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   Vol.66/No.22            June 3, 2002 
 
 
Steel bosses deny health and
pension benefits to retirees
(As I See It column)
 
BY FRANK FORRESTAL  
PITTSBURGH--If Dante, the great Italian poet, were alive he would find horrors worse than those he described in the Inferno in today's steel industry. The human magnitude of the crisis was brought home to many this spring when tens of thousands of retired steelworkers lost their health-care benefits. Many took a sharp cut in their pensions as well. Lifetime promises from the steel companies were not worth the paper they were written on.

"We should have had this for the rest of our lives," said James Gilliam, a retired 66-year-old steelworker from Pittsburgh. "They're messing us over, treating us like animals." Gilliam worked 35 years for LTV. He is one of 12,000 LTV retirees and dependents in the Pittsburgh region who have had their health benefits eliminated. Altogether, 85,000 LTV workers are being forced to shop for replacement health-care coverage. Some 45,000 of these retired workers live in Pennsylvania.

"We live a long time but our life is not a good one," said Rosalee Melgari, a widow of an LTV retiree with a heart condition. Now in her 80s, the only compensation Melgari will receive from LTV is a paltry pension of $117.60 a month. Like thousands of other retirees, Melgari must now rely solely on Medicare, which doesn't cover the costs of prescription drugs.

Steelworkers, like other industrial workers, feel entitled to lifetime health care. Every steelworker knows the toll working in the mills and coke ovens takes on the body. "We worked hard. We worked in coke ovens. There was benzene there, sulfuric acid," said one LTV worker who was forced to retire from the Hazlewood mill in Pittsburgh.

Earlier this year a federal bankruptcy court in Ohio gave LTV permission to protect its assets and cut off health-care benefits to its retirees--even though this was a clear violation of the labor agreement with the United Steelworkers of America (USWA), the union that organizes workers at major U.S. mills.

In the wake of this disaster, thousands of retired and laid-off LTV workers attended informational meetings organized by the union. The meetings were filled to capacity. At some, hundreds were turned away for lack of space. Anger, more than any other emotion, was the prevailing sentiment at these overflowing meetings.

Anger at the bosses' inhuman stance. And anger because these meetings organized by the union officials put forward no proposals about fighting for their rights. Instead, they were given "insurance options" and "counseling" from the likes of insurance agents, and other hangers-on of the misnamed health-care industry.

"If we don't receive some kind of help, we are going to have a lot of trouble," said one retired LTV worker, adding that his only option for continued coverage is the Federal COBRA program, which at $1,300 a month exceeds his monthly pension of $1,240. COBRA is the acronym for Consolidated Omnibus Budget Reconciliation Act of 1985.

According to the union, about 50 percent of retired steelworkers receive a pension of between $500 and $900 a month; about 20 percent make monthly pensions of $1,300 or more; and almost 20 percent receive less than $500 a month.  
 
Unfunded retiree benefits
In the recent period, 33 steel companies have filed for bankruptcy, either to liquidate or reorganize. Some 17 have liquidated, resulting in more than 125,000 workers losing their health-care benefits. But the crisis doesn't stop there. Unfunded retiree benefits in the current nine unionized steel companies amounted to $9 billion at the end of 2000. Some say today it is as high as $13 billion. While the industry employs about 200,000 workers, there are approximately 600,000 retirees and dependents who rely on the steel industry for health-care benefits. The state with the largest percentage is Pennsylvania (115,000), followed by Ohio (56,000), Indiana (45,000), and Illinois (30,000).

With one active steelworker to every three retirees, the steel industry has "nearly triple the [ratio] of most other major basic manufacturing industries," according to the Pittsburgh Post-Gazette.

Steel prices have been at a 20-year low, a result of price competition among capitalist rivals, as they contend over limited markets. The industry is plagued by overproduction and excess capacity. Overproduction is not measured in relation to social needs, but by what can be sold at a price high enough to realize a competitive profit.  
 
'Retirees are the losers'
The Wall Street Journal featured a front-page article whose title accurately summed up the view of the steel bosses: "Retiree Costs Drive Big Change in Steel; Retirees Are Losers." The big-business paper said that the "American steel industry is in the midst of a quiet but potentially profound transformation driven by companies' costly obligations to retirees."

The paper continued, "U.S. steelmakers face an estimated $10 billion in costs for the health care, life insurance and pensions they promised in the past to retirees, who now far outnumber active steelworkers. These expenses, known as legacy costs, make it harder to compete with imports and are a key reason many companies can't earn a profit."

The steel bosses at US Steel Corp. are pushing a mega-merger plan. But this is conditional on getting union concessions and an agreement by the federal government to pay health benefits for thousands of retired workers.

Bethlehem Steel Corp., which has 10 retirees or dependents for every active worker, plans to become a holding company, but remain in bankruptcy. This would force retired steelworkers to compete for its assets in bankruptcy court. Few believe that the so-called legacy costs of steelworkers would take precedence over the claims of Bethlehem's bondholders.

Bethlehem also plans to contract out steel-making. The company is reportedly close to a deal with a Brazilian steelmaker, which would pay fees for operating Bethlehem's modern Sparrows Point plant in Maryland. The catch to the whole deal is that the Brazilian company wants no part of paying retirees' health-care costs.

Since LTV has stopped making steel, its attention has focused on selling its steel plants. It found a buyer, W.L. Ross and Co., right off. LTV is now called International Steel Group. This group of capitalists, according to the Journal, "won't have to pay the legacy costs because it didn't buy a company but simply its carcass."

