“Never again will this group of retirees have to worry about the steel cycle because our health care is under our own control,” Lawson said.
AK made efforts to reduce its health care costs in 2006, leading to a lawsuit filed during the steelmaker’s yearlong lockout of active employees. The Middletown VEBA was formed as part of the 2007 court settlement.
AK made an initial payment of $468 million in 2008, and three annual payments of $65 million in following years for a total of $663 million. The last payment was March 1, said AK spokesman Alan McCoy.
Lawson said the trust fund is worth more than $600 million after the payment.
Before the VEBA was established, AK said its liability for post-employment benefits was $2.1 billion, half of which was related to health care benefits for Middletown Works. Middletown Works has the most employees of AK’s seven steel plants. Transferring the responsibility for the health benefits to the trustees takes the costs off AK, McCoy said.
AK said it continues to try to reduce health care costs to be more competitive.
“We said once this is completed, our liability will be $1 billion,” McCoy said. “So (we’re) cutting it in half.”
Now that AK has paid off the Middletown VEBA, it will make its first payment of $22.6 million to a Butler VEBA — which applies to its Pennsylvania plant — Aug. 1, he said.
AK Steel, based in West Chester Twp., makes carbon, electrical and stainless steels with 6,200 total employees. It is Butler County’s second largest employer, with approximately 2,600 local workers.
About the Author