Beth will idle 500 at Point next week
Furloughs are viewed as a preliminary to job
reductions here; Steel market worsening; 'It is
inevitable that we have to cut our costs,' ailing firm's
CEO says
By Gus G. Sentementes
Sun Staff
Originally published December 21, 2002
Because of a "rapidly softening steel market,"
Bethlehem Steel Corp. will furlough 500 workers at
its Sparrows Point plant during Christmas week, the
company's chairman and chief executive said
yesterday.
Though for one week, the cutback is a precursor to
permanent work force reductions expected in the next
several months as the steelmaker tries to emerge from
bankruptcy either on its own or as part of another
company.
Robert S.
"Steve" Miller,
Bethlehem's
chairman and
chief executive,
said yesterday
there will be
job reductions
at Sparrows
Point in the
next couple of
months but
declined to
give a precise
number. Sparrows Point employs 3,300 workers.
"It is inevitable that we have to cut our costs," Miller
said.
Miller visited the Baltimore County plant yesterday
for meetings with employees and the media. The
session had been scheduled before the federal Pension
Benefit Guaranty Corp. terminated the bankrupt
company's pension plan Wednesday.
The PBGC's move has threatened a possible deal to
sell Bethlehem's assets to a rival steelmaker,
Cleveland-based International Steel Group Inc.,
officials from both companies said.
Tom Conway, chairman of the United Steelworkers
of America's negotiating committee, said he was
aware that Bethlehem will need significant job
reductions in order to be competitive.
As part of the current labor contract, the union and
the company would have to agree on those
reductions, Conway said. Both blue-collar and
white-collar jobs will be affected, he said.
"We're convinced that the steel industry is undergoing
sort of a historic change," Conway said. "Right now,
frankly, we compete against cheap imports and cheap
minimills. If we ignore it, we will eventually be
forced out of business."
Next week's temporary layoff is the second in a
month at Sparrows Point. Sparrows Point suspended
finishing operations during Thanksgiving week and
laid off 700 workers.
The finishing side of the plant will also be affected
next week when the hot mill, which turns slabs of
steel into thin coils, suspends operations.
At the plant's main office yesterday, Miller said
Bethlehem has a business plan to continue operating
through next year. The plan assumes that Bethlehem
no longer has to contribute to the pension plan, that
market conditions do not worsen and that it's able to
keep customers, he said.
Miller said the steel market is softening, particularly
in demand for products used by the construction
industry and which are made at Sparrows Point. He
said demand has remained strong at Bethlehem's
biggest plant, in Burns Harbor, Ind., which makes
steel for the automobile industry.
The PBGC, a government agency that insures pension
programs, said it moved to terminate the pension plan
and protect the benefits of 95,000 workers and
retirees - including 14,600 in the Baltimore area -
and limit its own liabilities. The agency would be
liable for $3.7 billion of the Bethlehem plan, which is
underfunded by a total $4.3 billion.
The pension takeover, which awaits court approval,
would rank as the government's largest in the PBGC's
28-year history. As of Dec. 18, Bethlehem workers
are no longer accruing new pension benefits.
Miller yesterday decried the PBGC's pension takeover
move, saying it disrupted plans with ISG and the
Steelworkers union to offer early-retirement
enticements to senior employees. But he said he
expects negotiations with ISG to continue past Jan. 6,
the formal deadline of the two companies' 60-day
exclusive exploration agreement.
"We have not made a decision on what course to
take," said Miller, referring to a possible Bethlehem
challenge in court to the pension plan's takeover.
"We'll try to negotiate with the PBGC. We're hoping
to get there by persuasion rather than litigation."
Sen. Barbara A. Mikulski, who flanked Miller at
yesterday's media briefing, said she was "outraged" by
the PBGC takeover.
Bethlehem is based in Pennsylvania, and Mikulski
said she would enlist the support of that state's senior
U.S. senator, Arlen Specter, and lobby other top
government officials to pressure the PBGC to push
back its termination date to February.
"If they're going to make the lives of my steelworkers
miserable, I'm going to make their lives miserable,"
Mikulski vowed.
Miller contested the PBGC move, saying that
Bethlehem was not in arrears on its pension-funding
obligations. The company had expected to miss a
required $190 million payment in July 2003.
Jeffrey Speicher, a PBGC spokesman, said "it's not
necessary under the law for the plan to have missed
its minimum funding payments for termination."
Said Speicher: "The PBGC determined that the plan is
unaffordable and there's no reasonable scenario under
which the company or the bankruptcy estate would be
able to pay all of the benefits, given its level of
underfunding."
Copyright © 2002, The Baltimore Sun
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