DukeEmployees.com - Duke Energy Employee Advocate
News - May 2000
- Howard Scott
New York Times - May 31, 2000
The American workplace has evolved to a kinder, gentler state. With unemployment at a 30-year low, bosses realize that they have to do more than pay good salaries and lavish perks on their employees if they want to keep them. They also have to be nice to them.
Is it too much to ask that employers not rob the worker's pensions?
MSN-NBC - May 30, 2000
Under a traditional pension plan, employee Bill might be guaranteed 1.67% of pay for each years of service, up to 30 years for a maximum of 50% of pay averaged over the final three years. Bill is 55 years old, has worked for the company for 20 years, and earns $40,000 this year. When he retires at age 65, at pay of $54,536 a year, he would receive annual benefits of $27,268.
Now let's say Bill's employer converts to a cash balance plan. It tells Bill what a great plan it is and how he can more easily understand his benefit statement. But unless Bill thoroughly investigates the conversion, he may not understand what he is losing, says Stone.
The cash balance plan might contribute five percent of Bill's pay and credit the "account" with six percent interest each year. But hereís whatís overlooked, says Stone.
"The catch for Bill is that the company will most likely defer contributions to him and other older participants until such time as contribution credits under the cash balance plan exceed the accrued benefit credited to the plan from the pre-amended defined benefit plan. In cash balance plan parlance, thatís known as wear-away," he said.
"The company most likely will not contribute anything for Bill until the wear-away expires, but he wonít know that because he doesnít understand the language by which he is told. Who would? Thatís the point. Itís not clear to anyone but actuaries and other pension trolls. In Billís case, because of the wear-away, the company wonít contribute anything for three years."
The net result of the new plan and the wear-away provision is that Bill ends up with considerably less at retirement than he originally would have, says Stone. Under his old defined benefit plan, he would have had a pension benefit worth $252,236 when he retired in ten years. Under the new cash balance plan, the retirement benefit would be $122,203.
The Charlotte Observer - May 29, 2000
When an employee on the night shift collapsed with chest pains, sparking fears of a heart attack, her boss helped carry her to an ambulance. But when the employee returned to work a few hours later after being diagnosed with only a bad case of indigestion, the same boss who helped carry her to the ambulance wrote her up for an unexcused absence.
After employees told the story to Kevin Sheridan, HR Solutions' CEO, the drug maker took corrective steps. The boss apologized to the woman and called a staff meeting to apologize to his entire 25-employee work group, saying he had erred in interpreting the company's absence policies.
Barron's - By WILLIAM PESEK JR. - May 27, 2000
Throughout history, corporate earnings have driven the stock market higher or lower. But these days, because of the heightened role that profits from pension plans are playing in Corporate America's bottom line, equity performance sometime s is driving earnings. Thanks to the (until recently) raging stock market and higher bond yields, many huge, old-line companies aren't paying into retirement plans, but instead are profiting from them. A growing number of defined-benefit programs -- plans in which companies agree to pay employees a fixed amount upon retirement -- are overfunded. Their investments are throwing off more income than needed. This lets companies suspend yearly contributions, trimming overall expenses and boosting profits.
"Pension funds are becoming a major profit center," says Adam Reese, a consulting actuary at Towers Perrin. But what the bull market gives, it can also take back. A long drop in stocks could end this bonanza.
The Securities and Exchange Commission is concerned that pension income is giving less sophisticated investors a distorted view of some companies' health. In a letter last December, the SEC, in effect, said that if pension income boosts a company's operating net, this should be clearly stated upfront, not buried in a footnote.
The issue isn't just academic.
Reese analyzed the 30 companies in the Dow Jones Industrial Average, 24 of which offered defined-benefit plans last year, with combined assets totaling $457 billion. The bottom line was boosted for 11: AT&T, Boeing, Caterpillar, DuPont, Kodak, General Electric, Honeywell, IBM, International Paper, Philip Morris and SBC Communications.
