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What's next for labor?

Corporate bankruptcies and workers' control

By Milt Neidenberg

It's a spreading plague on the house of labor. More and larger corporations are filing for bankruptcy in federal courts. Chapter 11, the reorganization of companies in a bankruptcy court, has become the mechanism to break union contracts, default on health benefits and pensions and demand huge wage concessions.

Top executives, however, walk away with pensions, severance pay and health care that lasts a lifetime. Recently, the crisis has been highlighted by the bankruptcy of billionaire corporations like Enron, Worldcom, Bethlehem Steel, United Airlines and US Airways.

In response to huge concessions granted by the bankruptcy courts, there has been resistance. Deep in coal mining territory, a bitter struggle is being waged between the United Mine Workers of America (UMWA) and the Horizon Nat ural Resources Coal Co. Horizon is the fourth-largest coal producer in the U.S. with 27 surface mines and 15 underground in Central Appalachia, the Illinois basin and the Rocky Mountains.

A cruel hoax

With the full compliance of the bankruptcy court, corporations often change names and form new entities to manipulate their assets and demand more concessions from the unions. Addington Enterprises, which had a contract with the UMWA, filed for bankruptcy in February 2002. Three months later it emerged as Horizon, which in turn filed for bankruptcy in November 2002. Horizon demanded that 2,300 retirees pay more for health care and began to default on their pensions.

Devastated by these cuts, miners from Kentucky, West Virginia, Illinois and Indiana fought back. Many are retirees suffering from high-cost medical bills caused by black lung and other chronic diseases. Others have long-term injuries. Then there are the widows who lost their loved ones to sickness or accidents in the dangerous mines.

The UMWA has long provided health care for its members. In 1946, it established the first union-sponsored cradle-to-grave health care. During the 1950s, the union built a chain of Miners Memorial Hospitals in southern West Virginia, eastern Kentucky and southwestern Virginia.

War abroad and at home

Last year, in a militant protest against the cuts on Nov. 6, hundreds of miners and steelworkers converged on Horizon headquarters, not far from the meeting place of the bankruptcy court. UMWA International President Cecil Roberts challenged Horizon's petition to abrogate the current labor agreement. The workers forced the company to delay its reorganization package.

A message from AFL-CIO Secretary-Treasurer Richard Trumka, a former UMWA international president, pledged that "the 13 million members of the AFL-CIO stand with the UMWA and the Horizon workers and retirees in your fight to preserve health care insurance and to stand up against this corporate betrayal." The pledge turned out to be just words, as the AFL-CIO poured all its resources into the Kerry election campaign.

Roberts challenged the government: "If we've got $87 billion to bail out Iraq, let's bail out the UMWA ... 44 million Amer icans have no health care, 9 million are unemployed and another 6 million are underemployed. ... Let's get 44 million Americans health care for life."

For over two years, miners, their families and communities have demonstrated and rallied many times at Horizon's headquarters. On one occasion, led by Roberts, a number of them blocked the courthouse as thousands cheered. They got arrested, but they forced the company to renegotiate a contract through 2006.

In spite of the heroic efforts of the miners, on Aug. 31 bankruptcy court Judge William Howard bailed out Horizon. He declared Horizon's assets to be "free and clear" of any and all contractual obligations to the miners, represented by the UMWA. Now another company will take over the property.

Following this setback, the UMWA issued a press release on Sept. 4: "Horizon lawyers and lawyers for the entities who will soon own the bankrupt coal operators' properties, began laughing and high-fiving each other, knowing full well that the ruling meant that thousands of Horizon retirees and active coal miners, many suffering from chronic, high-cost medical problems, like black lung disease, would soon be without promised health care benefits and job rights." It continued that this showed how insignificant the needs of working people are to corporate America.

This battle was lost, but the class war is not over. Many lessons were learned in this protracted struggle.

Three days to remember

On Sept. 17, 1989, the UMWA had seized the property of the Pittston Coal Co.'s Moss 3 preparation plant in Carbo, Va. Ninety-eight miners and a minister, outfitted in camouflage, pushed aside shocked Vance security guards and occupied the property. A giant spotlight propelled by a generator focused on the Pittston walls, where a giant sign spelled out "United Mine Workers of America." When the light went on, over 200 miners and supporters cheered and thousands more came forward to bar state police from entering the grounds.

Cecil Roberts, then vice president of the UMWA, addressed the crowd: "Welcome to ... class warfare in southwestern Virginia." For over three days they held the property, until Pittston agreed to a contract protecting jobs and other benefits. Pittston feared that the miners were planning to run the Moss 3 plant.

Workers' control
to protect union assets

Can this UMWA strategy be emulated? The major airline unions may have to make this difficult decision.

Today, the airline industry is in its biggest crisis since the 1978 deregulation. United Airlines, the second-largest U.S. carrier, has been in Chapter 11 bankruptcy since December 2002. US Airways, the seventh largest, has been in bankruptcy twice in the last two years. Delta is threatening bankruptcy. Continental, which had been in bankruptcy, and American and Northwest have been getting more concessions in wages, health care and pensions.

United Airlines muscled $2.5 billion annually in concessions in its recent contract with the Association of Flight Attendants and plans to terminate billions in pension contributions. U.S. Airways wants $950 million in wage and benefit cuts. And Delta reported it will no longer continue company-paid health care benefits to retirees.

These airlines are also reducing vacation and sick time and plan to lay off as they increase the workload on the stressed-out workers.

This amounts to taking away billions in union assets won over years of struggle. These assets belong to the workers and their unions. The total amount entitles the unions to be the principal creditor, to assert their legal rights in bankruptcy court to be the trustees. It is hazardous to keep giving concessions to companies in bankruptcy. The record shows they will only ask for more. And the court will comply.

It is the creditors who must decide ownership--and the unions are the principal creditors.

Karl Marx wrote in "Capital": "That credit is not mere fiction is shown not only by the occasional loss of wages on the bankruptcy of the capitalist but also by a series of more enduring consequences." Bankruptcy allows corporations to expropriate all the assets owed to the workers. Marx showed that the status of workers as creditors is not a fiction. How right he was.

It's time to take a cue from the 1989 UMWA occupation of the Pittston property, especially during the major attacks by the airline companies in Chapter 11 bankruptcy. The unions, as principal creditors, must take concrete steps to demand legal recognition of their de facto ownership by possession and occupation of the property. They are the only entity that can run the airlines and keep them afloat.

On Nov. 6, 2003, as hundreds of miners and steel workers rallied outside the headquarters of the bankrupt Horizon corporation to protest its collusion with the bankruptcy court, UMWA President Roberts, the organizer of the Pittston take over, turned prophet, saying, "Some times it takes just the tiniest spark to lead to a great big fire." On Oct. 17, the Million Worker March in Washington can be that spark.

Neidenberg worked at Bethlehem Steel in Lackawanna, N.Y., from 1950 to 1965. Bethlehem has since declared bankruptcy.

Reprinted from the Oct. 21, 2004, issue of Workers World newspaper

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