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No good news for steel

July 18, 2010
By PAUL GIANNAMORE, Business editor

FOLLANSBEE - Their handshakes still can crush an average man's fingers. Their skin is weathered and their hair is gray, but they still trade stories about their days in the mill.

Their mills are largely silent now, victims of the economy, and they're retired. But they are steelworkers, both in the capital "S" sense of the word meaning United Steelworkers union, and in the blue-collar, hard-working, community-building sense of the word.

About 125 of them gathered Thursday for the annual Steelworkers Organization of Active Retirees summer picnic at the Follansbee Park, to trade stories and share memories.

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They also spoke of Wednesday's explosion at the U.S. Steel Clairton coke works.

Walter Danna, organizer for the Local 2911 S.O.A.R. chapter, said news of the explosion and injuries brought back painful memories.

"We had our own coke plant explosion at Weirton in the 1970s," he said, remembering the day in 1972 when the Brown's Island coke battery, under construction at the time, exploded, killing 23 and injuring more.

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BENEFIT UPDATE — John Saunders, VEBA program administrator for the USW at Severstal Wheeling, provided an update on the likelihood of escalating out-of-pocket costs for Severstal Wheeling retirees in 2011.
-- Paul Giannamore

"It brought back a lot of painful memories," Danna said. "And I've been to the Clairton coke plant before, too."

The retired Steelworkers held a moment of silence for the injured from the Clairton blast.

Santo Santoro, a USW District 1 official and former president of USW Local 1190, which includes the Mountain State Carbon coke plant, recalled the explosion at Weirton, then responded to the comment that the men injured at Clairton were mostly in their 40s and 50s.

"It's not an old man's part of the plant. But it's that way in every steel mill everywhere now. Everybody's in their 40s and 50s now," said Santoro, who had worked in the coke plant decades ago as a young steelworker. "The way it is now, young people don't stand a chance. But those mills have to start running so we can at least get these older guys who are working retired."

Santoro was Local 1190 president during a bankruptcy and labor stoppage at the then-Wheeling-Pittsburgh Steel Corp. in the mid-1980s, and has been a union official through changes of ownership and another bankruptcy for the steelmaker. He said while the coke plant at Follansbee continues to operate with 353 employees, there are problems with the EPA that could lead to cutbacks on production in the older coke batteries. Wheeling-Pitt had refurbished about half the plant before being sold to Esmark in 2007.

The USW has no contract talks scheduled with current owner Severstal, a Russian-based steelmaker headed by billionaire Alexei Mordashev. Instead, the union has been working on periodic extensions of its old contract since the Russian firm bought Esmark in August 2008. The local plants, except the coke plant, were brought off line over the course of the next year. There is limited production at Yorkville and Martins Ferry's finishing lines, but the steel and ironmaking units at Mingo Junction remain closed.

"We've done everything humanly possible to get Mingo Junction running," he said. "There might be a bit of good news in that they've recently hired back a foreman whose experience was solely in running electric arc furnaces, but we don't know. We're not being sold. Surely we'd like to be, but we're not."

Santoro said it's not known what the impact of the closure of the blast furnace at Severstal's Sparrows Point, Md., plant next Sunday will have on the limited production at Yorkville and Martins Ferry. Those plants are fed with steel coils from Sparrows and the Severstal Warren plant.

"I'd love to say we're starting up next week, but it does not look that way," Santoro said. "We've got a mess. People want to work. We've been through this now for 40 years."

John Saunders, USW benefits administrator at Severstal Wheeling, said the lack of work at Severstal Wheeling is putting pressure on coverage for retirees.

The retirees benefits are covered through a Voluntary Employee Benefits Association, which was founded with 50 percent of the stock of Wheeling-Pittsburgh Steel Corp. in 2003, largely through the work of Ron Bloom, then working for the Steelworkers and now manufacturing czar for the Obama administration.

"We have to be thankful to Ron Bloom. You might not agree with all he's done, but he came up with putting 50 percent of those shares into the VEBA," Saunders said.

The fund currently has $80 million, but it's burning through about $8 million a year, with no money coming in because Severstal Wheeling isn't turning a profit, with its mostly closed mills, Saunders explained.

It means Saunders and other officials will be pouring over the payments and claims from this year and trying to come up with solutions to saving money with next year's insurance coverage, though he warned that it will mean more paid out of pocket.

"It doesn't take Einstein to figure this out," he said. 'If you've got $80 million and you're paying out $8 million a year, you're out of money in 10 years."

Still, Saunders said, the retirees' coverage is better than what they would find in the open market. He noted the health insurance payment was $130 a month when the VEBA first went into effect in 2003. For 2010, workers are paying $80 a month and have a $30 co-pay up to $1,000. Saunders said the insurance from the VEBA for next year also will try to assess the impact of federal changes in drug costs.

He cautioned the retirees not to buy into plans that insurers will try to sell them independently. He said once a worker is out of the VEBA, they cannot get back in.

Overall, though, Saunders cautioned the retirees to expect higher costs.

"There are less than 800 total working in all these facilities combined. We used to have more than that in just Mingo Junction," he said. "Unless there's a miracle in Moscow and Mordashev does something unbelievable, the costs will go up."

(Giannamore can be contacted at

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