Reese estimates that, in aggregate, the 24 companies had surplus pension assets -- the excess of assets over liabilities -- of over $101 billion, a 35%-plus increase over 1998's level. Should the surpluses grow, or even hold steady, companies would have an enviable tool to smooth out earnings over time. When a pension's return on assets beats the company's estimates, the difference is considered a deferred gain and spread out over a number of years. This has left some companies with a rainy-day fund to be tapped down the road.
Not all Dow components enjoy substantial overfunding. But for the Dow as a whole, pension plans boosted income by more than $1 billion, compared with pension expense of the same amount in 1998. Also, reports Towers Perrin, the median return on pension assets among Dow companies in 1999 was 19% -- more than double what had been expected.
GE was a big beneficiary, with pension income of $1.38 billion -- nearly 5% of its operating income -- versus $1 billion in 1998. Its annual report refers to the gains as cost reductions in pension operations. Without the gain, GE's earnings would have grown 14%, instead of 15%.
Two other Dow components that experienced pension windfalls last year were SBC Communications and IBM, with $844 million and $799 million, respectively, amounts that equaled about 7% of operating income for each. Two non-Dow companies that saw similar benefits were Lucent Technologies ($614 million, or 11% of operating income) and Northrop Grumman ($353 million, or over 35%).
Some big companies are being candid about pension income. USX-U.S. Steel stated plainly in its annual report that such income kept it from reporting a loss in 1999. In fact, this provided a whopping 156% of USX's 1999 operating income.
But the same clarity wasn't found in Stone & Webster's first-quarter report. As Dow Jones Newswires reporter Sean Davis pointed out in a May 3 story, the engineering and construction company listed net from continuing operations of 43 cents per share. To learn that pension income had accounted for 22 cents -- more than half -- of this, investors had to scrutinize the report carefully. Said a company spokesman: "We're comfortable we properly disclosed the pension credit . . . in a footnote that was very clear and easily identified."
Dick Joss of Watson Wyatt Worldwide Consulting points out that roughly 24% of 500 large companies he tracks showed pension income in 1992. By 1998, this had jumped to 32%, and even at companies that showed pension expenses, the costs were declining.
Given the generally strong stock market of the past two years, Joss says that up to 40% of companies probably are showing pension income today. In fact, he adds, this now accounts for over 10% of total income for many corporations.
Despite the stock market's recent woes, analysts think the dynamic will continue. Consider DuPont, which made $164 million in pension income last year. In its 1999 annual report, the company predicted double-digit profit growth this year, in part because of pension income. But to some observers, that's just the problem. Because some of the growth would be pension-related, J.P. Morgan analyst Don Carson questions the projected earnings' quality.
To be sure, companies taking pension income into account in operating income are merely following existing accounting rules. And in general, pension-fund costs have been falling anyway; many companies have switched from defined-benefit to "cash-balance" plans, which have attributes of both 401(k) and conventional retirement plans and allow their sponsors to lower liabilities.
Will pension income be here today, gone tomorrow? That, of course, depends on the markets. But regardless of what happens, Bear Stearns analyst Pat McConnell is disturbed by the inclusion of pension gains in operating income. She thinks the solution is to break up the components of net pension costs for purposes of financial analysis. Only the cost of funding the retirement benefits of current employees should be included in operating income. Other components should be recorded elsewhere on the income statement.
With more and more companies sitting pretty thanks to Wall Street's boom and higher bond yields, the role of pension income may get more attention.
Labor unions already have taken notice, stepping up demands for a share of the largesse. But what would have an even bigger impact is an end to the bull market and an eventual end to a bonanza that some investors don't even know exists.
Dow Jones - 5/23/2000
"NEW YORK -- The Wall Street Journal's Ellen E. Schultz won a Gerald Loeb Award in the large newspaper category for her series on cash-balance pension plans.
"The Gerald Loeb Awards For Distinguished Business and Financial Journalism praised Schultz's series for making a difficult and important topic comprehensible to readers, while leading to government scrutiny and worker activism."
Congratulations to Ms. Schultz for her outstanding work in exposing pension injustice in America. This is not the first award she has won for her work. Ellen Schultz is a strong ally of the truth.
Poughkeepsie Journal - By Craig Wolf - 5/19/2000
By telling employees they were breaking company rules by putting large pro-union signs on their vehicles, IBM Corp. violated the National Labor Relations Act, a judge has ruled.
