[Congressional Record Volume 147, Number 177 (Wednesday, December 19, 2001)]
[Senate]
[Pages S13664-S13666]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              LTV SHUTDOWN

  Mr. WELLSTONE. Mr. President, there is a piece in the New York Times 
today, the business section, ``LTV Seems on the Verge of a Shutdown,'' 
subtitled ``Without Loan, Steel Giant Could End Its Labor Contract 
Today.''
  I ask unanimous consent that this article be printed in the Record.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

                [From the New York Times, Dec. 19, 2001]

                  LTV Seems on the Verge of a Shutdown

                           (By Riva D. Atlas)

       After more than half a century in business, the LTV 
     Corporation will soon shut its doors, barring a government-
     supplied miracle.
       One of the nation's biggest steel makers, LTV put its mills 
     earlier this month on what is called ``hot idle,'' which 
     would allow the company to restart them quickly if a 
     government-backed loan comes through at the last minute.
       But if help does not arrive by today, the company will ask 
     the bankruptcy judge to end its labor contract.
       A shutdown would leave about 70,000 retirees and recent 
     employees with no or reduced pensions and health care 
     benefits, and force the government to pick up at least some 
     of the tab for what remains. The pension costs alone would be 
     at least $2 billion.
       LTV's predicament--with creditors on one side saying life 
     support no longer makes sense and workers on the other 
     fighting to preserve jobs and benefits--may become all too 
     familiar in the future. More companies are liquidating in 
     bankruptcy under pressure from creditors.
       In the steel industry alone, 12 companies have shut down 
     since 1998, according to the United Steelworkers of America, 
     and 17 more are now in bankruptcy. The steelworkers union is 
     lobbying for government assistance--as are Bethlehem Steel, 
     U.S. Steel and Wheeling-Pittsburgh, which want permission to 
     consolidate in an effort to avoid LTV's fate.
       LTV's decision to shut down, announced last month, comes a 
     year into its second bankruptcy. In its first bout with 
     Chapter 11, the company spent seven years in bankruptcy--one 
     of the longest reorganizations of any American company. Now, 
     LTV's management has concluded that its losses, $2 million a 
     day, are simply too large.

[[Page S13665]]

