Union local steels itself for talks

Workers expect Beth Steel to seek benefit reductions

Bankruptcy filing Monday

2 sides likely to start serious discussions early next week

October 17, 2001|By Julie Bell | Julie Bell,SUN STAFF

Bethlehem Steel Corp. is likely to begin negotiations with steelworkers in earnest Monday as it seeks to whittle away at benefits for workers and retirees in the wake of this week's bankruptcy filing, a local union representative said yesterday.

The two sides, which have held preliminary discussions, did not specify what they will seek. But union officials, fresh off negotiations in which LTV Corp. sought benefits and other concessions in the wake of its bankruptcy filing, tried to strike a balance in their public statements yesterday, saying worker benefits must be protected while acknowledging that the company's cost problems are legitimate.

"If the company doesn't exist, we don't have a union, either," said Al Barmer, vice president of United Steelworkers of America Local 2610 in Baltimore, which represents about half of the 4,000 employees at the company's Sparrows Point plant. But, he said, "We're not going to bend on our retirees, either."

Robert S. Miller Jr., Bethlehem's chairman and chief executive officer, made plain in a letter to retirees and in statements Monday that Bethlehem, struggling to meet the cost of funding health care for a base of retirees that far outnumbers its current work force, is putting benefits squarely in the company's cross hairs, perhaps as never before. The company is struggling to meet $3 billion in "legacy payments," including paying health care costs for 130,000 active and retired workers and their families.

The company's pension fund had assets at the end of last month of $4.55 billion, $1.85 billion short of what is needed to cover its obligations.

That represents what it would cost to pay the pensions of the company's 13,000 current workers, 74,000 retirees or their surviving spouses, and 16,000 workers who no longer work for the company but will be eligible for benefits at age 62.

No immediate risk

Despite the shortfall over the long run, the pension checks of retirees are at no immediate risk, and the pension fund's assets are separate from the company's, meaning the fund is not involved in the bankruptcy filing, said Bruce E. Davis, a lawyer for the Retired Employees Benefits Coalition, which represents the interests of Bethlehem's retirees.

Barmer said union and company officials are scheduled to meet again today as they prepare for negotiations that likely will begin Monday.

Local 2610 President Ron Allowatt spent part of yesterday at the Sparrows Point plant, walking from worker to worker to discuss what concessions workers might be prepared to make to help the company.

Also, Barmer met at the local's Dundalk Avenue union hall with about 500 of the area's more than 20,000 retirees. "Where we're going to end up with this thing, nobody can tell," Barmer said he told them, though he said he felt positively about the outcome.

Concern about premiums

The average Bethlehem retiree has a pension of less than $1,500 a month and pays about $155 per month in health care premiums, Barmer said. "The company probably will give us a figure next month that is much higher," he said. "Some of these pensioners can't afford [much higher premiums] and buy their medicines."

Pensioners pay 15 percent to 30 percent of the cost of their prescription drugs, with the company covering the rest, he said.

Health care benefits for workers at Bethlehem Steel have been eroding during the past several years, with premiums paid by employees climbing along with doctor's office co-pays, Davis said. Even so, he said, health care for the most part "has been a subject matter ... that has been off the table as far as the Steelworkers are concerned."

The workers, for example, agreed to eliminate about 900 of the 4,500 union jobs at the Sparrows Point plant in 1997 in exchange for a company commitment to upgrade the plant, helping to save it from closure.

LTV example

In the LTV Corp. case, the union agreed to work rule changes and the restructuring of managed health care benefits that it said did not reduce benefits to either workers or current and future retirees.

United Steelworkers spokesman Gary Hubbard said that Bethlehem's problems could be remedied without deep concessions by workers if Congress passes a $1 billion annual package to ensure coverage of health care benefits for the industry's 600,000 retirees and their dependents.

"It's an impossible situation, and the union is the first to recognize this," Hubbard said of the health care obligations. But, he said, "We've also laid the gauntlet down and said we're not going to forsake the retirees, who most need their health care."

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