The judge's report now goes to the National Labor Relations Board. Green's proposed penalty is a cease-and-desist order that would bar IBM from telling employees that union signs violated company policies regarding postings. He also would make IBM put up notices saying employees could display union signs on their vehicles.
Company policy doesnít trump the law, said Thomas Steed, a CWA organizer.
Sentinel By JENNIFER BROOKENS 5/19/2000
"FAIRMONT -- Many retired 3M employees and their spouses gathered at the American Legion on Thursday morning to discuss a class action lawsuit alleging the company has illegally cut retirement health care coverage.
"'We were promised that the health care coverage we were receiving when we worked there would be ours for life,' said former 3M employee LaVonne Bowman of Fairmont. 'We ended up taking less wages just so we could have this health care coverage.'
"The workers say they were covered by a contract that stated workers who retired with 15 years of pension service, and their spouses, would receive medical benefits for life at the company's expense.
"They say other arrangements in the contract included: workers who retired before the age of 65 would be covered by the 3M medical plan for active employees in the area, and, once reaching the age of 65, they would be covered by Medicare Supplement plan.
"The class-action suit covers union members who retired before September 1994 and their spouses.
"Most everyone at the meeting had a horror story to tell. The names and the technical terms they were grappling with were different, but the problem remained the same. People who were used to seeing health insurance deductibles and premiums in the low hundred-dollar figures are now facing prices of up to $1,500 or more.
"'So many of us are getting so many different answers to this, but none of them coincide,' said Dorothy Hughes of Cottage Grove. She, along with her husband Ed, originated the lawsuit against the 3M corporation. Hughes and her husband both worked for 3M -- Dorothy for 27 years, Ed for 46. Both were covered under the union contract.
"'The price changes started about a year or two ago, when our insurance company was switched to Cigna corporation in Connecticut,' Hughes said. 'No one ever told us this would be happening, and soon after the company just took our insurance clause out of the contract.'
"'The phone consulatants (sic) we would call to try and get some answers to this were not well-educated, and didn't have enough knowledge about our insurance,' Hughed (sic) recalled. 'After a year of complaining, we decided to take action.'
"In January, the Hugheses contacted their attorney, Dan Boivin of Meshbesher & Spence Limited in Minneapolis. Boivin, along with attorney Matt Newmann, is preparing the suit against 3M.
"'3M has made a promise to these people, and they haven't lived up to it,' Bolvin said. 'We need to send a message to corporate America.'
"'Confusion is how the system gets away with what they're doing,' Boivin told the group Thursday. 'They hope that after awhile, people will just get frustrated, give up and pay all that extra money. And a lot of people do. But if we keep pushing them and stick with it, they will relent.'
"'With everyone hearing different stories, we have people here that are scared that they will lose their insurance coverage all together.' Bowman said.
"3M public relations officials were unavailable for comment.
"This summer, the lawyers will file to have the case declared a class-action lawsuit covering all eligible 3M retirees, including retirees from the Fairmont plant. In the meantime, they are gathering information in preparation for the suit."
Slowly, very slowly, employees and retirees are learning that those who take no action get nothing. Employers have capitalized on the aversion to litigation by most workers. The pendulum may be starting to swing the other way. People are learning that if they sit silently by and do nothing, they will be picked clean by greedy employers. Even greedier consulting firms are leading the way. These employees want to send a message to corporate America. Good! They are sending a message in the ONLY language that corporate America can understand. These people indicated that they had spent enough time complaining and it was time for action. Excellent! Duke's people have put in an adequate amount of complaining time. Complaints + No Action = Zero Results.
Company officials were unavailable for comment. These officials are smarter than some others. If you have no defense, it is better to keep your mouth shut than to say something utterly stupid like: "This is what the employees wanted"!
Employers are taking away benefits even from the worker with contracts! For those with no contract, it is like shooting fish in a barrel.
The Charlotte Observer - By DAVID H. COBURN - 5/18/2000
"Stephen Brown took on his former employer and won back overtime pay for himself and for all of the company's N.C. employees.
