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October 17, 2001
Retiree Benefits Helped Break Bethlehem's Back
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hlehem Steel Corp., the country's third-largest steel company, has filed for bankruptcy, partly because of rising pension and health-care costs for its huge roster of retired and laid-off workers, the Washington Post reports.

Foreign competition has also been dogging Bethlehem. And last month's terrorism attacks appears to have finally broken the back of the company. "Since Sept. 11, what was a declining marketplace has become a free fall," Robert S. Miller Jr., Bethlehem's chairman and chief executive, told the Post in an interview.

Yet continuous restructuring resulted in years of repeated workforce cutbacks, adding to the retirement and health-care benefits the company is obligated to pay under its union contracts.

Bethlehem now has 13,000 workers, 3,800 of them at the Sparrows Point plant in Baltimore. But it has 130,000 retirees and dependents receiving company-paid pension and health care.

The Chapter 11 filing provides an opening for the company to seek wage, benefit and work-rules concessions from the United Steelworkers union. The union agreed in August to a new cost-savings formula with LTV Corp., a Cleveland-based steelmaker that has been in Chapter 11 since December.

"We are going to look at every element of our labor agreement" in negotiations with the union, said Miller.

Leo W. Gerard, president of the United Steelworkers of America International, told the Post that the union would begin bargaining with Bethlehem on cost-savings, but he vowed to resist significant reductions in the pension and health-care benefits now guaranteed to steelworker retirees and their families.

Throughout the industry, 600,000 union retirees and dependents are receiving those payments and Gerard said another round of plant closings in the industry could easily drive that number to 1 million next year.

"This problem was not caused by workers . . . These companies won't be saved on the backs of our membership," Gerard said in a conference call.

The union is backing legislation that would provide a federal takeover of a major part of the industry's health-care commitments to retirees. Those health-care commitments now cost $1 billion a year. The union is seeking a 1.5 percent tax on U.S. and foreign steel shipments to fund the program.

Beyond that, Gerard said it may be time for the union and the companies to arrange their own health-care coverage with providers. "Maybe we need to . . . create a buying consortium and bring 1 million lives to the table. We don't intend to have their benefits reduced in any way," he said.

To view the Washington Post article, click here.

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