exchange for the monopoly over the transportation of the ore. This agreement never materialized. In 1931, Getúlio declared that the steel mill was “ideal,” and decreed the nullity of the contracts with the Americans. In addition, he announced the creation of the National Steel Industry Committee. When Vargas and the Estado Novo regime took office in 1937, the steel mill actually became a government priority and Brazil’s trump card in the relations between Brazil and the two rival powers, the United States and Germany. In 1939, conversations were initiated with the U.S.’s United Steel concerning the latter’s participation in the Brazilian steel industry program. The conversations had the support of President Roosevelt, who wanted Brazil to align with the United States. This expectation, however, was frustrated. In the famous speech on board the armored ship Minas Gerais, Vargas was ambiguous about a possible alliance with Germany, and finally managed to get a positive response from the U.S. Government, which came in the form of a loan.

In April 1941, the CSN was created as a public and private joint stock company. It was inaugurated in 1946, during the Dutra Government. Nearly ten thousand men worked during the peak of the construction work. The company gained “national security” status. The decision to build a city resulted from the need to house the enormous quantity of laborers needed to build and operate the steel mill. “The intention of the CSN was to educate the men who came from the rural regions and turn them into ‘civilized’ people to work at the steel mill and create a community of working-class families,” says Dinius.

“Vargas and the ideologues of the Estado Novo viewed the city as a showcase of a Christian order that would allow the country to make the transition from a rural to an industrial society, without social evils and class struggle. They wanted to create an industrial utopia to give an example to Brazil and the rest of the world. At one point, Volta Redonda was referred to as the ‘sweet Pittsburgh of Rio de Janeiro’. To make this idea of ‘the steel mill family’ materialize, CSN used the coercive power of an authoritarian State, always wrapped in an ideology of Catholic paternalism with a social and economic development agenda. The promise was to transcend the rationality of industrial capitalism,” says the researcher. Although reality did not support this myth, the discourse attracted Brazilians’ imagination. “Right from the start,  CSN sought to create a culture of pride and loyalty based on Christian values, which combined the idea of duty and discipline with generous social services, such as housing, medical care, education for the children and leisure activities. Management expected this culture to result in productivity gains.” At the same time, CSN exerted total control over the lives of the inhabitants of the company-town, extending its power to the private lives of the workers by means of various discipline mechanisms. “The houses were different in terms of location, size, and conveniences, according to the company’s hierarchy. This hierarchy was embedded in the urban space, where each person was attributed a place,” points out researcher Regina Morel of the UFRJ. Management would instruct the workers to see themselves as “soldiers” building a Brazil that would be better, and where everybody’s sacrifice would be offset by economic stability and a comfortable life in a modern city. To this end, a Catholic culture was essential. “Volta Redonda was also a feeler on the part of Brazil’s Catholic Church authorities, which at the time were on good terms with the Estado Novo, concerning actions in the lay world of work, using new integration strategies with the faithful. Ironically, in less than ten years, the local church authorities – which had previously been a source of paternalistic power – turned into an instrument of opposition to CSN. In the 1980s, the Catholic culture was still strongly embedded in labor union members. However, the labor unions were no longer following obedience or discipline. They had come under the influence of the Liberation Theology, which, in turn, lost its social and political power in the 1990’s after the privatization of the steel mill and the arrival of the Evangelical churches,” says Dinius.

PHOTOGRAPH FILES - CSNPresident Vargas visits the CSN in the 1950’sPHOTOGRAPH FILES - CSN

Another specific characteristic of CSN refers to the origin of its labor union, the creation of which did not contradict the wishes of the company’s management; indeed, the labor union had management’s full support. “The creation of the labor union reinforced the corporate formula related to the control of workers’ movements, with the objective of ensuring its ties to the steel mill and, by extension, to the government,” Regina points out. “From then onwards, the state-owned nature of the company would carry a lot of weight in the labor union?s choices regarding workers’ demands and the contradictory attitudes taken in relation to CSN. In spite of this scenario, and due to the absence of labor strikes, the labor union was a major driver in allowing the workers’ to achieve citizenship rights.” As the years went by, the initial paternalism gradually became less powerful. “In the 1950’s, because of new productivity demands of the industrialization process, the company adopted new forms of rationalization, which increased the individualization and hierarchy of the workers and stricter control over the work processes,” says the researcher “In addition, the first generation of workers retired in the 1970’s; this generation strongly identified with the company because of its paternalistic past. It was a group of workers who  had built up their professional identity at the steel mill and the new generations had very little involvement with CSN,” explains sociologist Wilma Mangabeira, a professor at the University of Middlesex, England, and author of the book Os dilemas do novo sindicalismo: democracia e política em Volta Redonda [The dilemmas of the new union movement: democracy and politics in Volta Redonda]. “In the past, the identity of the workers was supported by the history of the company and by the differences between CSN employees and employees of other industries. Now they were coming closer to other labor groups that worked elsewhere. The younger generations no longer identified with the concept of a state company employee; they identified more closely with the concept of the steelworker.” In the 1960’s, CSN began to cut back on its social responsibilities and paternalism declined. The military coup d´état in 1964 intensified this decline and created a new labor identity. “The military regime, which sent military troops to take over the company after the fall of former president Goulart, opted for a developmentalism which had very few labor-related characteristics. The widely-held belief among the military was that the major contribution of CSN to Brazil’s development was the production of enormous quantities of high-quality steel and that the social welfare rights on the labor agenda were not supposed to interfere in this mission,” Dinius points out.

