TOPICS > Economy

Steel Workers Face Competition

October 27, 2005 at 12:00 AM EDT
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TRANSCRIPT

TOM BEARDEN: Tucked into a valley in the West Virginia panhandle, Weirton started out as a boom town, home to a thriving steel business. But the boom went bust a long time ago.

It’s 7:00 A.M. on a Wednesday morning, the regular monthly meeting of the Independent Steel Workers Union at the Knights of Columbus Hall.

On this day, members talked and prayed about the future of the Weirton steel mill.

STEEL WORKER: I ask dear Lord that you watch over these people here at Weirton Steel to find a way out of the mess we’re in.

TOM BEARDEN: For some workers, it is a mess. At its high water mark in the 1960′s, the plant employed 14,000 people. Twenty years ago it was 7,000.

Today it’s 2,000. Eight hundred workers were laid off in just the last six months. Many worry more layoffs are coming, and perhaps a complete closure.

Weirton Steel is emblematic of the ups and downs of the entire industry, a story the NewsHour has been watching and reporting on for more than 20 years.

TOM BEARDEN: Weirton used to be an integrated mill that took in raw iron ore, ran it through blast furnaces to make molten steel, and then processed it into finished coils. But the blast furnaces are shut down now; the new owners say it’s temporary.

Slabs of steel are shipped in from a more modern plant in Cleveland. Weirton heats them up, pounds and stretches the metal into coils, and then plates the metal with tin. The trend has workers concerned that they will soon be permanently reduced to being a finishing plant, employing only 1,500 people.

Dean Harris is a 30-year company veteran who currently works in the tin mill.

DEAN HARRIS: I think it’s going to be difficult. But we’re just in a bigger market, and what would happen to this town if Weirton Steel were to go under, I really don’t know. I don’t think there’s another buyer out there.

TOM BEARDEN: Harris’s concern is understandable, given the history of Weirton Steel. Weirton was once an independent company and the largest industrial employer in all of West Virginia. The plant was the reason the town existed. In fact the, the company built and ran the whole city.

DEAN HARRIS: They paved our streets, they hung our lights, they changed our light bulbs, they, they just did everything.

TOM BEARDEN: From building a community pool to publishing a monthly magazine, Weirton Steel was the town’s economic engine.

The pool still exists, but not much else. The streets leading up to mill were once packed with stores and restaurants. With only a fraction of the work force now, the stores are locked up or abandoned.

The NewsHour first visited the company in 1983. It had been sold to National Steel, which had just announced it wanted to shut the plant down. Correspondent Charlayne Hunter-Gault reported that facing an imminent closure, workers banded together to raise money, with concerts, telethons and parades, so they could buy the company through an Employee Stock Ownership Plan, or ESOP.

CHARLAYNE HUNTER-GAULT: Why is it that you think the employees can make it work when National Steel couldn’t make it work?

WALTER BISH, Union President: Well, under an ESOP there are several tax advantages, tax shelters an employee-owned company can get.

Also there are the concessions, the concessions that the employees would be willing to give to a corporation that they would own, as opposed to giving concessions back to a corporation where the profits go out to shareholders and stockholders other than the employees.

TOM BEARDEN: The buyout succeeded.

DEAN HARRIS: The entire community rallied around the concept, and we were going to be shut down. And, if we didn’t take on the ESOP, we wouldn’t be here today.

TOM BEARDEN: But the good times didn’t last. The 90′s hit Weirton hard. Tough new competition demanded expensive modernization of the facility. Like many other aging U.S. mills, Weirton didn’t have the capital to fully upgrade every section of the plant.

Economist Frank Giarratani is the director of the University of Pittsburgh’s Center for Industry Studies.

FRANK GIARRATANI: They don’t build plants like that anymore in the United States and they have not built plants like that in the United States in many, many years. What they, what they do is refurbish plants like that.

TOM BEARDEN: In addition to competition from newer plants, the steel industry went through an international trade crisis in the late 90′s when overseas competitors were dumping cheaper steel in the United States.

Many workers believe that’s why their employee-owned company eventually went bankrupt some four years later.

