Wheeling-Pittsburgh Steel Corp. Chairman Dennis J. Carney will resign today in an attempt to end a two-month strike at the financially troubled company, according to sources involved in the labor dispute.
The combative, 64-year-old Carney has been trying to lead his company out of U.S. Bankruptcy Court, where Wheeling-Pittsburgh has been since last April 16, seeking protection from creditors who are owed nearly $500 million.
In conjunction with the company's attempts to reorganize under Chapter 11 of the federal bankruptcy code, Carney told leaders of the United Steelworkers union on July 17 that Wheeling-Pittsburgh had abrogated labor contracts covering 8,200 workers in three states and was slashing its total labor costs by more than 18 percent.
Carney said then that the cuts were necessary to keep Wheeling-Pittsburgh, the nation's seventh-largest steel maker, from being forced into Chapter 13 under federal bankruptcy laws. Chapter 13 would mean total failure -- shutting the company's nine plants and liquidating its assets in an attempt to satisfy creditors.
USW-represented workers, who already had given up $90 million in wages and benefits in previous concession agreements, responded to Carney's actions with a strike that began July 21. The walkout affects the Pittsburgh-based company's nine plants in Ohio, Virginia and Pennsylvania.
Carney's steadfast insistence on the deep labor-cost cuts eventually personalized the issue, putting him at the center of the storm, according to sources involved in the dispute. Carney's presence in the chairman's office thus became an obstacle to resumption of negotiations, some of those sources said yesterday. "If Dennis Carney resigns, I would consider that a very statesmanlike position on his part," said Paul Rusen, the USW's chief negotiator in the dispute and the director of USW District 23, based in Wheeling, W. Va.
"I think it Carney's resignation will demonstrate that he knows and that the shareholders know that there isn't going to be any settlement as long as his ridiculously low labor-cost-cut proposal remains on the table," Rusen said.
Carney could not be reached for comment. Wheeling-Pittsburgh spokesman Kenneth F. Maxcy Jr. refused to comment. But another company official said: "I don't feel that anyone of us is at liberty to say what Mr. Carney will do. Mr. Carney, himself, will be the one who will be coming out with a statement."
Wheeling-Pittsburgh administrative and labor officials and one steel industry analyst said that they expect Carney's statement of resignation to come today.
Some sources speculated that Carney agreed to go only after Wheeling-Pittsburgh board member Allen E. Paulson, who holds the single largest group of the company's shares, personally guaranteed Carney's severance benefits, which amount to $1 million over the next three or four years.
Carney's benefits were in question largely because the Justice Department earlier this month formally objected to a Wheeling-Pittsburgh corporate proposal to honor severance contracts for Carney and four other top executives.
The company had offered Carney four years' salary and full benefits in case of a change in control of Wheeling-Pittsburgh, or Carney's forced resignation. The other four officers were to receive three years of their salary and benefits under the same conditions.