"Next up for the 17-year-old from Charlotte: high school graduation.
"Charlotte-based Eastern Federal Corp. paid Stephen $391.53 and cut checks for other workers as a result of the Vance High School senior's persistence.
"'My best friend told me she got a check for a little over $900,' said Stephen, who quit his $6-an-hour job at Eastern Federal's Starlight Stadium 14 in April for a better-paying position at Jillian's in Concord Mills.
"Stephen started working at the University City area theater off U.S. 29 in August 1998, and soon began asking why he wasn't earning time and a half when he worked more than 40 hours a week.
"A succession of managers told Stephen that movie theaters were exempt from the overtime requirements of federal labor law. True enough, but Stephen hit the Internet and learned that N.C. law requires theaters to pay overtime even though federal law does not.
"After Stephen complained to the N.C. Labor Department in March, the state contacted Eastern Federal, which agreed to review its records and reimburse employees at its 11 N.C. theaters who were owed overtime going back to May 1998.
"'We've been in business a long time (50 years) and thought it was something we were properly doing,' said Eastern Federal executive George Royster. 'And when we found out it wasn't, we stepped up and did the right thing.'
"The company declined to say how much it reimbursed or how many employees were paid, and those figures won't become public record until Eastern Federal files a report with the state.
"Tom Brown says he was impressed by his son's initiative - 'He did it all himself' - although he admits he had to resist the parental urge to get involved.
"I try to let him make up his own mind."
What a great story! You cannot start too young learning how to defend yourself against greedy employers. An executive said the company had been doing that for 50 years and thought they were doing the right thing! He just admitted that the company has cheated employees for half a century! Was he truthful about not knowing it was illegal? We have no way of knowing. But, it is a fact that many companies do not mind twisting the truth at all to save a buck. An important lesson to learn from this incident is: "Never believe everything the company tells you." It may be true; it may not be true. It could be an outrageous lie. But, if no one ever questions the company line, we are forever doomed to accept any trash thrown to us.
Technically, the managers did not tell a lie. They said that they were not violating FEDERAL law. Sometimes what is not said is more important than what is said.
Not only did Stephen help himself, he helped some of his former coworkers even more. That is the stuff that warm fuzzy feelings are truly made of!
The executive said: "We stepped up and did the right thing." Yes they did. AFTER their hand was called by Mr. Brown. The company did the right thing only after Mr. Brown refused to believe what the "succession of managers" told him. The company did the right thing only after outside agencies were brought in. As long as a company's policy of deny, deny, deny works, they have zero incentive to clean up their act. "Tom Brown says he was impressed by his son's initiative..." Duke Energy Employee Advocate is impressed with his initiative. Perhaps Stephen Brown will consider a career in law. There are many more companies that need to get their comeuppance.
Pioneer Planet 5/14/2000
"If you work full time, your employer spends about $4,000 on your medical insurance each year. What if your manager handed you that money and let you pay for your own health care instead?
"It could happen. IBM is among the blue-chip companies weighing the pros and cons of 'defined contribution' plans for employee health care.
"Benefits plans in general are giving employees more choices. For example, PTO banks, short for 'paid time off,' allow people to pool their vacation and sick days, and use their time off as they please."
But, remember the rule of choices. Companies only offer choices that save them money. The more choices and change - the more you lose!
"Twin Cities companies such as Land O'Lakes, Carlson Cos. and U.S. Bancorp give their workers several health plans from which to choose. Employees who pick a less expensive plan may opt to put more money toward dental insurance, for example.
"Those who want the Cadillac health plan may have to pay some of the cost themselves. 'It's the first step in a defined contribution plan,' says Cathy Tripp, health care practice leader at William M. Mercer in Minneapolis, a human resources consulting firm."
You remember William M. Mercer. They are the nice folks who designed our nifty cash balance plan. They probably have a lot more "goodies" for us.
"Although defined-contribution plans may be convenient for employers, they could wreak havoc with employees' lives. People who are healthy could get by with cheaper health plans and pocket the extra cash."
