About 10,000 retirees and dependents would lose their pensions as well as their health and life insurance under a bankrupt West Virginia steelmaker's plan to return to financial solvency.
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Get Your Report Now!Weirton Steel, the nation's fifth-largest integrated steelmaker, sought Chapter
11 protection in May after losing more than $700 million in five years, according
to the Associated Press.
At the time, Weirton said more than half its $1.4 billion in debt was owed
to retirees.
Last year, the company paid nearly $31 million in retiree benefits, and it
expects to pay slightly more than that this year, according to documents filed
in U.S. Bankruptcy Court in Wheeling, W. Va.
The company claims its reorganization strategy will succeed only if it can
shed those costs. Current employees would feel the squeeze as well. The plan
calls for the elimination of 950 jobs—one-third of the remaining work force—and
reduced benefits for those who keep their jobs.
"We are working very hard to save this company," Weirton spokesman
Gregg Warren said. "It's going to be painful on both sides, but what is
the alternative to saving this company?" He pointed to rival steelmaker
International Steel Group Inc. of Cleveland, saying it "continues to get
bigger and stronger ... it's squeezing the little guy out. We have to do something
to compete."
In February, workers took a 5 percent pay cut and made other sacrifices to
keep the company afloat. The 3,000 members of the Independent Steelworkers Union
voted to forgo a planned $1 per hour raise and froze their accrued pension benefits
to stop the company's liability from growing any larger.
Former CEO John Walker had hoped to cut costs by $34 million by asking both
active employees and retirees for health care givebacks. Despite warnings that
lack of cooperation could lead to bankruptcy, many retirees balked at the request
to help cover the cost of health insurance with a $200 monthly deduction from
their pension checks.
About 65 percent voluntarily agreed to the plan, but the company — partly
in fear of litigation — decided not to impose the change unilaterally on
the holdouts.
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