“While seeking to preserve and expand benefits, the workers tried to break away from the paternalistic model and seek direct access to the rights established in the CLT. They went from being members of the ‘steel mill family’ to Brazilian citizens,” says Regina. “The case of CSN shows how the CLT – in spite of its corporatist nature – can, in some situations, create transformation in the forms of controlling the work force and building up a feeling of citizenship,” she adds. However, the powerful labor union that had obtained high salaries for its members (those salaries were much higher than the average salaries paid to employees in private sector companies) and many other benefits in the 1950’s and early 1960’s were weakened with the advent of the military regime. “The military forces jailed the labor union leaders, took away the political rights of many of these leaders and intervened in the labor union by putting in place a junta that worked very closely with the management of CSN in relation to cutting back expenses. Nevertheless, the power of the labor union managed to obtain salary increases at the time when salaries were pegged to an index,” says Dinius. According to the researcher, in the period from 1968 to 1983, the main concern of the labor leaders was to maintain a good relationship with the military governments in order to preserve the privileged status they had gained as employees of the CSN. “The labor union avoided open confrontations with the company and the strongest opposition to the company came from Catholic social movements, which were very powerful on the outskirts of Volta Redonda, where the less privileged employees lived. The labor union joined forces with these groups after the election of labor leader Juarez Antunes, linked to the Central Única dos Trabalhadores (CUT), a federation of labor unions, and to the left-wing parties (PT and PDT). This led to the radicalization of the labor movement in the 1980’s.” Dinius points out that at that time the country was going through a serious economic crisis, which led the State to pressure CSN to cut back on expenses, a measure that sparked the strike of 1988. This was the most famous and violent of all strikes, albeit not the first in a series of labor strikes that blew up in the 1980’s under the leadership of CUT. “The 1988 strike was the first strike with victims, following in the wake of the Brazilian State’s long tradition of calling upon the Armed Forces to deal with crises at  CSN.”

PHOTOGRAPH FILES - CSNPresident Vargas and the president of the steel millPHOTOGRAPH FILES - CSN

In the early 1990’s, the split in the group linked to the CUT led to the election of a group linked to the Força Sindical, federation of labor unions, which facilitated the privatization process, which CUT was against. “The consequences of the privatization of CSN were felt, most of all, in Volta Redonda. Many workers were laid off, which changed the social and economic profile of the city and eliminated any lingering paternalistic ties between the company and the city. The labor union movement in the 1980’s and the labor strikes had postponed this process, but it was clear that the company had to reduce its work force to compete with other domestic industries,” says the researcher. “However, we cannot state that privatization solved  CSN’s biggest problem: the strategic position of its workers, that is, their ability, based on key job positions on the production scale, to organize a general strike, stop all of the steel mill’s operations and adversely affect the Brazilian economy. Privatization made the company feasible as a commercial venture within the logic of capitalism, but it did not abolish these strategic positions,” the researcher states. “The Vargas Era had a corporatist project through which it intended to rebuild Brazil as a modern nation supported by an alliance between the State, capital and workers. In line with this project, CSN was created as a place where this vision of the country’s future would materialize in the present. Volta Redonda was a small-scale version of this new world.” According to Dinius, pressure was put on the two Vargas Governments to demand that the management of CSN implement social services and the laws established CLT in exemplary form. The steel workers understood the meaning of this special status.

“The labor unions always put forth their demands as being fair compensation for the contribution that the workers were making to the country’s development. Thus, they used the developmentalist discourse to justify their demands which, in the long term, adversely affected CSN’s financial problems and, indirectly, contributed to the crisis of developmentalism and to the military coup d´état of 1964.” Thus, says the researcher, although the labor union was not directly responsible for the demise of developmentalism, its success created problems for this national developmentalism model, as its union achievements reduced the economic benefits produced by CSN for Brazil. “The conclusion is that the history of the company emphasized the weak points of the developmentalism model based on a few big companies. CSN contributed significantly towards Brazil’s growth, but this contribution was smaller than the one envisioned by the technocrats, who never dreamed that the workers would mobilize their strategic power to demand higher compensation for their efforts,” says Dinius. The portrait of “old” insists on remaining in the same place.