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Steel retiree watches and worries
Bill Latishaw never thought he'd see the fall of the giant Bethlehem Steel.
Now a proposed takeover by International Steel Group of Cleveland might revive the working parts of the Bethlehem company, and alter some of his retirement plans.
"It's tragic to see a great company going out of business," Latishaw said. "When I came here the stock was at $198 a share. Now, it's pennies. There were 144,000 workers and there are now less than 12,000."
Latishaw, 71, grew up in Wyomissing, Berks County, and attended Lehigh University. Like so many Engineers in that post-World War II era, the goal was a degree and a lucrative salaried job at "The Steel."
Now he resides in Bethlehem, reads the newspapers and receives updates from the Retired Employees' Benefits Coalition, which represents mostly white-collar retirees in the Lehigh Valley.
Advice from the benefits coalition has been to hold tight as ISG, Bethlehem Steel and the United Steelworkers of America union negotiate a possible merger. If successful, it could form the nation's largest steel company.
But Latishaw is more worried about items promised to him 17 years ago, when he retired. Those so-called legacy costs -- pension, health care and other expenses for retirees -- weigh heavy on mature industries such as steel.
"We're going to lose our life insurance," he said. "The health insurance payments have been ratcheted up every year. The pension may be taken over."
The latest count for 95,000 retirees and 12,000 active employees at Bethlehem Steel is $3.2 billion in under-funded pension costs and $2.8 billion in under-funded health care and insurance costs. It has fewer than 400 active employees and about 12,000 retirees in the Lehigh Valley.
Merger may be the only answer. Robert "Steve" Miller Jr., Bethlehem Steel's chairman, president and chief executive officer, said that's a fine idea, even if it's with the folks who took over Cleveland's LTV Corp. in a liquidation sale.
Miller said that Bethlehem Steel has time to complete a reorganization plan under Chapter 11 rules. The company's monthly financial picture is improving, but those legacy costs are pulling it down.
International Steel Group on Nov. 5 obtained the rights for 60 days to see if it can work out a deal to buy Bethlehem Steel.
Financier Wilbur L. Ross, a specialist in buying distressed companies, formed ISG, which purchased LTV's assets early this year. Because LTV was in Chapter 7 liquidation, ISG was able to acquire the assets and not pay off legacy costs.
Miller has said the case will not be the same with Bethlehem Steel. The Pension Benefit Guaranty Corp., an agency funded by business, is expected to take over Bethlehem Steel's under-funded pension costs in the coming months.
Then the health care costs could be partially covered by ISG's payment for Bethlehem Steel and possibly the new Trade Act of 2002.
The bottom line would have ISG snatching Bethlehem Steel's operating assets -- such as Burns Harbor, Ind., and Sparrows Point, Md. -- and leaving behind liabilities.
Those liabilities would become part of a holding company possibly at Bethlehem Steel's Martin Tower. But that would hardly be the same company Latishaw remembers.