Bethlehem Steel collapse leaves retired workers scrambling for benefits

DAVID B. CARUSO, Associated Press Writer
Sunday, February 9, 2003
©2003 Associated Press

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."'

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 March 31.

It was seen as essential to the company's bid to sell its assets to International Steel Group, and 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 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. Moreover, corporate America largely has shifted the responsibility of old-age provisioning to workers, with self-funded plans such as 401(k) accounts.

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 still get some benefits. Pension payments, 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-related costs of many retired steel workers.

Joe Pancoe, who worked for Bethlehem Steel for 31 years with spray paint and asbestos, 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.

Almost all workers agree Bethlehem Steel is in little position to help. When it declared bankruptcy in October 2001, the company had about 12,000 employees, down from more than 300,000 during World War II. Most factories have been closed.

On Saturday, Bethlehem's board approved the sale of the company's assets to International Steel Group, a new steel producer cobbled together by financier Wilbur Ross from other distressed steel mills. The deal is subject to approval by the bankruptcy court.

Bruce Davis, a retired Bethlehem Steel lawyer who serves as legal counsel for the Retired Employees Benefit Coalition, said several labor groups are negotiating to extend health-care benefits, at least temporarily.

The coalition has asked the company to continue health benefits through May, rather than March. It also anticipates that it will be able to offer retirees a replacement health insurance package similar to ones offered at other bankrupt steel companies.

Would you please fill me in about the social compact you write about. I thought you work, you get paid and your supposed to save for a rainy day.
I'm feeling under minded.
I subscribe to the idea of marry for money. It's a better system then voting for handouts. Kings and Queens have beat mobs in the harsh light of history.

When the retirees were working, the steel market was very strong, in part because there was no foreign competition. Wages had risen so high that union negotiators started looking at other items to pursue, and began negotiating large retirement benefits. Unfortunately they did not secure the funding up-front, but relied on conditions to remain as they were so that the companys could pay the retirees out of the monthly profits. When conditions changed, the money was not there to pay the benefits.

Who's to blame? Probably the unions for negotiating benefits to be paid from future earnings. Those earnings are unsure at best, and also they were taking away from the future workers.

Could the companies have withstood the demands from the unions? Probably not, as it would be difficult to convince workers not to strike because "things might be different in the future."

I dont't think that taxpayers should bail-out retirees who negotiated pie-in-the-sky benefits. It should only apply to pension funds that are lost due to embezzlement or banking failure or the like. We have a basic safety net, called Social Security.

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