Feb 17, 2003
International Steel Group just agreed to buy bankrupt Bethlehem Steel for one and a half billion dollars. The hearts of the bosses, bankers and lawyers beat fast with joy. They were buying up Bethlehem Steel which was in bankruptcy court. The advantage for the bosses is that the bankruptcy court had already allowed Bethlehem to throw out parts of their contract with the United Steel Workers of America. Bethlehem was able to stop paying the health premiums and life insurance benefits of 95,000 Bethlehem retirees. And all pensions, for retirees and for the 11,000 still working, are tossed to the PBGC (the Pension Benefit Guarantee Corporation).
What does this mean for the workers? The amount of the pensions paid will be limited by the rules of the PBGC. For highly paid workers or those earning a lot of overtime, this means their pensions are cut considerably.
For workers still working, Bethlehem doesn't have to put anything into their pensions from the time the bankruptcy terms are accepted. So those not yet retired will get reduced pensions from the PBGC compared to those already retired.
The PBGC was set up in 1974 after a scandal over the loss of workers' pensions, particularly in the case of bankrupt automaker Studebaker.
Although PBGC has the word "guarantee" in its name, it really guarantees nothing – not even pensions, only a portion of some pensions. It is a federal agency, but receives no federal funds, only a ridiculous $19 charge per person per YEAR from those corporations with pensions it is guaranteeing.
PBGC was covering pensions of 800,000 workers from bankrupt companies before this most recent round of bankruptcies, like United Airlines, US Airways and Kmart, in addition to these new steel bankruptcies. This past year, the assets the PBGC had were not enough to cover its liabilities. It paid out eleven billion dollars more than it took in – and it is now three billion in debt.
For corporate America looking always to cut its expenses, the PBGC is a wonderful invention. And International Steel Group, which bought up Bethlehem, has plenty of experience with this kind of maneuver, using the bankruptcy courts against workers. The corporation was born two years ago from the remaining assets of LTV. LTV was a steel corporation which had been in bankruptcy court not once but TWICE, first in 1986 and then in 2000. Each time it was able to get rid of benefits while leaving steel assets for the next set of investors to gobble up.
Other steel companies are looking to do the same thing. Last month, U.S. Steel bid on bankrupt National Steel. National Steel is waiting to hear if the steel union will allow them to pass their pensions off to the PBGC. Another corporation has started a bidding war with them, since both companies expect they could make a profit in steel.
But these corporate tricks leave nothing for the work force, no matter how the consolidation of companies is carried out. Said an angry Bethlehem worker from the Sparrows Point plant outside Baltimore, "Most of us walk out of here with some type of health ailment. Most of us will work until the day we die because retirement is no longer an option. This is what Bethlehem Steel Corporation has done to us." A steel worker with 37 years at a division of National Steel said, "Everything I worked for is going to be taken away. I never thought it could come to this."
The steel bosses show everyone what way they want to go. But the future still depends on what the workers accept and on what they are ready to fight for.