       ``The company was running out of cash,'' said James Bonsall 
     Jr., chief restructuring officer of LTV. Unless it began to 
     liquidate, it would be unable to pay off $100 million in bank 
     debt due at the end of the year, he said. Officials at J.P. 
     Morgan Chase, which provided LTV with $582 million shortly 
     after the bankruptcy filling in return for first claim on 
     LTV's assets, declined to comment.
       If LTV closes, it will mean the end of a company with roots 
     far from the steel industry. Founded by James Ling, a high 
     school dropout from Hugo, Okla., the predecessor company, 
     known as Ling-Temco-Vought, had interests in electronics and 
     aerospace. An avid conglomerator, Mr. Ling's endless stream 
     of acquisitions landed his company in 14th place on the 
     Fortune 500 in 1967. The following year, he entered the steel 
     business with LTV's $425 million acquisition of Jones & 
     Laughlin Steel. (Mr. Ling was ousted in 1970 under pressure 
     from LTV's banks and has since emerged as an oil industry 
     entrepreneur in Texas.)
       LTV sold off the other businesses during its first 
     bankruptcy. ``We tried to get rid of the steel business, but 
     we couldn't,'' said Mark Tomasch, a company spokesman. The 
     steel business was unattractive to buyers, he said, in part 
     because of the large health care obligations.
       With $5 billion in revenues last year, LTV was the third-
     largest integrated steel producer in the United States, 
     operating steel mills in Cleveland and East Chicago, Ind.
       LTV's employees, aware that jobs are hard to come by, are 
     fighting to keep the company alive. Their situation has won 
     them the support of members of Congress from the region. 
     Analysts and investment bankers say the workers' expectations 
     are unrealistic, and ultimately side with LTV's management. 
     Demand for LTV's product is too meager to justify the company 
     staying in business, these executives said.
       [On Tuesday, the U.S. and 38 other nations agreed to reduce 
     world output of steel by nearly 10 percent over the next 
     decade in an effort to drive up demand. C8.]
       ``All these politicians want the steel mills to open or 
     reopen, but they never look at the other side of the 
     equation,'' said Charles Bradford, an independent steel 
     industry analyst and consultant based in New York. ``They 
     say, `Let's make steel,' '' Mr. Bradford said, citing a 
     rallying cry of the steelworkers. ``But they never think 
     about who's going to buy the stuff.''
       LTV's business, along with that of the other large steel 
     makers, has steadily weakened in recent years, thanks in part 
     to cheap foreign imports that have been flooding the United 
     States since 1998. (Operators of so-called ``mini-mills,'' 
     which are not always small and recycle scrap steel into new 
     products, have generally remained profitable.)
       All the integrated steel companies, including LTV, are also 
     paying benefits to a population far larger than their 
     employees. At LTV, there recently were at least 10 retirees 
     for every worker. The precise number is unclear because the 
     union counts 10,000 more retirees than the company does.
       Waves of layoffs beginning in the 1980's and continuing in 
     the last 2 years have swelled the ranks of retirees at most 
     steel companies. A provision in many steelworkers' contracts 
     guarantees them the right to claim retirement benefits early 
     if they are dismissed or if their mills shut down, said Cary 
     Burnell, a member of the research staff at the steelworkers 
     union. As part of their push for industry consolidation, U.S. 
     Steel and Bethlehem Steel asked Congress two weeks ago to 
     assume some of their health care costs.
       LTV's workers are laboring furiously to pull off an 11th-
     hour rescue, but their prospects are dim. Their union is 
     hoping for a $250 million loan backed by the Emergency Steel 
     Loan Guarantee Board, an arm of the Commerce Department. 
     ``We're going to fight like hell to get this loan, and fight 
     like hell to save this company,'' said Leo Gerard, 
     international president of the steelworkers union.
       The company's banks, National City and KeyBank, suspended 
     their efforts to secure such a loan last month, after 
     deciding that they could not adequately demonstrate that the 
     loan could be repaid.
       Senator Paul Wellstone, a Democrat from Minnesota, was 
     hoping to attach an amendment to the economic stimulus bill 
     that would loosen such loan standards, but it is unclear when 
     the bill will come to a vote, said a member of his staff. The 
     union also delivered a letter, signed by 91 members of 
     Congress, to the Commerce Department on Friday urging 
     approval of the loan.
       But with the union due to report its progress to the 
     bankruptcy judge today, time may be running out for LTV's 
     workers. Even if the loan is approved, the company says it 
     will not be enough to keep LTV alive. ``The company would 
     need close to $1 billion to return to business,'' said Mr. 
     Tomasch, the spokesman.
       If the bankruptcy judge permits, LTV will soon stop paying 
     retirement and health benefits. Some of these expenses will 
     be assumed by the government. The Pension Benefit Guaranty 
     Corporation will take over LTV's retirement plan, at what it 
     estimates will be a cost of $2 billion. Retirees over 65 will 
     qualify for Medicare.
       Many of LTV's remaining employees will be out of luck. 
     There are limits on the benefits the pension agency will 
     cover, according to Mr. Burnell of the steelworkers. It will 
     not cover, for example, a payment of $400 a month from the 
     company to many steelworkers dismissed between the ages of 50 
     to 62, intended to tide them over until they qualify for 
     Social Security. Someone with 20 years at LTV typically 
     qualifies for a pension of $1,450 a month, including the $400 
     monthly payment, but the pension agency would exclude recent 
     enhancements to the pension plan and probably pay about half 
     that amount, Mr. Burnell said.
       Employees younger than 65 will also be on their own for 
     medical costs. A fund set up by LTV when it last emerged from 
     bankruptcy to pay for employees' health care probably will be 
     out of money in less than a year, said Mr. Tomasch, the LTV 
     spokesman. Among the benefits that will be lost is a medical 
     plan that covers 80 to 90 percent of the costs of 
     prescriptions ordered by mail. Last year, the company paid 
     $200 million in health care costs, he said.
       If LTV's unions are unable to secure the loan, their best 
     hope is to find a buyer for the mills.
       ``Plan A is to keep LTV operating and to do our work in 
     Washington, D.C.,'' said Stephanie Tubbs Jones, a Democratic 
     representative from the Cleveland area, where LTV has it's 
     biggest mill. ``Plan B is to prepare our community to invite 
     a new buyer for LTV, including providing incentives.''
       Finding a buyer for the Cleveland mill will not be easy. 
     ``There is excess capacity around the world, and the 
     Cleveland mill is one of the highest-cost mills,'' said Mr. 
     Bradford, the independent analyst.
       Even if a buyer is found, that might not help LTV's current 
     employees. The mills will be more attractive to a buyer 
     without the workers, Mr. Bradford said, because then they 
     would not be forced to assume the health care costs.

