A new contract with the United Steelworkers union is one of the major obstacles as Wheeling-Pittsburgh Steel Corp. prepares to present its reorganization plan to federal bankruptcy court, company president and chief executive officer William Scharffenberger said Tuesday.
“Negotiating an equitable labor agreement is the single most important task still before us,” Scharffenberger said during the company’s annual shareholders’ meeting.
“The next contract we sign with the United Steelworkers will, to a very large degree, determine whether Wheeling-Pittsburgh can compete in the global steel economy after we leave the shelter of bankruptcy.”
He said contract talks with the union must start soon but probably not until November. The union’s current contract expires 10 days after the company’s reorganization is approved by the court, Scharffenberger said.
But USW District 23 Director Jim Bowen said following the meeting that it would be foolish to start contract talks before the reorganization is complete.
Bowen said that there’s no sense “wasting our time” negotiating a contract when all claims against the company have not been settled and that he favors waiting until the plan is filed and the union knows how much money the company has to pay workers.
Scharffenberger, speaking at a press conference before the shareholders’ meeting, said talks about the company’s pension obligations are continuing with the union and the Pension Benefit Guaranty Corp., the federal agency that insures pensions.
When Wheeling-Pitt filed for Chapter 11 bankruptcy protection in April, 1985, it terminated its pension plan, and the federal pension agency assumed responsibility for the benefits.
Scharffenberger said the company is also negotiating with the Internal Revenue Service, which has a $400-million claim against the company stemming from the pension problems. He said the IRS has offered to accept $18 million to settle the dispute, while the company is offering $1.8 million.
Scharffenberger said the USW should not expect too much in its contract talks: “Our negotiations must be conducted in the light of what could be called optimistic realism.”
Wheeling-Pitt will try to negotiate a 15% work force reduction over the next 2 years, mainly through attrition, Scharffenberger said. The company has 6,400 employees, 5,200 of who are covered by the union contract.
He said Wheeling-Pitt has about $414 million in cash on hand, but most will go to creditors immediately after the reorganization plan is confirmed.
“As terrible as bankruptcy is, and as expensive as it is . . . it gave us a marvelous opportunity to clean up the company,” Scharffenberger said at the press conference. “But I don’t recommend it.”