The New York and Pennsylvania state teacher retirement systems have withdrawn $750 million in pension funds managed by Manufacturers Hanover Trust Co., as part of a union effort to force a settlement in a bitter 20-month strike in the Arizona copper fields, AFL-CIO officials announced today.
Manufacturers Hanover, one of the nation's largest banks, is a prime financial backer of Phelps Dodge Corp., which has operated since July 1983 with strikebreakers hired to replace 2,400 striking members of the United Steelworkers of America and 11 other unions.
The withdrawals, initiated by teachers union members on the two state retirement boards, are part of a "corporate campaign" by the Steelworkers to financially pressure Phelps Dodge, through its creditors, to end the strike.
Albert Shanker, president of the 600,000-member American Federation of Teachers, said the funds were withdrawn because of "poor performance" by the bank in managing the retirement funds. He said an additional $1 billion may be withdrawn by the New York system.
Shanker said the bank's money managers were "outperformed" by 74 percent of other major institutional investors. "These figures do not inspire confidence for the trustees of one of the largest pension trust funds in the United States."
Pension fund trustees are obligated by law to seek the highest return on investments and could not publicly cite the bank's backing of Phelps Dodge as the reason for the withdrawal, AFL-CIO officials said. Bank spokesmen were not immediately available for comment.
Phelps Dodge, which continued to operate during the strike, lost $267 million last year. Steelworkers President Lynn Williams said he believes the withdrawal of bank funds will pressure Manufacturers Hanover and other institutions to shy away from investing in or guaranteeing loans for the company.
The strike began after the unions offered to accept a three-year wage freeze because of the deep recession in the copper industry. While other firms agreed, Phelps Dodge demanded deeper concessions.