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Steel Mill Blues

Tuesday, December 18, 2001 at 1:45 PM

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Cleveland's LTV Steel plant sits idle for a second week. The last twelve months have seen the company enter bankruptcy, reorganize, lay off some of its workers - and finally, all of its workers. It's been a struggle to keep the 20th century institution alive. Now it looks like the plant may be a lost cause. After all the legalities of the last year, we thought it time to briefly retrace some of that history and hear some impressions from some of those involved. 90.3 WCPN's Bill Rice prepared this extended report.

BR- Friday, December 7th, 2001. That was the day the door all but closed on roughly 3,200 employees of LTV Steel’s Cleveland Works. After three days of U.S. Bankruptcy Court hearing, Judge William Bodoh signed an order permitting LTV management to begin shutting down steel production. The shutdown began immediately.

Dennis Kucinich- Yes, production is ceasing. But our efforts will not cease until we have exhausted every possible opportunity to get those mills into production.

BR- Seeing the writing on the wall just a few hours earlier, Congressman Dennis Kucinich, on the steps of the courthouse in Youngstown, still held out hope that the shutdown was temporary, that steel making in Cleveland was not dead yet. That hope still lingers for Kucinich and others, but for LTV workers who lost their jobs that Friday and during the preceding weeks, it’s as faded as the flame that only recently billowed from the plant’s smokestacks to welcome night-time visitors.

Pat McGlynn- Friday was kind of the death knell, the ax coming down. It became obvious that we probably wouldn’t be going back and if we do go back it’s be greatly different circumstance.

BR- Pat McGlynn is an electrical technician. He worked his last shift November 21st - the day before Thanksgiving. Tall and in good shape at a youthful 46, Pat is sad, wistful and just a little worried about his new circumstance: a wife, three kids, a mortgage, and no immediate prospects for work. Sitting at the kitchen table of a friend, Pat is still in that early stage of unemployment - not necessarily a state of denial, but one where the future hasn’t arrived yet, where the only solid psychological footholds stretch from the still-fresh events leading up to his joblessness, backward over a career that began at LTV 27 years ago.

PM- I was 19. A year out of high school, I went to college for a year. I started down at the steel mills. At the time it was one of those jobs where I’ll work for the summer, work for the year and then get some money and then I was going to go back to school. Well, after a while the money seemed fairly decent and I didn’t mind the work. I tried to go back to school several times, I went to Tri-C and taking some other classes. It’s difficult to work full time and go to school part time.

BR- Pat’s friend is longtime co-worker John Pawloski - also an electrical technician. Like Pat, John started at LTV in the mid-seventies.

John Pawloski- I started down there, got a taste of that money, and I decided to get married. Once I got married the guys told me you’re a lifer now. That’s it. I guess they were right.

BR- John and Pat are both married. Both have children - John two, a son still in college and an older daughter who’s living on her own, and Pat three, all sons, two in high school and one in sixth grade. Both head what we think of as traditional American families. Pat’s wife works part time as a nurse, but his paycheck has provided the bulk of the family’s support. John’s has provided all of it.

JP- My wife is the same age as me. She doesn’t work. The situation at LTV, working different shifts, she didn’t need to work. I brought home the bread and the butter, and she took care of the family.

BR- The shift arrangement at LTV was one that might make any other working person shiver. Employees were rotated through three different shifts on a weekly basis: day shift one week, night shift the next, overnight the next, then back to dayshift. The rotation is known as working turns, and Pat says it’s one thing he’s happy to leave behind.

PM- I think I’d be through with the midnights and afternoons and weekends. It is very difficult, especially on the rest of the family. My wife especially, because she has to pick up all the slack. You’re working afternoons, she may have just come home from work. The youngest boys got to go to basketball practice, the second son has to go down to school for parent-teacher conferences, the oldest boy, someone has to drop him off at work. There’s just all these things that are going to get done whether you’re there or not, and it all comes down on my wife and I give her a lot of credit because she’s done it for all these years and hasn’t complained too much, and has worked on top of that.

BR- But it’s a routine both a Pat and John say they got used to, and for nearly 30 years LTV was largely the center of their existence. Overtime was the rule rather than the exception much of that time, and that added significantly to the paycheck. It wasn’t a glamorous job, but bills got paid, their families had plenty to eat and decent roofs over their heads. Life was manageable and predictable. Then, late last year, things turned sour.

JP- A lot of guys might have sensed it, because you always heard stuff, you know, the company’s losing money, we’re losing so much a day - so you kind of sensed something.

BR- Just before Christmas of 2000, Congressman Dennis Kucinich began what he called a “civic crusade” to save the steel industry, which he said was reeling from the pressure of cheap foreign imports. Other factors have also been blamed for the company’s troubles: competition from newer more efficient mini-mills that have sprung up since the 1980s, as well as just bad management. Whatever the reason, LTV itself had reported losing more than $350 million during the first 9 months of the year. Days later Kucinich gathered about two dozen government, business and labor officials at his Lakewood office to discuss the plight of the steel mill. William Bricker, who just a month earlier had taken over as Chairman and CEO of LTV, joined in by speakerphone from his office in Texas.

