Steelworkers Walk Out on 401(k)

November 27, 2002 ( - A group of unionized steel workers have walked off the job, angered that their employer wants to replace their pension plan with a 401(k) plan.

The 56 union workers at Dave Steel Co. in Asheville, North Carolina rejected the company’s proposal late last Friday and voted to strike, according to published reports.

Sticking Points

“The biggest sticking point with us is the pension plan,” said Jeff Pruitt, president of Local 812 of the International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, according to the report.

The company wants to replace the union pension plan with a 401(k) plan that employees contribute to, said Jeff Dave, executive vice president at Dave Steel, which has also has 34 non-union people working in the office, according to the Asheville Citizen-Times.

“We’re trying to give the employees more choice,” he said. “We’re not taking anything away from them at all. I’m not embarrassed at all about the wages and benefits we offer our employees.”

Competitive Disadvantage

The company said the union pension fund puts the company at a competitive disadvantage in recruiting employees because employees must work at the company five years before they are eligible for benefits.  

Of course, that’s not how all the workers see it.   The report cites employee Dwight Carney who said, “If the money gets stolen out of a 401(k), that’s my retirement gone.   With a pension fund, it’s a guaranteed thing.”

Certainly the Pension Benefit Guaranty Corporation (PBGC), the nation’s private pension plan insurer has been called on regularly this year to pick up the responsibility for a string of ailing pension plans, particularly from steel companies – many of whom were already in bankruptcy court when the agency got involved.  

Also at issue in this particular case is how much Dave Steel contributes to the pension fund.   The Citizen-Times says that the average industry contribution to union pension funds is 85 cents per hour worked by employees, compared with 55 cents per hour at Dave Steel, according to Edward Cottongim, general organizer for the union.