The company has already wreaked havoc with employeesí lives with the pension conversion. If it saves the company a dime, they are all for it. Do not think that Duke has not looked into other "deals" for us. They would rather the pension issue to "blow over" first. But, it just may not blow over. It may blow in some much needed changes in the way the company operates.
"But people with chronic conditions, whether allergies or diabetes, could have a harder time finding affordable insurance because they would be buying as individuals, not as part of a pool.
"'That's the biggest disadvantage of all: How do you deal with the equity issue of sick employees having to pay more?' Tripp says. 'The only way to deal with that is legislative reform.'
"And there's another issue the government would have to solve. The health plan your employer offers isn't taxed. A lump sum of money would be."
Companies do not like "outsiders" in their affairs. But, their blunders ensure that there will be more outsiders, more investigations, and more laws to curb the runaway greed.
The Charlotte Observer 5/15/2000
A Jewish appliance repair worker, a Catholic racetrack clerk, a Mennonite trucker and a Muslim hotel worker: What do these people have in common? They've all been discriminated against on the job because of their religion. They have not been fired because of their beliefs; they've been fired or forced to quit because they take their beliefs seriously enough to translate them into action.
America is indeed a land where religious freedom is bountiful - at least until it runs into other powerful interests championed by our society, such as unfettered market capitalism or rampant liberal secularism. Devotees of each of these philosophies are blocking our attempts to remedy this through the Workplace Religious Freedom Act, a measure introduced in the House this year.
The Civil Rights Act of 1964 was once understood to require employers to reasonably accommodate the religious needs of their employees. In recent years, however, courts have interpreted the law so narrowly that there is almost no protection for the religious needs of employees. The new act would reinstate employers' obligations to attempt to accommodate religious needs. Worried about anything that might affect their bottom line, businesses are opposing the legislation.
Employee Advocate - DukeEmployees.com - 5/15/2000
The article below deals with sexual harassment in the military. The gist of the article is that many women do not report harassment to protect their careers. That is a decision that only they can make. But, one wonders just how much should be suffered to "protect a career"? Some careers are more lucrative than others, but most just allow people to "get by." That is the nature of the game; for a few at the top to live lavishly, the majority must just "get by." Often an employee will suffer an enormous amount to hang on to a marginal career.
Have you ever suffered sexual harassment, racial harassment, discrimination, or pension injustice on the job? Did you "look the other way" to protect your career or avoid conflict. If so, did you feel sort of cheap afterwards? Was it worth it?
The irony: some employees knuckle-under in every way imaginable so as not to anger the management gods, and then get tossed out on their ear anyway! That is a fact. Kowtowing does not guarantee a career.
Tolerating an unacceptable situation will never improve it. Once in a while, you have to confront matters head on and let the chips fall where they may.
The New York Times 5/12/2000
"The case of General Kennedy, the Army's highest-ranking woman, has revived the question of how pervasive sexual harassment remains in the military and how such cases should be handled. Women in the military are reluctant to file harassment complaints, many female officers said, because they fear opening their personal lives to examination and being blamed for inviting a sexual advance.
"'Now, instead of being remembered as the first woman to earn three stars in the Army, she is going to be remembered as that woman with the sex complaint,' said the senior officer who, like most of the other 15 senior officers interviewed for this article, spoke only on the condition that she not be identified.
"Of those officers, all but three said that they had been the target of sexual harassment in the military.
"In interviews, these 13 women all said that to protect their careers they never reported a one-time case of sexual harassment. They marveled that General Kennedy, so close to retirement, would have subjected herself to the backlash and tarnished reputation that would inevitably come from making a sexual harassment charge.
"The women said they generally accepted General Kennedy's account that she made the complaint against Maj. Gen. Larry G. Smith four years after the incident only upon learning that he had been appointed deputy inspector general of the Army, a position that included investigating sexual harassment.
"There could be no other reason, they said, to willingly open oneself to the personal scrutiny that would come with reporting an incident."
InfoBeat - 5/11/2000
"NEW YORK (AP) _ Securities and Exchange Commission Chairman Arthur Levitt is stepping up his campaign for greater independence of auditors who check the books of publicly traded companies. Levitt said Wednesday the SEC will draft new rules to help prevent conflicts of interest between auditors and the companies they review for financial integrity.