  Mr. WELLSTONE. I will read a paragraph:

       LTV's workers are laboring fiercely to pull off an 11th-
     hour rescue, but their prospects are dim. Their union is 
     hoping for a $250 million loan backed by the Emergency Steel 
     Loan Guarantee Board, an arm of the Commerce Department. 
     ``We're going to fight like hell to get this loan, and fight 
     like hell to save this company,'' said Leo Gerard, 
     international president of the steelworkers union.

  Mr. President, I along with other Senators who try to represent 
workers and working families and steelworkers, have written a letter to 
this Emergency Steel Loan Guarantee Board in the Commerce Department 
asking them to grant this loan. On the Senate floor today, I wish to 
associate myself with President Gerard's comments. If there is any 
vehicle--we are down to the wire here--if there is an economic stimulus 
package or economic recovery package, I will have an amendment which 
will give that loan board better authorizing language to make it clear 
that, indeed, this is their mandate to guarantee just these kinds of 
loans. I don't know whether or not we are going to have that package. 
That is being negotiated.
  I have also made it clear that I think if there is any other bill 
that passes through in terms of providing relief for this sector of the 
economy or that sector, that from my point of view there also has to be 
an amendment which represents relief for those people who are flat on 
their back, out of work, without unemployment insurance any longer, 
without health care coverage or soon to be without coverage, or to help 
these steelworkers.
  I wanted to cite this article because I am sure President Gerard and 
the steelworkers sometimes think they are shouting in the wind, that 
they are not being heard. Industrial work is being spit out of the 
economy. LTV shut down. At the taconite plant in the Iron Range of 
Minnesota, 1,400 workers are out of work.
  I went with them the day the local president called everybody 
together to tell them it was over. And I got really mixed advice about 
whether to go because people said, if you are there, like a politician, 
people are just going to turn on you because they are so angry about 
losing their jobs. They didn't do that. People appreciate the fact you 
go up and you are with people, especially in these times.
  But the fact is, not just for the sake of these workers who want 
nothing more but to work, but for financial security as well, we ought 
to pay attention to what has happened in the steel industry. We should 
pay attention to what is happening to certain vital sectors of the 
economy.
  Again, just so President Gerard and the International Steelworkers 
Union don't think there aren't Senators who support them, I know others 
do as well. Senator Rockefeller has been at this a long time. This was 
Senator Byrd's original idea. This Emergency Steel Loan Guarantee Board 
of the Commerce Department can do this. This is

[[Page S13666]]

their mission and mandate. They can say: We guarantee this loan. So far 
they have not done so. I wish we could rush through some additional 
language to make it clear this is their mission and mandate. We may not 
be able to do so. But they ought to go forward with this loan. If they 
don't, the consequences are going to be very harsh.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. REID. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Johnson). Without objection, it is so 
ordered.

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