Posted on 02/09/2003 4:00:38 PM PST by A Patriot Son
Bethlehem Steel collapse leaves retired workers scrambling for benefits
(AP) Sun, Feb. 09, 2003 BETHLEHEM, Pa. - Some of them went to work in the blast furnaces when they were just 18, then spent half a lifetime handling molten slag and inhaling steel dust in some of the most dangerous jobs on earth.
But for the tens of thousands of Bethlehem Steel workers who stuck it out, retirement brought a rich reward: a hefty pension and a lifetime of almost free health care for themselves and their families.
"It was capitalism's version of socialized medicine," said James Van Vliet, a retired Bethlehem Steel vice president. "And it was an implied contract. It was the company and the workers saying, 'We are going to take care of each other.'"
It may go down in history as a promise unfulfilled.
Bankrupt and only a shadow of its former might, Bethlehem Steel on Friday announced it was seeking bankruptcy court approval to terminate health and life insurance benefits for 95,000 retired workers and their dependents on March 31.
The move, seen as essential to the company's bid to sell its assets to International Steel Group, followed news in December that Bethlehem Steel's pension plan was underfunded by $3.2 billion and would be turned over to a government agency.
Both pieces of bad news were expected. The American steel industry has been in decline for decades, and most of its former giants have been trimming pensions and benefits for retirees for years.
But the one-two punch is still a staggering blow for a generation that had been promised a lifetime of comforts in return for a career spent at one company.
Now, some are facing the prospect of seeing their monthly $6 payments for health insurance jump to between $200 and $300.
"That's a lot to swallow," said Len Christman, 67, who worked 39 years at Bethlehem Steel's sprawling plant in Bethlehem, about 40 miles north of Philadelphia. "It's a very tough position to be in at this stage in life."
Nearly all retirees will continue to enjoy some benefits. Pension payments, which are being taken over by the Pension Benefit Guarantee Corp., are expected to continue at about 90 percent of their former level. For workers over 65, the federal Medicare program will pick up some health care costs.
But Medicare, which covers hospital visits, but doesn't pay for medications, won't come close to covering all the health problems suffered by many retired steel workers.
Joe Pancoe, who worked for Bethlehem Steel for 31 years, said that at 81, he has asthma and a hacking cough, and uses a slew of pills and inhalers to soothe his battered lungs.
"We, the old timers, were part of the industrial revolution. And now, we are part of the medical revolution. We have the emphysemas, we have the cancers. We have everything," he said.
He isn't positive his illnesses were related to his work as a spray painter in the plant's fabrication division, where he said his spit turned red from inhaling fumes, or in the research lab where he regularly handled bags of asbestos.
But as he sees it, the country owes him something either way. His labor built propellors for battleships and girders for skyscrapers and bridges.
"We helped the country, and the people who helped to build the country should get the benefit of it," Pancoe said.
Almost all workers agree Bethlehem Steel is in little position to help. When it filed for bankruptcy in 2001, the company had about 12,000 employees, down from more than 300,000 during World War II. And most factories have been closed, including the one in Bethlehem. The company's board also voted Saturday to sell the company's assets to Cleveland-based International Steel Group, a deal that is subject to approval by the U.S. Bankruptcy Court in New York.
Bruce Davis, a retired Bethlehem Steel lawyer who now serves as legal counsel for the Retired Employees Benefit Coalition, said several labor groups are negotiating to at least temporarily extend health-care benefits.
The coalition has asked that the company continue health benefits until May 31, rather than March. It also anticipates that it will be able to offer Bethlehem Steel retirees a replacement health insurance package similar to ones offered to retirees at other bankrupt steel companies.
The hardest burden, Davis said, will be borne by retired workers who are under 65, and thereby unable to qualify for Medicare coverage.
"We need to find a way to get them to age 65 without bankrupting their financial portfolio," Davis said. "If we can do that, the pain of seeing this proud company walk away from them, after so many years, will be considerably lessened."