The new company claims this arrangement will lower the cost of each ton of steel by $20 to $40. The owner of the buyout group, W.L. Ross, says that he "hopes to have a unionized workforce" as long as the "the union is sufficiently flexible." His health care and retirement plan doesn't go beyond offering a 401(k). But in the post-Enron fallout, more and more workers know these seemingly secure plans can go up in smoke in a heartbeat.

As in the nonunion minimills, which now employ some 120,000 workers, Ross is seeking a labor agreement that ties wages to plant productivity. It will be similar to the plan in place at Nucor Corp., the industry's "most profitable player." Ross has appointed a former Nucor executive to head the International Steel Group.

At the same time that steel bosses are restructuring, steelworkers are accused of being "greedy" and "unyielding" at a time when the steel bosses needed "concessions to stay afloat." But this turns reality on its head. In fact, a strong argument can be made that the unions have yielded too much. Last year LTV workers agreed to defer $1.50 an hour in wage increases and made other concessions, only to see the entire company shut down. And some 3,000 workers at the Wheeling-Pittsburgh Steel Corp. company ratified a labor agreement that cut their wages by 15 percent, only to see 1,500 steelworkers laid off a couple of months later.

The USWA is lobbying for the government to pay retirees' health-care costs. In Congress they are seeking cosponsors of the Steel Industry Legacy Relief Act of 2002. In the Senate, they are supporting West Virginia senator Jay Rockefeller's bill, "The Steel Industry and Retiree Benefits Protection Act of 2002." The union officials agree with Rockefeller, who blames the crisis on foreign "illegal subsidies" of steel.

The congressional bill, in addition to providing health insurance benefits, calls for strengthening "the American steel industry." The steelworkers' union is also in favor of removing "the weight of 'legacy costs' as a barrier" to the merging of "American" steel companies. The bill concludes by saying that "it is in our military and national security interest for the United States to have a strong steel industry for years to come."

The thoroughly American nationalist framework of the USWA leadership was summed up recently by the union's international president, Leo Girard. "Do we want to have a strong domestic steel industry and be able to rebuild America's infrastructure?" he asked. "Do we want the next World Trade Center to be built with American steel?"  
 
Opposition to the bills
Many within the U.S. ruling class are opposed to the bills. In the steel industry, opponents include the owners of the minimills and the American Institute for International Steel, whose president said, "The domestic steel industry has been a corporate welfare queen for 30 years."

In Washington, they are opposed by bourgeois politicians such as Sen. Philip Gramm, who has described the use of federal money for this purpose as "piracy."

As expected, President George Bush announced May 10 that he is against federal assistance to finance health insurance for retired steelworkers. After intense steel industry lobbying backed by the USWA, the Bush administration in March agreed to impose tariffs on steel of up to 30 percent for three years. This move ratcheted up the already tense trade relations with Washington's rivals in Europe, as well as in the semicolonial world. At home Bush's move was opposed by the auto barons, who favor lower prices for steel.

The USWA's response to the plant shutdowns, mass layoffs, and cutting of health benefits has been woefully inadequate. Instead of mobilizing its members to defend the union and fight for a program to unify workers worldwide, the steelworkers officialdom supports the protectionist policies of finance capital and ever more onerous trade restrictions. Such a course will only magnify the unequal terms of trade intrinsic to the world capitalist market, under which the semicolonial world is hit the hardest.

One impact of the current crisis is the shredding of employer-fostered illusions in "promises" of retirement and health benefits. In New International magazine, a magazine of Marxist politics and theory, Jack Barnes took up this question in a 1994 talk entitled, "Imperialism's March Toward Fascism and War."

"Never think that you have a pension, that you have a medical plan," he said. "What you have is the capitalist's promise of a pension, the promise of a medical plan. You have a promise based on the 'value' of the paper holding in a 'trust.' And trust it you should not!"

In another talk, published in the Pathfinder book, Capitalism's World Disorder, Barnes says, "Workers should rid ourselves of the illusion that anything we or fellow working people have put somewhere--in a bank, an insurance policy, a pension fund--is secure."

In a deep crisis, Barnes says, "nothing 'stands behind' these institutions, no matter what we have been told about alleged government guarantees."  
 
Experience of coal miners
One experience that steelworkers should take to heart is the decades-long battle United Mine Workers miners have fought to maintain their health care. These benefits were won through a mass mobilization of coal miners beginning in the 1940s. The government made a "promise" to ensure that miners receive cradle-to-grave health benefits. Many times the government, egged on by the coal bosses, has tried to renege on its pledge.

Each major challenge has been met head-on by the coal miners. They have fought many strikes--from the 111-day 1977û78 national strike to the battle against Pittston in the late 1980s--to defend their right to a lifetime health card. The most recent protest took place in May 2000 when 12,000 miners converged in Washington under the banner, "Defend the Coal Act! Keep the Promise." The miners' determination to defend their right to a health card points to the need to win a health card for the working class as a whole.

The recent developments in the steel industry have another message too. "With retired workers living longer, this is increasingly a hugely expensive proposition," is how a leader of the National Association of Manufacturers put it.

The capitalist market system with its dog-eat-dog values, was not designed with the idea that workers should live long after they retire. On average, workers live some 10 years longer than retirement age. This poses a big crisis for the capitalist rulers.

This disaster comes, ironically, from human progress. After thousands of years, human labor has made huge advances in medical science. Human beings are living longer. Instead of a great development to celebrate and make further advances on, the increased longevity of humanity is posed as a grave crisis. This is the best the capitalist world has to offer.
 
 
Related article:
Pensions are steelworkers' right  
 
 
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