WEIRTON STEEL Company seeks freeze on pensions
The proposed pact calls for a 5 percent wage reduction.
To stop a $400 million liability from growing any larger, West Virginia's Weirton Steel Corp. is asking its union for permission to freeze workers' accrued pension benefits at current levels and make other concessions.
While such a move would make Weirton Steel more attractive for a potential merger or buyout, company officials said Thursday that was not their goal.
"Pension plans are an issue for the steel industry and across corporate America," chief financial officer Mark Kaplan said. "What we had to do here, cooperatively, was to figure out a way to fund the liability.
"It's a stark difference from what happened at LTV, at National -- and what may happen at Bethlehem, where they basically walked away from their obligation," Kaplan said.
Bankrupt Bethlehem Steel Corp. is being purchased by Cleveland-based International Steel Group, the successor to LTV Steel. Last week, Bethlehem told some 95,000 retirees it planned to terminate their health benefits. The company's pension plan, underfunded by $3.2 billion, is being turned over to a government agency.
Independent Steelworkers Union spokesman Dave Gossett said neither management nor the union wants Weirton Steel to follow that path.
"From a union perspective, we think it's a crime the federal government is standing by while thousands and thousands of retirees -- and not just steel workers -- are facing a loss of health care and a cut in their pensions," he said. "This union is committed to trying to preserve pensions for retirees and to push for affordable and quality health care."
The freeze affects all workers, regardless of how long they have until retirement. Weirton officials would not say how much the average steelworker had accrued. Existing retirees are unaffected.
Besides the pension benefit freeze, which also would affect the 530 management personnel, the contract calls for an across-the-board, 5 percent wage reduction and the cancellation of a $1 per hour increase that had been planned for April 1.
Currently, the average wage for a union worker is about $19 an hour.
The contract also proposes deferral of some vacation pay that is ordinarily distributed in a lump sum Feb 20. Under the agreement ISU leaders are endorsing, half of that $12 million would be paid this month and the rest on July 17.
Combined, the changes would save Weirton Steel an estimated $38 million. The new contract would expire March 31, 2004, the expiration date of the current labor agreement.
If the ISU approves the pact, it will immediately launch another round of negotiations with Weirton Steel to tackle changes in the health-care plans that cover employees and 3,500 retirees.