William Bricker- Dennis, words can’t express my feeling of how much you’ve helped us and inspired me in fact. I was dedicated I thought before but I can guarantee you, my whole heart and soul is in this, because I only look at one prospect and that’s winning. I’m not used to being on the losing end, so we’re going to prevail.

BR- Bricker called for big changes in the way LTV did business. He said the company was going to have to slash hundreds of millions from its yearly operating expenses, hinting that much of that savings would have to come from labor concessions. It also needed loans, he said, and its major lenders were growing reticent about lending to the steel industry. That began a campaign on the part of Kucinich and others to put pressure on lenders to help LTV stay afloat. Two days later Bricker announced LTV would file for bankruptcy, and was prepared to cease operations if the loans weren’t forthcoming. The move gave technician Pat McGlynn an inkling of what was in store over the coming year.

PM- It doesn’t seem that long ago, a year ago. You have to remember it was several months before that Peter Kelly resigned. That’s who Bricker took over for. And that was one of Bricker’s big - it seems that the way he bargained was give you an ultimatum. And back then he was going to cease all operations if the bank didn’t loan him two million dollars or whatever.

BR- LTV remained in business under bankruptcy protection, and began work that would stretch into the summer.on a new labor agreement. In the meantime, in March, a syndicate of banks headed by Chase Manhattan in New York agreed to loan LTV $650 million. Things were looking up, according to LTV Communications Director Mark Tomasche.

Mark Tomasche- When we secured the financing that was a major milestone for the company because that gave us the money and the time that we could implement a restructuring plan that we had been working on since the first of the year. That restructuring plan would permanently reduce the costs to operate the company and produce and sell steel by $800 million a year. We believed that if we could accomplish that we would also be able to qualify for additional financing through the Federal [Steel] Loan Guarantee Program.

BR- Tomasche says the $250 million federally guaranteed loan would enable LTV to compete against non-union mini-mills, which the company claims produce over 50% of the steel made and sold in the United States. Unfair imports would still be troublesome, but according to Tomasche, costs under the restructuring plan would be low enough for LTV to survive the imports.

But it wasn’t long before more bad news struck. On April 11, 2001, Congressman Kucinich addressed a somber group gathered at City Hall - the same group that had first met in his office four months earlier.

DK- LTV was given a chance to reorganize. That reorganization plan, we’re starting to see it work its will. And today we’re notified that 900 of our fellow citizens - men and women who work to make steel, who work to support families - that 900 of them are being terminated. That is something that all of us accept only with heavy hearts, and with the understanding that we have so much more work to do to make certain that nearly 4,000 other individuals who are working at LTV will continue to have jobs.

BR- The layoff was the result of LTV’s decision to close its west side plant, which occurred in June. Negotiations on a new labor contract continued. But remaining steel workers were growing increasingly uneasy, and doubt began to grow that LTV’s strategy to keep going was sound. Pat McGlynn.

PM- We all realized that this is one of the toughest economies we’ve had to deal with in steel. We were at 20-year lows, there was a lot of competition from the mini-mills - it was just hard doing business. But then again, the way the company throws around - you know, we’re losing two million a day. Well, how can a business lose two million a day and stay in business, and still have contractors in the mill, and still paying overtime? The management of LTV, somehow… I blame them more than the economy or anything else.

BR- A new labor contract was finally agreed to in July. LTV spokesman Mark Tomasche says, from the company’s point of view the restructuring plan so far was successful.

MT- We were ahead of our goals by mid-summer. Unfortunately the recession came into play. We saw an increasing decline in steel prices and reduction in demand that affected the whole industry, of course. And that phenomenon ended up consuming a lot of the savings we achieved with our restructuring plan. We also had a prolonged series of negotiations with the steelworkers’ union and were not able to secure the kind of savings, the kind of cash savings that we needed to implement the restructuring plan, and, as it turns out, the savings we did achieve were not adequate to qualify for the guaranteed loans.

PM- The union thought we had an agreement that was workable, where we would be able to still keep our pensions and health care. What we did was we postpone any raises that we might get, and we lost a lot of jobs. And even supervisors, quite a few supervisors were let go during that time.

MT- At that time - in July - we felt we were making enough progress with other aspects of our restructuring plan that it was worth a try. It clearly was not the savings we needed. The union knew that. They’ve had access to all of our documents from the beginning. In fact, the union has a representative on our LTV Board of Directors and they are part of the creditors committee, so they’ve been fully informed since the beginning of this bankruptcy of all the facts and all the numbes that, by law, we’ve had to share with al of the constituencies in this. But we felt that, in spite of that, we would present that contract into our plan, factor it in and take it to the banks and see what their reaction would be.

