For Immediate Release

WASHINGTON, D.C., March 14, 2002 - Following last week's decision by President Bush to implement steel tariffs of up to 30 percent on most flat carbon steel products, Robert S. Miller Jr., Bethlehem Steel Corporation's chairman and chief executive officer, called for action today from the U.S. government to help solve the steel legacy problem.

Testifying before the U.S. Senate Committee on Health, Education, Labor and Pensions, Mr. Miller said, "While the President's adoption of safeguard tariffs is essential to the recovery of the domestic steel industry, by itself it is not enough. Equally important is government assistance in solving the legacy problem."

Citing Bethlehem's record of consolidating and rationalizing facilities over the past 20 years, Mr. Miller used Bethlehem's current situation to illustrate the magnitude of the legacy problem. "Unfortunately, one of the major and unavoidable consequences of the efforts of companies such as Bethlehem to respond to changes in the marketplace is that our ratio of retired to active employees has risen dramatically, while the relative costs of retiree health and other non-pension benefits have risen even more dramatically.

"Further consolidation and rationalization will continue to exacerbate the legacy cost problem. With our significantly reduced workforce of fewer than 13,000 people, Bethlehem provides health care coverage for 130,000 retirees, employees and dependents. Of these 130,000, about 95,000 are retiree beneficiaries. This means that, for each active employee, Bethlehem provides health care coverage for more than seven retiree beneficiaries," he pointed out.

In 2001, Bethlehem's total cash costs for health care and other insurance amounted to $300 million, and this expense is expected to grow significantly as a result of the upward trend in prescription drug prices and usage as well as general health care cost inflation. The net present value of Bethlehem's legacy benefits, excluding pensions, is $3 billion. Another aspect of the legacy problem is pension obligations, which currently are underfunded by $2 billion. These types of liabilities constitute the major barrier to necessary consolidation within the industry.

"Even though we have downsized our capacity and modernized many facilities, these legacy obligations constitute an extraordinary burden, having a major impact on the ability of integrated producers such as Bethlehem to compete and, indeed, to survive," said Mr. Miller.

"There are three reasons for government action on legacy costs," he stated:

1.Foreign governments, not market forces, are responsible for much of today's problem.

2.Prior administrations have played a significant role in creating the current economic situation in which Bethlehem and the other domestic integrated steel producers find themselves.

3.The cost of meeting the health care needs of this enormous and unanticipated number of retirees and dependents is preventing normal market-driven consolidation in the industry.

Mr. Miller continued, "Bethlehem Steel is very appreciative of the committee for bringing the legacy issue to the forefront today and, in particular, Senator Mikulski for taking the initiative to arrange for this hearing.

"We are committed to working with Congress to craft an appropriate response that would involve the industry, labor and government. However Congress decides to approach the issue, it should act quickly. The options available to Bethlehem and the other domestic steel companies are rapidly declining," Mr. Miller warned. "If the government does not help, more domestic steel producers will be forced into liquidation," he said.

"Steel is critical to our national security," Mr. Miller concluded. "As a result of large-scale restructuring in the 1980s, the domestic integrated industry faces a crippling problem with health care related legacy costs. Generally, our foreign competition does not have this problem. This inequity needs to be addressed.

"America needs a viable steel industry. Bethlehem and the industry simply cannot develop a permanent solution without government assistance. Consolidation will continue in the domestic industry, with or without government assistance. But, with governmental help, this process can be orderly, minimizing the possibility of massive job losses over short periods of time."

For more information contact:

Robert W. Bilheimer- (610) 694-3711
Bethlehem Steel Corporation
Public Affairs Department

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