Beth Steel retirees fret over nest eggs Moves to sell, close 4 struggling divisions worry ex-workers

November 21, 1996|By Sean Somerville | Sean Somerville,SUN STAFF

A group that represents Bethlehem Steel Corp. retirees is trying to reassure members who fear that the company and their pensions are in danger.

Bruce Davis, the counsel for the Retired Employees Benefits Coalition (REBCO), said Bethlehem Steel's announcement last month that it will sell or shut down four struggling divisions -- including BethShip Inc. in Sparrows Point -- raised the concerns of retirees.

"What we had was the convergence of four forces," Davis said yesterday.

In an Oct. 30 announcement, the company said it not only will sell or shut down the four divisions but also will spend $375 million to do so. That charge ensures that Bethlehem Steel will report a loss in the current year.

At the same time, the company reported a 68 percent plunge in third quarter earnings, to $11 million. Just last week, retirees received a letter from REBCO saying that Bethlehem Steel's pension plan is 77 percent funded.

Davis said the developments prompted a number of questions from retirees.

"Is Bethlehem going to make it? Is bankruptcy a possibility? What about our pensions?" he said.

Gary Millenbruch, Bethlehem Steel's chief financial officer, called funding the pensions "a high priority."

"We have always met or exceeded our legal funding requirements," he said in a statement.

Bethlehem's pension fund assets exceed $4 billion. The company pays about $500 million every year to 71,000 pensioners. The company also contributes about $116 million annually for retirees' health insurance.

The typical Bethlehem Steel retiree collects about $14,000 in annual pension benefits, Davis said.

REBCO was founded 10 years ago by 35 Bethlehem Steel salaried retirees to track the company's financial condition and to assess its ability to fulfill obligations to retirees. The organization represents 20,000 retirees and their families.

Russell R. Jones, a Baltimore area retiree who serves as the president of REBCO's board, said retirees in Bethlehem, Pa., were more concerned than retirees in Baltimore.

That's because of plans to shutter or sell three divisions in Bethlehem, including BethForge, Centec and Bethlehem Steel Products Corp.'s structural mill.

"I have not received any calls [from Baltimore-area retirees]," said Jones, a former general manager of Bethlehem Steel's Sparrows Point plant, which employed 22,000 in the 1970s and currently employs about 5,300. "But I'm sure there is concern."

Davis said that "if Bethlehem were to declare bankruptcy tomorrow and immediately cease all operations, current pension plan assets would not be able to meet all pension obligations." But he called that a "disaster scenario."

He said that analysts have applauded the company's plans to jettison the four under-performing divisions and that no one expects bankruptcy. Davis also said Bethlehem's 77 percent funding of its pension liability is an improvement from last year, when that figure was 69 percent.

The company has whittled the under-funded amount from $1.6 billion in 1992 to $1.1 billion in 1996.

Pub Date: 11/21/96

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