August 22, 2002

Bethlehem Steel Corp. wants to give retirees a voice as the company tries to curb pension and health care benefits costs. It's an issue that affects thousands of Western New Yorkers who worked in the steel company's sprawling Lackawanna complex.

The bankrupt steelmaker has asked a federal bankruptcy court judge to create a six-member panel that would represent the interests of 75,000 retirees, plus 20,000 spouses and dependents. A hearing is set for Sept. 12.

A group representing Bethlehem salaried retirees, the Retired Employees' Benefit Coalition, likes the idea, but argues that the committee proposed by Bethlehem would shortchange former salaried employees.

Bethlehem says it must reduce its pension, health care benefits and life insurance obligation to retirees - estimated at close to $2.4 billion - in order to survive.

"Bethlehem is facing substantial increases next year in health care-related costs and we must move forward with discussions on modified health care coverage for retirees," said Robert "Steve" Miller Jr., Bethlehem's chief executive officer, in a statement.

The company also wants to revise its labor contract with the United Steelworkers of America.

The steelmaker has relatively few active employees left in the Buffalo Niagara region, with about 400 people working at its galvanized products mill in Lackawanna.

But thousands of Bethlehem retirees and their spouses still live in the region, and rely on the company for their pension and health care benefits.

In its heyday, Bethlehem Steel employed 20,000 people in the region, but its local employment and production dropped sharply two decades ago when the company announced the end of basic steelmaking operations here. Its presence was further diminished last year when the company closed its coke ovens in Lackawanna.

Bethlehem wants the retirees' committee to include one retiree each from the unions representing steelworkers, miners, shipyard workers and railroad workers at Bethlehem. Each union would select its own representative.

The other two members would be salaried employees chosen by the company: one covered by a health plan covering employees who retired before April 1, 1984, and the other for employees who retired after that date and are covered by the Comprehensive Medical Program.

The salaried retirees' group, known as REBCO, says Bethlehem's plan would give voting rights to the salaried retirees who retired before April 1, 1984, but not the other retired salaried workers. Bethlehem says that's because it could terminate or amend that plan unilaterally, said Bruce Davis, an attorney with REBCO.

Davis argues that the committee should include three salaried retirees, each of whom should be allowed to vote.

"We think that the committee as proposed by Bethlehem is unbalanced, because you have four from a collective bargaining history - hourly retirees - and two from the salaried retirees," he said.

Salaried workers and their spouses account for about 28 percent of all the retirees and spouses who receive benefits from Bethlehem, according to court documents filed by the company.

The Steelworkers account for the single largest group of benefits recipients, with about 65 percent of the total. Thomas Conway, the Steelworkers union's chief negotiator, could not be reached to comment on Bethlehem's committee proposal.

Davis said it appears the company will focus on health care costs as it tries to reduce expenses. He noted that while there's a "safety net" for pension benefits in the form of the Pension Benefit Guaranty Corp., there's no comparable backup for workers' health benefits.