"Levitt's call for new regulations comes after an 18-month campaign in which he stressed the importance of accurate corporate earnings reports as a way of upholding investor confidence in the U.S. stock markets.
"Current SEC rules require companies whose stock is publicly traded to hire firms such as PricewaterhouseCoopers, KPMG and Arthur Andersen to conduct independent reviews of their financial reports _ most importantly, the quarterly earnings reports used by investors to gauge a company's profits and growth.
"But in recent years, many of the big auditing firms have expanded their businesses to include lucrative consulting services that help companies operate more efficiently.
"The firms market those consulting services to many of the same companies they audit for financial integrity, causing potential conflicts of interest."
"Levitt also criticized companies that issue misleading or outright inaccurate earnings reports in order to live up to expectations set by Wall Street analysts.
"He said that too many corporate financial officers 'are being judged today not by how effectively they manage operations, but by how they manage (Wall) Street.'"
The deeper you dig the more inequities, conflicts of interest, and back room deals you will find. If the firm that set up the pension plan also does the auditing, they will have endless opportunities to spin the number to come out the way they want them to. And, we know those who spend more energy trying to manage Wall Street than managing the business.
InfoBeat - 5/11/2000
"ATLANTA (AP) _ Eleven black Lockheed Martin employees have filed two lawsuits claiming that they have had to endure racial taunts and discrimination in pay and promotions.
"The lawsuits filed Wednesday ask the U.S. District Court to permit two class-action cases on behalf of blacks at the defense contractor's plants _ one for salaried employees and one for hourly workers."
This is interesting news, indeed! There are those who would have you believe that salaried employees have absolutely zero rights. But, we have seen that salaried employees can have union representation and receive justice in a court of law.
"Burbage said the company is willing to continue to negotiate a settlement with the workers and the Equal Employment Opportunity Commission. The EEOC notified Lockheed Martin last year that its investigation indicated violations might have occurred.
"'To date, the EEOC has not shared with us the basis for these findings,' the company said in a statement Wednesday."
The EEOC continues to make its power for worker justice felt across America.
"Lockheed Martin, which employs 149,000 workers worldwide at more than 900 plants, submitted a resolution proposal two weeks ago. The details of the offer are confidential, but the plaintiffs' attorneys characterized it as inadequate."
It seems that these plaintiffs are not interested in low ball offers. Consider this: What if Duke Energy realized that their head was going to be handed to them in court - what would they do? You could bet your cash balance plan that they would come out with a low ball offer!
Milwaukee Journal Sentinel/KRTBN - 5/8/2000
Wisconsin Electric Power Co. said Friday that it will begin purchasing power from a facility being built near Shawano that uses cow manure to help generate electricity as part of its growing renewable-energy program.
Hey, maybe Duke should build one of these plants. Since the employees are not buying what they are trying to feed us about pension plans, the company could just funnel it to the manure plant. They could reduce employee communications by 90%; just send them straight to the new plant where they truly belong.
The New York Times - 5/7/2000
"'Eventually Union Pacific is going to get the message that they have to come to terms with the workers at Overnite,' Mr. Hoffa said.
"To raise the stakes, Mr. Hoffa said the union was planning a federal racketeering lawsuit that would charge Overnite with breaking the law hundreds of times, by, for example, firing many union supporters, as part of a strategy to do anything to avoid a union contract. The company denies using illegal tactics."
"The broader labor movement sees major stakes in the Overnite dispute. Many labor leaders say it is the most flagrant example of how unions, after surmounting numerous obstacles to get workers to vote in a union, then face a hard time getting companies to sign a first contract.
"At several Overnite terminals the drivers and dockworkers voted to unionize more than five years ago, but they still do not have a contract."
"For one of those strikers, Eddie Dunn, at Overnite for 24 years, the stakes are highly personal and boil down to regaining dignity at work.
"'We went through Thanksgiving, Christmas and New Year's out here, and they thought once the first snowfall came, we would fold,' Mr. Dunn said. 'We're serious here. We're fighting for a better future. If we don't win, our kids will face a future with jobs paying $5 or $6 an hour, subcontracting, no benefits, no nothing.'
