IBEW Local 1141 (Oklahoma City OK) Negotiates with Lucent/Celestica with eye on health insurance benefits

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Sat September 25, 2004

Benefit cuts worry Lucent retirees

By Paul Monies, The Oklahoman

Former Lucent Technologies Inc. retirees in Oklahoma are casting a wary eye on upcoming union negotiations that may result in cuts in their health benefits.

Recent cuts in the health care benefits for dependents of former management employees have angered Lucent retirees, who number 4,760 in Oklahoma. Most worked at the sprawling factory in western Oklahoma City under Lucent or its forerunners Western Electric and AT&T Corp. Canadian telecom-gear maker Celestica Inc., which took over operations in 2001, closed the plant last year.

To cut costs, Lucent last year stopped providing health benefits to the dependents of management retirees who made at least $87,000 at the time of their retirements. This week, it told management retirees those dependent health benefit cuts would be expanded to management retirees who made at least $65,000 when they retired.

Lucent said it saved $75 million from last year's retiree health care cuts, and it expects to save $16 million in 2005 from the most recent cut. But many former employees from both management and union-represented positions fear the cuts are just the beginning.

Jerry Mauck, an Oklahoma City retiree who heads the Lucent Pioneer Club, said members are concerned about the fate of their health insurance plans and pensions. Management retirees have little input in Lucent's cost-cutting steps, she said.

"We don't have a vote, we only have a voice when it comes to the retirees," Mauck said. "Sometimes the voice doesn't mean too much."

Meanwhile, negotiations begin in October for a new contract for 3,500 union members at Lucent. Included in those negotiations will be the health-care benefits for Lucent's 70,000 union retirees.

Trudy Kroutil, a union retiree in Tulsa, said about 300 retirees met earlier this month to discuss their options.

"No one wants to give up what they've worked their whole life for," Kroutil said. "We had some very lively discussions."

Lucent spokesman John Skalko said wages, benefits and retiree health care are expected to be major negotiating points when Lucent heads to the bargaining table with the International Brotherhood of Electrical Workers and the Communications Workers of America.

"We believe we can convince the unions to reach agreement that's appropriate for our circumstances, but also rewards them for their contributions to the business," Skalko said. "The current employee and retiree health care costs are a major concern for us and our employees."

Bryan Flickinger, who will represent Oklahoma retirees for IBEW Local 1141, said negotiations would be tough.

"Asking retirees on a fixed income to pay more in health care costs is just like cutting their pensions," he said. "We don't want to add Lucent retirees to the growing number of people without health insurance or adequate coverage."

In a letter to management retirees this month, Lucent said it will spend about $800 million on retiree health care this year. Officials with the Lucent Retiree Organization, a group that advocates for both union and management retirees, said retirees contribute about $150 million of that amount.

Health care benefits for management retirees came from a trust fund set up by AT&T when it spun off Lucent in 1996. That trust fund has been exhausted, and the company has been funding health benefits for management retirees from its operating cash, Lucent's Skalko said. The trust fund that covers union retirees is projected to run out of money in 2007.

Lucent, which had 157,000 employees in 2000, shed thousands from its work force as it restructured amid a severe downturn in the telecom industry. It offered many long-time employees early retirement. Since 2000, the total number of Lucent retirees has risen 18 percent to 125,000. Now many feel those benefits are slowly being chipped away by Lucent, which is eager to control costs.

"We realize that Lucent has downsized dramatically and they have made some tremendous changes in their business," said Kroutil, the union retiree. "We do realize that many large corporations today don't offer these kinds of benefits anymore. If the company does not stay afloat, we will lose not only our health care, but also our pension. We don't want to give up anything, but you've got to get real."

Companies in other mature industries with large numbers of retirees are dealing with similar "legacy" issues, including airlines, auto manufacturers and steel companies.

"It's a new reality out there for us and our retirees," Skalko said. "The company is much smaller than it was, and the health care costs have grown dramatically and are much more than the company can afford on its own. If we're going to continue to provide this important benefit, we're going to need some help from the retirees."

Lucent's main competitors include France's Alcatel SA, Germany's Siemens AG and Nortel Networks Corp. of Canada. Most of the health care costs for those company's retirees are borne by the nationalized health care systems of those countries, which Lucent said puts it at a competitive disadvantage.

Still, many retirees look at the health care cuts and wonder why Lucent still pays large bonuses to its top executives.

New Jersey-based Lucent has 97 employees left in Oklahoma City who work with its supply-chain operations.