According to a Detroit Free Press Report, the lower pension benefits for 10,000 retirees and another 1,000 employees nearing retirement would come about if the federal Pension Benefit Guaranty Corp.rescues National’s pension plan (See PBGC to Take National Steel Plans in 2nd Largest Claim Ever) instead of it being included as part of the $750-million US Steel deal.
The United Steelworkers of America (USWA) said a 54-year-old worker with a spouse who was with National for 30 years would get an average $1,700 in monthly benefits under the existing plan. However, under federally set benefit limits, the PBGC would pay that person $1,385 a month (See PBGC Releases 2003 Maximum Guaranteed Benefits ), according to the newspaper report.
That’s why the union is gearing up to fight the deal, despite the fact that it might well save thousands of National Steel’s jobs, the Free Press story said. National’s unions are already fighting in bankruptcy court with the PBGC (See Union, National Steel Question PBGC Intervention) , the federal insurer of private pensions, which typically takes over a plan from an ailing or bankrupt company.
Union Rep: ‘I’m not going to turn my back’ on Retirees
In fact, union officials are meeting informally Friday with US Steel to voice their concerns. “I am not going to turn my back on 10,000 retirees plus 1,000 active workers who are getting close to retirement and say they have no pension and health care rights,” Dan Couture, a USWA local president told the Free Press. “Working in a steel plant is a hard life.”
Initial signals from US Steel aren’t encouraging for the union. US Steel representative Frank Harnack told the Free Press that his company wouldn’t take over the plan. “The government is already planning to handle those plans,” Harnack said, adding that US Steel would establish its own plans and roll National Steel workers into them. How those plans are administered would be a subject of negotiations, the newspaper said.
National, which filed for Chapter 11 bankruptcy reorganization in March, (See National Steel Seeks Bankruptcy Protection ) is Michigan’s largest steel producer, and its Great Lakes operations are the company’s largest manufacturing facilities. The Detroit area mills supply steel to the automotive, container, service center and pipe and tubing industries.
US Steel’s proposed deal is the second large merger announced in the steel industry this week. On Monday, International Steel Group, an industry newcomer forged just last year from the remnants of bankrupt LTV Corp., agreed to buy bankrupt Bethlehem Steel Corp. for $1.5 billion, creating one of the country’s largest steel makers. (See ISG Bethlehem Steel Deal Expected).
Costs for pension and health care plans have helped push more than 30 steel companies into bankruptcy since 1997.(See PBGC Exec: Pension Insurer Hit by “Perfect Storm” ).