"On the picket line, some 30 strikers poured out tales about how they felt mistreated by Overnite. One truck driver said he felt insulted when a manager called his doctor to ask whether a note saying he was sick was forged. Another driver said that after going for 10 years without a critical write-up, he got a notice putting him at the brink of dismissal, just days after signing a petition favoring a union.
"Frank Williams, a driver for 27 years, said: 'The main reason we're striking now, it's not for benefits or money. It's about Overnite not being fair to the workers.' Overnite drivers earn nearly $18 an hour.
"Mr. Hoffa said: 'The fact is they're not negotiating in good faith. We have had 163 negotiating sessions with little or no progress. That tells you the story of whether or not they really want a contract.'
"But Overnite officials insisted that they were bargaining in good faith and blamed the union for often postponing negotiating sessions. Mr. Goodwin held out little hope for a settlement, saying the company would never accept the union's demand to place Overnite workers in the Teamsters' pension fund. He said Overnite's pension fund was in excellent shape, while the Teamsters' pension fund was underfinanced."
Anytime there is a disagreement between labor and management, it seems that the word "pension" is involved somewhere. A pension guaranteed by a contract is always preferable to a pension plan written in disappearing ink. Some of the people voted in the union over FIVE years ago and still do not have a contract!
Leader News - by Bill Hewitt - 5/5/2000
Burning missile warheads in Duke Energy's nuclear reactors sounds like a really innovative plan. Is it safe?
The really "big" guns aren't pointed at Russia any more. The Cold War is over. The thousands of missiles we once had to keep our great enemy at bay aren't needed anymore and have become, instead, towering scrap heaps, rusting in the ICBM junkyards of the new world order. Need a tail fin off a '78 Minuteman? We've got some in stock. But it is not so easy to dispose of their payloads. No, the 50 tons of plutonium our disbanded missile fleet used to carry requires more than a blowtorch and a fenced-in area for disposal. It is dangerous stuff: powerful, radioactive and poisonous. So they came up with this plan: why not re-direct the stuff, put it to use making electricity in the nation's nuclear energy plants? After all, nuclear fuel like that has been used in Europe for decades. Why not do the same with this? How about lighting cities with the same stuff meant to snuff them out? How about a little modern, swords-into-pruning hooks kind of thing? What could be wrong with that?
Not a thing, said our very own Duke Energy Corp., which five years ago signed an agreement with the United States Department of Energy to join a group of power users that would help dispose of the nuclear arsenal of Democracy.
With that program in the works, a Moscovite has a better chance of getting nuked if he books a flight to the Carolinas than if he stays home where a few U.S. missiles are probably still targeted. Thirty-three tons of weapons-grade plutonium is slated to arrive, in about six years, for use in Duke's McGuire (Lake Norman) and Catawba (York, S.C.) reactors. Yes, two ounces of the stuff, used just so, could flatten Charlotte and turn Gastonia into the Great Piedmont Salt Flats, but don't concern yourself.
It's powerful, but when prepared as a fuel, it won't blow up. All it can do is poison you.
But don't worry about that, either. All the experts say it will be safe.
Well, at least most of them do.
Whatever the case, here's some good news: you may save a few bucks on your electric bill in the coming decade. But then again, you might not. Answering that economics-of-plutonium question right now, is like searching for an answer on a Ouija board. You just have to hold your mouth right and hope the vibes go your way. Duke Energy can only say that profits are expected to lower their customers' electric bills. But that could change. Stockholders could turn out to be the recipients of the payload payoff.
The plan itself is simple. Duke will replace the uranium fuel in its two reactors with weapons-grade plutonium currently stockpiled by the federal government. The plutonium in the actual warheads will be converted to fuel at the Department of Energy's Savannah River Site in Aiken, South Carolina. The end product will be a mixed oxide fuel (MOX), containing five percent plutonium. Duke plans to begin fueling its reactors with the controversial fuel in 2007. The plan is to continue doing so for 16 years.