Weirton was sold to Ohio-based International Steel Group in 2003. Workers took pay cuts to entice International Steel to make the buyout, and their pensions were taken over by the federal Pension Benefit Guaranty Corporation. Current retirees’ incomes were slashed, and most lost health care coverage.

Charlie Mitchel worked at the mill for more than 30 years. He thought he would be able to retire before the age of 65 and live off his pension with full health benefits. Now he does bookkeeping at the local newspaper to supplement his reduced pension and to pay for health insurance.

CHARLIE MITCHEL: They took away approximately 25 percent of the pension, plus you lost your health care benefits, that now we have to pay for. And that’s, that’s a chunk of money that, that you were planning on for your retirement years.

I mean, you’re back to work now; I’ll have to work probably till I’m 65 now, you know and I was hoping that I would be able to just piece things together, yeah, I’m bitter.

TOM BEARDEN: In 2004, International Steel sold Weirton again, this time to Mittal Steel, a foreign-owned company with headquarters in Holland and London, the largest steel producer in the world.

Now Weirton has to compete not only with outside companies, but also with other mills inside the Mittal Steel Group.

Dean Harris, whose father, uncle, and a brother all worked at Weirton, says it’s a totally different ball game.

DEAN HARRIS: Just being a part of this big corporation, you just don’t see the people that, that run the plant. You don’t have any connections with the people that run the plant and so you don’t know what their thinking is.

You know, all you can go by are rumors that you hear or you know you pick up the paper and you see that Mittal Steel is considering purchasing a steel company in Czechoslovakia. You know it’s, it’s, it’s a big change. It’s been it’s been a big change for everybody that works at Weirton Steel.

TOM BEARDEN: Harris points to the fact that the blast furnace and blast oxygenation process plant were shut down this summer and 800 workers were laid off.

Andrew Kamarac was one of those laid off workers. He works around his house as he waits for the word to go back to work. He says he doesn’t know what the future holds under Mittal ownership.

ANDREW KAMARAC: My wife said, her dad is probably turning over in his grave because everybody thought this mill would be here forever and that’s why we went ESOP for our families and to keep this place here. But I don’t know. It don’t look good right now as, as it sits.

TOM BEARDEN: Mittal Steel’s U.S. headquarters is in Chicago. CEO Louis Schoesch says Weirton’s ultimate survival depends on cutting costs.

LOUIS SCHOESCH: Weirton has been kind of beating the odds for more than 20 years. I think the main focus at the moment has to be on are there ways that we can make this facility more competitive. I know they’re working on a program to try to achieve higher levels of productivity.

We’ll certainly be looking at facility investments and so on. I don’t think there’s any guarantees in this marketplace; we have to do the best we can in the things that we control. If the market, turns against us, then maybe all bets are off.

TOM BEARDEN: Mark Glyptis is the president of the Independent Steel Workers Union, which represents thousands of Weirton employees and retirees.

He says Mittal executives have stated the blast furnace will reopen, and the jobs reinstated. So he’s optimistic, even though no one knows when those furnaces might be re-lighted.

MARK GLYPTIS: I believe we have a very bright future. We still need capital improvements. Once we get through those I think we’re gong to be very competitive and, I expect those employees that are laid off to be called back and we’re doing some things to make sure that, in the event that some aren’t, that there’s a humane way of treating them, but I’m very optimistic about the future.

TOM BEARDEN: Schoesch says any decision to bring people back to work will be based on whether the Weirton mill can make a profit.

LOUIS SCHOESCH: I think Weirton is in a much stronger position, has much more of the wind at its back, if you will, being part of that global enterprise, successful global enterprise than was the case if it would be a stand-alone company.

TOM BEARDEN: Professor Giarratani says the good old days of job security and full pensions are gone forever.

PROF. FRANK GIARRATANI: It’s never going to go back to the kind of security that you know that was felt during the boom periods through the, you know, in the industry.

But that’s true of every American industry now. It’s not just true of steel, where, you know, a lot of insecurity of our economic system has been decentralized — you know — to the workers themselves and that’s part of our life now.

TOM BEARDEN: Facing brutal domestic and international competition, Weirton workers are still trying to keep not only a steel mill, but a community, alive, and competitive, in the global marketplace.