Layoffs at Steel Plant Indicative of Larger Problems

C L E V E L A N D, June 19, 2001 -- Joe Kristoff is a steelworker with more time on his hands than he would like.

Kristoff and 900 others are out of work as LTV, the nation's fourth-largest steel company, negotiates with its union. "I'm 47 years old," he laments. "I haven't gone out and looked for a job since 1973."

Kristoff began working at a steel works plant in Cleveland's industrial flats right out of high school. Back then, steel and heavy industry were the heart and soul of Cleveland.

Dennis Eckert of the Greater Cleveland Growth Association recalls those times. "I remember driving downtown with my dad to Cleveland Indians games and he would tell me, 'Cleveland's working,' and you knew that because of the smoke belching up from the flats."

The Jobs Are ‘All Gone’

Back then giant steel furnaces were making raw materials for battleships and tanks, cars and appliances. Otis Steel built its plant on the West Side of the Cuyahoga River just after 1910. The company changed ownership over the years and became a part of LTV in the 1970s. The steel mills were a place where people without much education could get a good job — a union job.

"Back in the '50s, '60s and '70s we had a million and a half steelworkers," says Louis Venditti, who went to work in the West Side plant in 1953. "Now we have less than half a million. They're all gone."

The jobs have gone because technology has made plants more efficient and because the steel industry has hit hard times. New foreign steel makers with lower labor costs have flooded the U.S. market with cheap steel.

Domestic mini-mills, which reprocess scrap, have also brought steel prices down, so low to the point where the LTV plant, which makes basic steel slabs, is no longer profitable.

Hard Times

Mark Tomasch of LTV says the company is losing money on every pound of steel it produces because of that kind of competition. And the plant says it has been losing money for years.

Now it's shutting down. But this closing is only the most visible sign of a raft of troubles affecting not only the company but the entire U.S. steel industry.

To date, 18 American steel firms have filed for Chapter 11 bankruptcy, and LTV has filed for protection for the second time in 15 years. The company says it is losing $1 million a day and that in order to survive, it must reduce costs across the board, including closing the West Side plant and cutting back on health benefits promised to current workers and retirees.

Tomasch thinks the plan is disgusting. "It's heartbreaking, it shouldn't happen. But we're at the bottom of the chain, we still have money to pay the bill," he explains.

LTV argues that if it can't cut health-care costs, amounting to $80 million, it will go out of business. Tomasch knows the situation is dire. "Our steel company is, I would say without exaggeration, right on the edge."

For Small Businesses, a Tsunami

But union members and retirees like 73-year-old Venditti say the company should find other ways to cut costs.

Venditti has diabetes and a bad knee and his wife just had a minor stroke. "[What's] the worst thing that can happen? I could lose my home," he says. "If you don't get sick, fine, but if you do … "

If LTV is forced to shut down completely, some 6,000 more workers would lose their jobs. It would also jeopardize health care coverage of 100,000 workers, retirees and dependants. The impact would be devastating for businesses that depend on the company and its workers.

Argues Eckhart, "It's not a ripple effect. For these small businesses, it's a tsunami, it's a tidal wave of Lake Erie-level proportions."

Kristoff and his buddies now face the tough task of finding jobs in a local economy that is increasingly high-tech. "My job is making slabs, [my buddy's] job is preparing equipment so we can make slabs, my job is making steel … ," he explains.

Last week, LTV agreed to keep equipment at the West plant functioning in the event of a last-minute sale or investment by another company. Both the firm and the union consider that scenario unlikely.