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Saturday, October 20, 2001
The steel industry's latest sign of hemorrhaging is the decision by Bethlehem Steel Corp. to seek Chapter 11 bankruptcy protection. But the bleeding is hardly internal when it's the collapse of the nation's No. 3 steelmaker and it affects 13,000 employees and 130,000 retirees.
Those workers, retirees and dependents, 45,000 of whom live in Pennsylvania, rely on the company for health benefits, to the tune of $3 billion in costs to Bethlehem. So it's no surprise that when steel or other large companies fold, one of the first things they try to jettison is health insurance obligations.
Federal law forbids such abandonment without a bankruptcy court judge's approval.
LTV Steel, which filed for bankruptcy in 1986, came out of it in 1993 and refiled for protection last December, sought to cut health-care benefits earlier this year. Instead, it reached a new labor agreement with the United Steelworkers of America that required union members to defer $1.50 per hour in wage increases and make other concessions, in exchange for a 20 percent stake in LTV when it emerges from bankruptcy.
What will be left of such a company after the current shakeout is uncertain. But Bethlehem Steel, facing the possibility of its own demise, will seek a similar deal with the USW.
Though the steel industry eagerly sought help from the Bush administration, it has yet to arrive. In June the president asked the U.S. International Trade Commission to investigate, under the 1974 trade law, whether imports have significantly harmed the industry.
If the agency finds such damage, it can recommend remedies like quotas and tariffs; President Bush can accept them or create his own.
But imports aren't the only problem for U.S. steelmakers. They are hurt by a global drop-off in demand. Despite the strides in efficiency made by labor and management in American steel companies, it hasn't been enough to counter the industry's excess capacity.
That leaves the weakest firms with little chance for recovery. While no company or no union local dares to applaud in public, the grim reality of any shrinking industry is that when one or two weak members go down, the others have a greater chance of survival. What is understandably frustrating for the USW is that, by its own count, 25 steel companies, not just one or two, have filed for court protection since 1998. That adds up to a lot of jobs and a lot of families.
Regardless of whether the government can secure import relief (and regardless of whether such help will make a difference), Congress and the White House need to find a lasting solution that preserves health benefits for retired steel workers.
Ultimately, it may require legislation to spread the cost among all steelmakers, as is done in the coal industry. One way or another, it's time to put an end to the panic and distress of retirees when another steel company fails.