Ehrlich on Washington column, November 11, 2001

MEWS FROM Robert L. Ehrlich, Jr. Second Congressional District of Maryland 1 407 York Rood, Sod* 304 Lulh»rvilU, Morylond 2 1 093 3 1 5 Cannon Hoot* Office Building Washington, D.C 20515 EHRLICH ON WASHINGTON Week of November 11, 2001 By Congressman Robert L. Ehrlich, Jr. Legacy Costs at the Point: Searching for Solutions Recently, I hosted Maryland Congressman Ben Cardin and Pennsylvania Congressman Phil English for a visit to Bethlehem Steel’s Sparrows Point Plant. The purpose of the visit was to meet with members of labor and management to gauge the impact of Bethlehem Steel’s filing for protection under the U.S. Bankruptcy Code and to develop a strategy to achieve meaningful solutions to the problems facing Bethlehem Steel and our domestic steel industry. A significant portion of this meeting was spent discussing Bethlehem Steel’s legacy costs — the health care obligations of steelworker retirees. The tremendous legacy costs are a result of the high number of steel industry retirees (more than 15,000 in Maryland) that receive benefits compared to the small number of active employees (less than 4,000 at Sparrows Point today) who help fund the benefits. Currently, the largest companies with unfunded retiree health insurance plans are Bethlehem Steel, USX Corp. (U.S. Steel Group), LTV Steel, and AK Steel. In 1999, these four companies accounted for 63% of $10.6 billion in unfunded post-retirement health insurance obligations. Bethlehem Steel’s current health care costs are estimated to be $300 million per year; the net present value of Bethlehem’s legacy benefits, excluding pensions, is a staggering $2.8 billion. Many in the steel industry rightfully blame the overwhelming retiree health care costs on the massive layoffs that occurred during the 1970s and 1980s. Labor accepted these voluntary downsizing agreements in exchange for commitments on health care for retirees. It is important to note that technological advances has also played a significant part as the current Sparrows Point plant is making more steel today than during World War II - with only 10% of the workforce.