The Nation, 
Attachment II - Page 13 
597 
December 10, 1983 
j; sioos, which like the stretched-out payment schedule, re- 
duced Wcirton's early cash outlay. The reduction in start-up 
expenses made it possible for Lazard to reduce worker con- 
cessions from the projected 32 percent to 19 percent of pres- 
I j ent wages and benefits. As an additional sweetener, Na- 
tional conditionally agreed to pay supplemental severance 
benefits if Weirton should fail within five year:. 
Nonetheless, many workers opposed the deal. A dissident 
! group of rank-and-file workers waged a vigorous but un- 
successful campaign in a Federal District Court to force the 
I study committee to obtain and release supporting data for 
! the McKlnsey report’s vague statistics. Pleading “security,” 
j the consultants refused to supply the data, even though the 
figures were used to justify McKinsey’s harsh prescriptions 
for saving the company. Walter Bish, president of the 
I.S.U., testified that neither he nor anyone on the committee 
I took notes or kept minutes at meetings with the consultants. 
Thus representatives of the workers were not able to chal- 
| lenge the consultants’ projected costs, debt and cash flow, 
j Apparently Lazard, rather than the joint study commit- 
i tee, made key decisions with National and the prospective 
I outside lenders. The six board members who were supposed 
1 to have been named by Wcirton’s creditors were appointed 
by Lazard well before the banks had been identified. Not 
long after that appointment, Lazard hired former president 
of Copperweld Robert Loughhead as the company’s new- 
chief executive officer, before the labor and management 
representatives on the board had been chosen. 
Another court challenge to the stock ownership plan 
was filed in April by several hundred employees calling 
themselves the Concerned Steelworkers. They asked that 
the impending sale be considered a shutdown of the ex- 
isting firm, obligating National to pay severance benefits to 
senior employees. Many older workers understandably had 
little interest in staying on at a plant where speedups and 
cutbacks would be the norm, and they wanted to retire with 
full benefits. A decision on the workers’ suit is imminent, 
but it is unlikely to go in their favor. 
Despite rumblings of dissatisfaction among some of the 
workers, the deal moved toward completion. Another piece 
fell into place when the Environmental Protection Agency 
granted Weirton “bubble” status, allowing it to average 
emissions measurements from several spots rather than base 
its calculations on the worst sites, thus reducing its pollu- 
tion control requirements. Governor Jay Rockefeller signed 
a bill cutting the mill’s annual state taxes by $450 000 if the 
sale would come to pass. In late August the final sale 
documents were made public, and Weirton’s workers were 
given until September 23 to consider their all-or-nothing 
choice. 
The Weirton buy-out may be seen as an example in 
microcosm of how Felix Rohatyn’s proposed Reconstruc- 
tion Finance Corporation would work. Lazard Frercs used 
equity capital as a lever to enforce layoffs, concessions, 
modernization, deregulation and reorganization under 
bankers’ control. A government financing body with access 
to Federal funds, the R.F.C. would do likewise on the na- 
tional level, overseeing the streamlining of depressed sectors 
of American industry. The technocrats of the investment 
banking community would use such an agency to create new 
opportunities for profitable investment. 
What kind of an “employee-owned” company will Weir- 
ton be? The major impact of ESOP on the workers— aside 
from a chance to save their jobs-— may be continuing deteri- 
oration in their wages, benefits and working conditions. 
Their pay will be frozen at the reduced level for six years. 
Any increases would release National from its guarantee to 
pay benefits in the event of a shutdown; strikes are also for- 
bidden. To make matters worse, for the first five.years the 
board members handpicked by Lazard Frires will choose 
their own successors. In return for its financial aid, Citicorp 
placed numerous other restrictions on Weirton's operations, 
involving dividend declarations, disposition of assets and 
additional financing. 
After five years employees will elect the board of direc- 
tors, but this is unlikely to bring any significant measure of 
workplace democracy. Shares will be apportioned according 
to salary, meaning that hourly workers— more vulnerable to 
injury and layoff— will accumulate the least number of 
votes and those in managerial and supervisory positions the 
most. Any success for the fledgling firm w ill create strong fi- 
nancial incentives for workers to sell their shares; in that 
event, voting power will undoubtedly gravitate to the types 
of stockholders that usually control corporations. Because 
of the high risk of failure and the potential benefits of prof- 
itability,' workers will be hard pressed to resist future 
demands for further concessions. 
Thus for the new owners the Weirton deal means even 
greater vulnerability to the ups and downs of the troubled 
steel industry. For the upper Ohio Valley, it remains to be 
seen whether this investment bankers’ ESOP will pro- 
duce a new equilibrium— fewer, nastier jobs, but at least 
jobs— or whether it will be only a toehold on a precipitous 
descent. □ 
Biological Airfare 
(Continued From Front Cover ) 
antibiotic resistance of existing B.W. agents, or even to 
make harmless bugs lethal— all possible applications. Nu- 
merous readily available microbes are sufficiently deadly 
for biological warfare. Rather, the major thrust of the cur- 
rent research is to develop vaccines that will protect U.S. or 
allied troops and populations against biological agents that 
might be used by the enemy or by U.S. forces. The main 
deterrent to germ warfare today is the fear of retali- 
ation; therefore, if fail-safe vaccines against microbes could 
be developed, the use of biological agents would become a 
military option. According to Dr. Richard Goldstein, a pro- 
fessor at Harvard Medical School, “The key is vac- 
cination. . . . [With recombinant DNA technology] you can 
Charles Filler is a San Francisco-based writer »n labor 
and health issues. 
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