Something stinks in the LTV steel mills - plants that have been a mainstay in the industrial Midwest from northern Ohio to Indiana and Illinois - and it's not the blast furnaces. What smells bad is LTV's sad account of what led it to seek permission in bankruptcy court to call it quits at steel plants in Cleveland, East Chicago, Ind., and Hennepin, Ill.
The nation's third-largest integrated steel maker says it is barely treading water, has run out of money, and wants to preserve the value of its assets for creditors. It also wants the court's OK to save money by trimming the pension and health-care benefits of its retirees and by abrogating its labor agreements, the last of which was painstakingly negotiated with steelworkers in August.
Here's where management's lament about how insufficient cost-cutting moves forced its hand to liquidate becomes really troublesome. While it is certainly true that the steel industry has been on the ropes for a long time, buffeted by cheap imports, plummeting demand, and low prices, labor has gone out on a limb to help it limp to recovery.
In a move that goes against the grain of every organized labor organization, the United Steelworkers of America offered not only to defer scheduled pay raises but more than double the number of work-force reductions requested by LTV to keep the company in business, while still protecting members' health benefits and pensions.
The Steelworkers say their August deal saved LTV more than $250 million a year but now the company is angling for more - or else. The steel maker, which has been in and out of bankruptcy court in three different financial crises now, insists all is not lost if labor and creditors can put their financial needs on hold - again - while the company struggles to meet its pressing financial obligations.
Veteran employees of LTV, who have seen their corporate leaders earn big-time bonuses when the blue-collar bunch got by on concessions, don't know what to believe. Many, who have spent half their lives making steel, can't fathom LTV shutting down all its mills, and hold out hope that local and state politicians will intervene to rescue them from pending unemployment.
If the court grants the company's request to stop making steel, 7,500 workers will be thrown out of work. Cleveland stands to lose 3,200 jobs at its steel plant and corporate headquarters. Arguing that the loss of an employer as significant as LTV would affect more than Cleveland, Governor Taft urged both “labor and management to make absolutely every effort in arriving at a compromise for LTV to remain in operation.”
Other elected officials, including Cleveland Mayor-elect Jane Campbell, are meeting to urgently map out strategies to save the day, even if that means orchestrating a showdown with LTV in bankruptcy court. More power to them. Good-paying manufacturing jobs are not a dime a dozen anymore. Much time, effort, and money are spent by public and private interests to keep local industries happy and thriving.
Two days before Thanksgiving, LTV dropped its bombshell to close up shop in Cleveland and elsewhere, blindsiding its employees and civic supporters. They deserve better from a longtime business partner than notice from bankruptcy court that it intends to cut a deal and run if further rescue attempts fail.
So much for corporate responsibility to community.