BR- The reaction, says LTV’s Mark Tomasche, was negative. Loan officers at National City Bank and Key Bank, who would make the loan, told the Federal Steel Loan Guarantee Board that the agreement wasn’t satisfactory. That sent the company back to the drawing board, and the negotiating table, until well into the fall. But in the meantime, in September, world events would aggravate an already bleak outlook.

PM- The events of 9/11 happened then, and that just sent the whole economy into a tailspin. It was the worst thing to happen to LTV Steel at that time. Car companies quit selling cars… At the beginning of October, that was right after the terrorist attacks on the trade centers, and things were not good. We only rolled 15 turns a week sometimes. Which was, there’s 21 total turns a week, and sometimes we rolled 18, 19 turns when things were good.

BR- Labor negotiations continued in what LTV’s Mark Tomasche says was a race against time. The company submitted a new labor proposal to the banks, and this time, he says, the banks were more amenable.

MT- The only missing piece was that we didn’t have a labor agreement yet that would enable us to fulfill those numbers.

BR- But an agreement never was reached, and on November 20th, LTV’s management asked Federal Bankruptcy Judge William Bodoh for permission to stop steel production in Cleveland and its two other plants. The move touched off a storm of protest among Cleveland’s political leaders, the steelworkers’ union and the steelworkers themselves.

It was now LTV against nearly everyone else, with only a few exceptions. Accusations flew that company management was never interested in keeping the plant going, and that CEO William Bricker and others were hired from the start to liquidate LTV’s assets and run with the money. Serious discussion broke down, and battle lines were drawn that would play out during three days of court hearings in Youngstown in early December. On November 29th Bricker resigned, taking a payoff of $600,000 with him - a point union officials seized upon as yet another brazen example of corporate greed. But workers were elated he was gone.

Sound at Rally- We got rid of the bastard CEO!

BR- Steelworker rallies and vigils continued through the court hearings that began December 4th. In the end they accomplished little. On December 6th, while court was in recess, the steelworkers’ union, the company’s creditors and it’s management came together in apparent resignation that LTV could not or would not maintain the mill. All agreed to allow it to shut down steel production completely and attempt to sell the facilities - either whole or piecemeal. With that decision, nearly a century of steel in Cleveland appears to have come to a close.

What began a year ago as a cooperative effort to save LTV has ended in a bitter court fight. By legal standards LTV has won; the judge granted what it had asked for - to be allowed to throw in the towel and pay what it could to its creditors. In the face of accusations of greed and mismanagement, spokesman Mark Tomasche insists CEO William Bricker and those working under him were intent on saving the company, but market forces were against them, and in the end there was no other course of action. He says there are no winners here.

MT- We’re all out of work. The company is dying. The company will cease to exist after we’ve sold off these assets. So we all share the same fate.

BR- Others are loathe to succumb to the whims of the market. Congressman Dennis Kucinich, arguably the leader in the fight to save LTV, sees a more important principle at stake.

DK- We live in an era where ther’s some thinking that business is business and if people get hurt that’s just tough. Well, that’s not acceptable in today’s society. When people give their all to a business they work very hard. They give their loyalty their dedication, their physical health - everything they have they pour into making a business successful. It’s not right that a business or management can just turn around and act as if people are disposable.

BR- And then there are people like John Potawski and Pat McGlynn, co-workers and friends who have worked together for the better part of three decades in the Cleveland mills.

JP- We’ve had softball teams together, our kids have grown up together, and now this family’s just being ripped apart.

PM- It’s quite a shock. For 27 years I got up every morning and went to work. Now I don’t seem to be in a hurry to do anything anymore. And I’m sure that’ll change. It’s just a shock and maybe a bit of a depression you go through.

BR- John and Pat worry about the decline of manufacturing in Northeast Ohio - that’s what their electronics skills are geared to - and think it unlikely they’ll be able to find jobs in the area that pay as well as LTV has. They’ll look, and they’ll look into re-training opportunities as well. Life will continue, says John. But right now recent events are still too fresh to think much about the future.

JP- It’s a sad thing for 28 years to just slip by you. But I’m hoping something good will come out of this, not only for my family but all the families of LTV workers and the city of Cleveland.

BR- The loss of LTV is sure to be a blow to the city of Cleveland, at least in the short term. Not only are it’s workers now unemployed, but the company itself has been a major customer to many Cleveland vendors and suppliers. They’ll also face hardship, and some will likely not recover. The loss of revenue to the city and county will further complicate an already grim budget picture. Public schools and other vital public entities will suffer. While there’s still a chance the steel mill could be bought and resurrected, city leaders are starting to contemplate a future without steel, and stepping up efforts to find other means to fill the void. Next month a new mayor-elect, Jane Campbell, takes office in Cleveland. Her challenge is no less than to shepherd the city into a truly 21st century economy. In Cleveland, Bill Rice, 90.3 WCPN.

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