The proposal includes a number of benefits-related measures and would give Union members an ownership stake in the troubled company.
Cleveland-based LTV had proposed cutting pensions and eliminating retiree medical benefits as part of a program to save $800 million a year (See LTV Proposes Cutting Pensions, Retiree Benefits ). LTV, which has said it only has enough operating cash to last through September, filed for bankruptcy protection last December.
Details would not be disclosed until union members were briefed, according to a statement from the USWA. An LTV spokesman also refused to confirm the agreement, according to Reuters.
However, in a press release the USWA outlined several of the cost-saving elements of the new pact, including:
- “restructuring” work arrangements while maintaining limits on outside contracting and revising manning levels to reduce the costs of production.
- restructuring managed health care to meaningfully reduce costs without reducing benefits to either workers or current and future retirees
- providing millions in loans from the Union-negotiated Voluntary Employee Benefits Association (VEBA) in order to get LTV through its current difficulties, subject to repayment as the company’s profitability returns
- working with all the parties to approach the Pension Benefit Guaranty Corporation (PBGC) about mutually acceptable ways for LTV to meet its obligations to the pension plan
The agreement gives USWA members 20% ownership of the company, two seats on LTV’s Board of Directors, and profit sharing based on net operating profits before taxes and interest payments.
Coming to Terms
LTV had asked the bankruptcy court for permission to unilaterally impose a new labor contract on its workers, claiming that talks with the union had stalled. However, before the judge could rule on the matter, the company’s creditors stepped in and initiated talks with the steelworkers and company executives.
The restructuring plan, which affects 9,000 workers, will have to be ratified by union members and approved by the bankruptcy court, which has a status hearing scheduled for today.
In an unrelated development on Friday, General Motors announced that it would stop buying steel from LTV Steel by the end of the year as it moves to reduce the number of its suppliers. An Associated Press report noted that sales to GM make up less than 10 percent of LTV’s business, citing a company spokesman.