Whose Steel? | The Nation


Whose Steel?

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"We have no morality laws. Morality laws would say, Protect the American worker. All we have is trade laws."
      --Larry Ientile, president, USWA Local 1104, Lorain

About the Author

JoAnn Wypijewski
JoAnn Wypijewski, who writes The Nation’s “Carnal Knowledge” column, has been traveling the country...

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To grasp alternatives, it is necessary to review the real circumstances a community faces when confronted with shutdown. Even before the latest crisis, the 5,200-person steel work force in Cleveland was half what it was in the early 1980s, a quarter of what it was in the 1970s. The talk is that ultimately Ross will call back only 1,200. Those hoping to return are overwhelmingly older, with memories of a time when nothing seemed so powerful as steel. Simply because of the monumentality of the works--the stacks from the basic oxygen furnaces spouting forty-foot flames, the rickrack of railroad tracks and electrical towers, the mounds of ore and limestone, all of it ranging across a 1,200-acre gash in the heart of the city--it is easy to understand why the illusion might persist. But Cleveland doesn't depend on steel. Although manufacturing still drives the economy, in the form of many hundreds of small, mostly family-owned companies, increasingly it is a city that Style Section writers like to say has "made the transition." High-tech boosters tout the future of bioengineering and other "clean" pursuits. When LTV announced it was closing, the Plain Dealer took a times-change attitude only slightly more tempered than a message sprayed on the base of a bridge near the plant: "Get Over It."

And yet a shutdown of the mills would have been devastating. For steelworkers, the bankruptcy already has been. Joe Calucchia, who worked twenty-three years in the mill, now counsels the jobless at an employment assistance organization called the United Labor Agency. They come in "deathly scared," unaccustomed to interviews, to aptitude and physical tests, all of which they must undergo if they hope to be rehired to their old jobs by Ross. Right now about 800 workers have returned to the mill, but until there is a labor agreement, they are simply work-for-hire, their status uncertain. Health coverage ran out early in the year. Some families are going without; some workers have taken jobs they hate at half their old wage just for health coverage. If they are old enough to qualify for Medicare but have a younger spouse with chronic health problems, they may suddenly be facing thousand-dollar monthly medical costs. If they have a marketable skill, whether or not there's a market for it in Cleveland, they are denied retraining under the federal Trade Adjustment Assistance program. If they have alcohol or drug problems, and mostly if they have family problems, Calucchia says, the violence and disarray and trouble with the kids have only got worse. "People become brittle."

The Greater Cleveland Growth Association estimated that in addition to those directly affected, a complete shutdown of LTV would have negatively affected 13,000 workers in related industries, and their families. Some of LTV's suppliers have already gone under. Over the years, as LTV's work force dwindled, the social costs of displacement were ameliorated by union-negotiated health and pension protections for workers who took retirement. About 15,000 Cleveland-area retirees were getting such support when LTV collapsed. Ross has assumed no responsibility for them. Their pensions will be picked up by the federal Pension Benefit Guarantee Corporation, but they won't know what they will receive until September. LTV's pension fund was short $70 million, according to PBGC officials, who say the agency will make up only about $40 million; the rest will be borne by retirees in the form of pinched benefits. On the medical front, "it'll be helter-skelter," retiree Curtis Wilson predicted, as people decide which prescriptions to fill, where to roll the dice on treatment, at a time when hospitals are under financial pressures.

LTV's bankruptcy has cost Cleveland more than $7 million in tax revenue. Permanent abandonment of the site would have deprived the city of its biggest source of property taxes ($3 million a year when the company was paying) and $4.5 million in employee income taxes. Even those costs shrivel beside the environmental toll. The end of production would have made the works a "temporarily obsolete, abandoned and distressed site," a k a TOAD--a ruin within view of almost every approach to the city, a poisoned ground whose cleanup has been estimated at anywhere from hundreds of millions to more than a billion dollars.

"We had an imminent catastrophe with huge implications for the health and livelihood of the community," said Chris Warren, the city's director of economic development when the crisis was at its most intense. "LTV was broke. Without a buyer, who would put out the fires, deal with the toxins, the security, the rapes, the structural collapse, the vandalism? We were looking at an ongoing liability, a situation in which the actions of the federal [bankruptcy] court would have been to transfer the care and feeding of the TOAD to the Cleveland taxpayer, who is disproportionately poor, disproportionately minority."

So the costs of not making steel would be socialized in a way the benefits of making it never were. This is not the first time LTV has gone bankrupt. In 1986 the union conceded on wages, benefits, holidays and vacation time to help the company out. Later, the city granted tax breaks and other allowances. Back in solvency, LTV spent $250 million for part ownership of a mini-mill called Trico; it lost millions. It lost another $84 million on a failed venture in a Trinidadian iron-pellet plant. It spent $650 million to acquire Copperweld, a price twice what it was worth, according to a Wall Street steel-watcher, and $450 million on an unnecessarily extravagant computer system, according to the union. In December 2000, when LTV filed for bankruptcy a second time, it gave new CEO William Bricker a signing bonus of $200,000 and a base salary of $700,000; in March 2001, it awarded him a retention bonus of $1 million. Ten days before LTV was acquired by Ross its top management was guaranteed $6.6 million in bonuses.

"Integrated steel in the US is run by some of the stupidest people on earth," the Wall Street analyst told me. "LTV was the worst." Three years ago, he said, it seemed clear that the company was not committed to making steel, that its strategy was to sell off plants and become a manufacturer of steel parts. Or, as one LTV retiree put it more colorfully, "liquidate, terminate, vacate--they lived up to their name."

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