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On the Net:
Bethlehem Steel: http://www.bethsteel.com
IMO there were union abuses in the steel industry as well as the auto industry. These abuses led to a climate where US products were too costly. This is cleary wrong. On the other hand corporations that pit ten cent an hour employees in China against a man trying to raise a family in the United States will be looked on very unfavorably by God at some point, again IMO. I firmly believe this is not the golden rule at it's best.
I'd say that if he had options, they're worthless now.
Insert "General Electric" for Beth Steel and "Schenectady" for Baltimore and you get the same types of numbers.
Union labor is simply too expensive.
One of the main reasons that the number of employees in the steel industry went through a huge contraction in the 70's and 80's was a direct result of the computer technology that became available during that same era. The processes that once took a huge workforce became manageable by fewer workers. Many mills that could not be easily updated to take advantage of the new technology were closed.
The real interesting thing is that labor costs per ton dropped dramatically during this time period which placed the US steelworker at the top of the world's productivity heap. The current figure for labor costs(which I posted earlier) is around $13/ton. You can buy a finished ton of automotive grade steel for around $600/ton. This makes the labor costs of a ton of steel around....2%. Contrast this with an energy cost of about 30%/ton...
If you add in the legacy costs(pension and healthcare) of $30/ton, you can see that adding the legacy costs brings the cost of labor to around 7% of a ton of finished steel(BTW, the cost to ship a ton of steel from one continent to another is about $60/ton...clearly something is rotten in Denmark). Still well below energy costs.
It's interesting to note that those legacy costs would probably be much less, but the US steelworker was a victim of it's own success. The more productive they became, the fewer of them were needed which meant that fewer workers were contributing to the pension plans just as the industry contracted and hundreds of thousands of new retirees were added to the rolls.
Again, as I said earlier, the blame for this whole problem isn't solely the fault of the union. Management is always at least 90% of the problem.
At the end of the day, if a company cannot be profitable given its costs, it will go out of business.
BTW...the costs per ton ($13) were at Nucor, which is not an integrated steel company. They build mini mills and buy/melt scrap, which is the least labor intensive method. They are also non-union. They are not a representative example of labor costs.
Finally...there is no possible way that 12,000 employees can be productive enough to cover the health benefits for 95,000 retirees. This is not just a problem in steel, but in autos also.
Pensions in the steel industry have been underfunded for at least 20 years. It was a major issue in the 1970s and 80s.
The Union Bosses at the time get both respect and money, the Company Bigwigs at the time get production and their own golden parachutes soon enough after, the workers, enjoy the then current high-level of benfits, and feel a serenity (a folly, that) that they have provided for the future. Someone else has promised to take care of it.
And -- this is vile and mean -- the workers tolerate greater risks to limb and health than would otherwise be accepted, because, hey, well, they are covered, their widows and orphans will be covered! Putting up with dangers, risk, noxious, broiling work envoronments, they *pride* each other in their folly.
Now the piper of time and truth is playing his tune -- those fools who sold their futures too cheaply, who worked like brutes and not like men, and put their future and legacies in weak hands for the sake of a fool's promise. They are crying foul.
Mercy should not be slack to the old, the poor, the widow and the orphan -- even to the folly of fools. Yet see it for what it is, and not as some DUE for *heroic* work efforts.
No doubt.
I say....." If we got the federal government out of healthcare---shut down HMO's ( A TEDDY KENNEDY INVENTION)allow the market to dictate pricing and get the damned lawyers off the backs of doctors, then maybe we all could afford healthcare. We might even get to have doctors making house calls again!"
Since the federal government has been involved in the healthcare issue, the costs have skyrocketed. The government is the biggest problem. Next tort reform.
I bet that the government will never give up its control of healthcare. It makes us dependent on them. If we are dependent, then we must vote for them in order to stay alive. HOW CONVIENENT.
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