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
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
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
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.
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
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
Reprinted from the Oct. 21, 2004, issue of
Workers World newspaper
This article is copyright under a Creative
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