WARREN WCI bankruptcy leads to health-care worries

One veteran worker said health benefits are a major concern at the mill.
THE VINDICATOR, YOUNGSTOWN, OHIO
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
WARREN -- At 61, Ron Knarr has spent more than two-thirds of his life working in the glow of the steel-making furnaces at WCI Steel in Warren.
A forklift operator who carts materials around the massive steel mill, he still loves his job after 44 years.
Only 10 other WCI workers have been there longer than he has, Knarr said. Retirement? He thought he'd consider it after he turns 62 next month.
But Knarr's confidence in WCI's pension plan and retiree health-care benefits were shaken last week when the Warren steelmaker filed for Chapter 11 bankruptcy protection in U.S. District Court in Youngstown.
Suddenly the secure future he and his fellow workers at WCI have been counting on is uncertain.
"You go to work, it's all talk now. Rumors, rumors. It almost wears you out listening to all the rumors," Knarr said, reflecting at his Canfield Township home.
Company and union officials have assured customers, suppliers, WCI employees and retirees that they plan to continue operating and to reorganize and emerge from bankruptcy as a stronger, more viable company.
Chapter 11 of the federal bankruptcy code is designed for just that purpose -- to give a business protection from its creditors while it works out a plan to resolve financial problems.
But WCI's 1,800 employees know it doesn't always work out that way. Out of 35 American steelmakers that filed Chapter 11 since 1997, 17 were forced to liquidate, including LTV Steel in Cleveland and CSC Ltd. in Warren.
One consolation for longtime employees who fear the future of the company is that their pensions are insured.
The Pension Benefit Guaranty Corp., a federal corporation created under the Employee Retirement Income Security Act of 1974, guarantees payment of basic pension benefits for retirees participating in the nation's more-than 35,000 private-sector defined benefit plans.
Combined pensions
Mike Rubicz, president of United Steelworkers of America Local 1375, which represents 1,400 hourly workers at the mill, said most will have combination pensions.
In fact, most WCI retirees will get a good share of their pension from the PBGC, whether or not WCI survives.
WCI's 1,100-acre site in Warren was owned and operated by LTV Steel in the 1980s, so much of WCI's present work force worked for LTV. The PBGC took over LTV's pension plan when the company liquidated in 2001.
Knarr, for example, worked several years for LTV and its predecessor, Republic Steel, so he expects to get part of his pension from the PBGC and part from WCI.
Gary Steinbeck, a subdistrict director for the United Steelworkers International, noted that WCI is just 15 years old. Its relative youth as a company means its pension obligations are lower than some other, older companies' because it doesn't have tens of thousands of retirees to support.
Pension funding
Reports filed with the federal Securities and Exchange Commission say WCI funneled $22.1 million into the pension plan in the first three quarters of 2003, and paid a total of $41 million into the pension plan in 2002, 2001 and 2000.
Tim Roberts, WCI spokesman, said that the pension plan is not fully funded but that the company is current in its minimum required payments to the plan.
Knarr said most WCI workers know about the PBGC and believe their pensions are secure, though the government-run corporation's pensions may not pay them as much.
What he and his co-workers are worried about more, Knarr said, is health benefits. WCI employees have a generous health-care plan, he said, and they pay a nominal fee to keep the plan when they retire.
Retiree health-care benefits and life insurance cost the company $5.3 million in the first half of 2003 and totaled $16.9 million in 2000, 2001 and 2002.
The company established a trust fund to help pay for those benefits, but it also draws on corporate assets to foot the bill.
If WCI fails in its revival efforts, Knarr said, workers wonder if they'll be like the thousands of LTV Steel retirees who lost their health benefits when the steel giant shut down.
"This company has been good to me. I love my job, steady daylight Monday through Friday," Knarr said pensively. "But at 62, my big worry is health care. That's what most people there are worried about."