Cardin, Ehrlich pledge to seek relief for bankrupt Beth Steel

Congressmen visit Sparrows Point as steel industry allies

October 20, 2001|By Kristine Henry | Kristine Henry,SUN STAFF

With the steel industry's perilous position underscored by Bethlehem Steel Corp.'s bankruptcy filing earlier this week, two local congressmen went to the Sparrows Point plant yesterday to assure management and union leaders that Congress is working on their behalf.

Bethlehem was the 24th U.S. steel maker - and the largest - to file for bankruptcy protection since late 1998, and Reps. Benjamin L. Cardin and Robert L. Ehrlich Jr. said several legislative and executive actions that are pending could bring some relief.

The industry says it has been hit hard by inexpensive imports that have flooded U.S. markets and driven down prices, by lower cost nonunion domestic plants, by a sagging economy and by the huge expenditures it must make for pensions and health care benefits.

The congressmen said saving the industry is critical, not just to preserve jobs but to help keep national defense strong and to prevent reliance on foreign-made steel.

"This is important to national security," Cardin said. "We're at war."

Cardin, a Democrat, said there are three major issues Congress and the White House must address to get the industry back on its feet.

The first is so-called "legacy costs." Bethlehem, for example, has a liability of nearly $5 billion for pensions for its 74,000 retirees and for health care benefits covering 130,000 current and former workers and their dependents.

The second is trade policy: President Bush in June ordered the International Trade Commission to study whether the steel industry has been injured by cheap imports. If it answers in the affirmative, Bush could institute trade restrictions and quotas in response.

The third area that could help steel is the economic stimulus package Congress is preparing to help revive an ailing economy that was dealt another blow by the Sept. 11 terrorist attacks.

Cardin said one option could be to change the tax law regarding net operating losses, so that steel makers, and possibly other types of companies, could get immediate cash infusions.

Businesses are currently able to carry forward the losses they report in bad years and use them later to reduce the tax they owe on profits in good years.

"You could use it if you ever made a profit, but the prospects of Bethlehem making a profit any time soon is remote," Cardin said.

If the proposal being studied were to go into effect, Cardin said, Bethlehem could get a check from the U.S. Treasury of about $350 million.

Bethlehem listed $4.2 billion in assets and $6.75 billion in liabilities, including $3 billion for health care obligations, when it filed for Chapter 11 protection Monday.

The steel maker has lost $1.4 billion this year and as of Sept. 30 it had a negative net worth, with shareholder equity of minus $303 million.

"The numbers are just staggering," said Ehrlich, a Republican whose district includes Sparrows Point.

Cardin and Ehrlich were joined by Rep. Phil English, the Pennsylvania Republican who chairs the Congressional Steel Caucus.

Ron Allowatt, the president of United Steelworkers Local 2610 at Sparrows Point, said the congressmen are working hard to help the industry.

"They are more on board now than ever before," Allowatt said.

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