Mar 9, 2003 By Christine Haines 5 min read

ALLENPORT – Word that the federal Pension Benefit Guaranty Corp. has filed suit in U.S. District Court to take over Wheeling-Pittsburgh Steel’s pension plan drew a strong reaction from local union leaders Friday. “Every day it’s something else. It’s like a bunch of buzzards out there that smell blood. We aren’t dead, not by a long shot,” said Mickey Forte, president of United Steelworkers Local 1187 in Allenport.

Wheeling-Pitt filed for Chapter 11 bankruptcy protection in November 2000. Last week, the federal Emergency Steel Loan Guarantee Board rejected the steelmaker’s joint application with the Royal Bank of Canada for a $250 million loan that was key to the company’s emergence from bankruptcy.

The Allenport plant employs 365 people and is one of eight plants in Ohio, West Virginia and Pennsylvania that the Wheeling-based company operates. Overall, Wheeling-Pitt employs 3,800 workers and is one of two subsidiaries under New York-based WHX, which also owns Handy and Harman, a metal manufacturer in Rye, N.Y.

The WHX pension plan covers 9,400 workers and retirees of the two subsidiaries.

“The PBGC’s insurance guarantees will protect the basic pension benefits of workers and retirees in the WHX pension plan,” PBGC Executive Director Steven Kandarian said. “Retirees will continue to receive their monthly checks up to the guaranteed federal limits, and other employees will receive benefits when they are eligible to retire.”

According to the PBGC, the WHX pension fund has assets of $300 million but has more than $443 million in benefit liabilities.

However, Forte countered, “That’s not true. I don’t know where those figures are coming from. The pension plan that we negotiated during the strike of 95-96 is fully funded.”

The current pension plan went into effect in 1997, and the Handy and Harman pension was merged into the plan in 1998.

PBGC spokesman Jeffrey Speicher said the plan may have been fully funded in the past, but that isn’t the case today.

“Our analysis shows there is no reasonable way they can fund their pension plan,” Speicher said. “Pension plans across the board have been hit hard by the equity market and low interest rates.”

Of the $143 million in underfunding, the PBGC estimates it will be liable for about $65 million. By filing to take over the pension fund, the PBGC effectively has frozen that liability.

“As of (Friday), WHX workers will no longer accrue new pension benefits. Their benefits up to today are protected,” Speicher said.

The PBGC, Speicher said, would not be liable for an estimated $378 million in “shutdown benefits,” since it has taken action at this point to terminate the pension plan.

He said the PBGC cannot act unilaterally to end the pension plan. In order for the PBGC to take over the plan, it would need either a signed agreement from WHX or a court order.

“We did not anticipate that the PBGC would take this action and had no advance notice of their announcement,” said Wheeling-Pitt President James Bradley. “We believe this action was premature.”

His sentiments were echoed by Forte.

“The PBGC has jumped the gun a little bit. They should meet with the USW president and Wheeling-Pittsburgh Steel,” Forte said.

Bradley said the PGGC’s announcement will not affect Wheeling-Pitt’s daily operations and will not change the company’s plans to file an amended application for the $250 million loan.

U.S. Sen. Jay Rockefeller (D-W.Va.) and West Virginia Gov. Bob Wise have pledged their support to the company. Pennsylvania state Rep. Pete Daley (D-California) has written a letter to U.S. Rep. Jack Murtha (D-Johnstown), urging him to partner with Rockefeller to urge the Bush administration to provide financial assistance to the company.

“Since filing for Chapter 11 bankruptcy in November 2000, Wheeling-Pitt has asked for and received numerous financial concessions from its dedicated work force. Last year, Pennsylvania joined West Virginia and Ohio state governments in approving a $27.2 million emergency financial package to help the company work its way through bankruptcy proceedings. And now it’s time for the federal government to step up and do its part,” Daley said.

Murtha issued a brief statement Friday.

“I’m going to join my colleagues in the Steel Caucus in urging reconsideration of the loan. We’ll go from there in determining what future steps we might be able to take,” Murtha said.

Speicher said he would not speculate on how the PBGC’s decision to terminate the pension plan might be affected if Wheeling-Pitt were to receive the loan. He said the decision to terminate the pension plan was based, in part, on the rejection of the company’s loan application.

Under federal pension law, the maximum pension guaranteed for workers in plans that end in 2003 is $3,664 a month, or $43,977 a year for those retiring at age 65. The amounts are adjusted for retirees older or younger than 65 and for those who choose survivor benefits.

Workers or retirees do not need to take action as the result of the PBGC filing Friday. Until the PBGC becomes the trustee of the WHX pension plan, anyone with questions about the plan or those who wish to retire should contact the plan’s administrator.