The company will save/make money on the plan in two ways. First, plutonium is more potent than Uranium 235, the standard nuke fuel. Not surprisingly, it is also more expensive, but under the contract with the Department of Energy, Duke will pay uranium market prices for the plutonium. So that's more energy for the same price. On top of that, the DOE contract guarantees Duke at least $130 million as a fee for getting rid of the stuff. That may sound like a lot of federal something for nothing, but it is really a good buy for taxpayers, too. The normal cost of disposing of plutonium - i.e., burying it somewhere for a long, long time - 20 or 30 times as much.
Everybody wins ... as long as there aren't any other problems during the 16 years (possibly more if the program is extended). Few people really think there will be. The new fuel will be absolutely safe for years, according to most experts. But not all. There is some uncertainty. It could be a "long" 16 years according to some.
If most of the experts are right, however, 2007 will be a very good year. Folks will have a little extra mad money left over each month because of a decrease in their power bill. The MOX fuel venture will have been successful. And as an added bonus, the government and the American people will be on their way towards ridding the planet of 33 tons of the real-world's Kryptonite. That's not the entire U.S. plutonium stock. Seventeen tons of the stuff are considered too impure and will still have to be buried. About 50 tons will either be added to the program later or stored in the ground. Still, that's a lot of plutonium out of the way. Without such a plan, all that plutonium would need up to 25,000 years in the ground to be rendered safe. Twenty-five thousand years? The dinosaurs might come back before that is done.
Sound too good to be true?
Yes. But it's not. Well, it might be.
A particular stance on speculation, vis a vis safety and other non-economic considerations, depends on whether or not you believe most of the experts most of the time, or some of the experts some of the time, or just a handful for most of the time. There is a lot of information out there - at least 33 tons worth - and more is coming in all the time. Consider, for instance, the Duke Energy stockholders' meeting in Charlotte a couple weeks ago where one of Duke Energy's stockholders - a guy whose great grandfather founded the company - threatened to divest all his Duke stock over the MOX fuel issue. When something like that happens, people listen, and they did when Peter Wylie, whose family can claim the Wylie in Lake Wylie, flew into Charlotte to protest the company's intent to use MOX fuels. After all, he is a Wylie and he does own a megawatt's worth of Duke shares.
Most of the listening was likely just politeness, though. When the tally was taken on the vote to ban Duke from using that form of energy, Wylie's remarks seem ... to have made no difference at all, or at least not the kind of difference Wylie and his anti-nuclear companions had in mind. Ninety-six percent of Duke Energy stockholders voted to defeat a motion which would have halted the company's joint venture with the Department of Energy to begin fueling its Catawba and McGuire nuclear reactors with MOX. That was even more resounding than the 92 percent "yes" the company received at a similar meeting a year ago. So either Wylie is not very persuasive, or momentum for the move, which could save Duke (and its stockholders) millions in fuel costs, is growing.
It has been said that there are two kinds of people in this world - people who don't eat well and people who don't sleep well. A quick glance around the board room at the shareholders' meeting revealed wall-to-wall insomniacs. This was a well-nourished, blue-ribbon gathering of the state's elite. And Wylie fit in, if only by virtue of his money. His Hushpuppy shoes were bookended by wing-tips, and his laid-back sport coat - one imagined a save-the-whales T-shirt hidden beneath - was hemmed in by rows of Hart Shaffner and Marx (But not that Marx, of course). Wylie's stock-owning colleagues listened to him last week, and then voted against him.
Left behind is the $64,000 question: Can those warheads be made into a safe fuel? And perhaps even more importantly, who actually knows the answer to that question?
Certainly not the stockholders. To portray them as marionettes controlled by the board is probably unfair, but ... not too unfair. Stockholders invest for profit, and as long as the company continues to mail out dividend checks, for the most part, stockholders remain happy. At worst, MOX fuel could mean bigger dividends.
But Wylie's criticism doesn't pass scrutiny, either. As it turns out, he not only objects to the use of plutonium in Duke's reactors, he objects to all nuclear reactors, regardless of what fuel is used. When questioned, Wylie conceded that he will likely divest his Duke Energy stock even if the company cancels its plans to burn plutonium. "I'm very uncomfortable receiving money from the nuclear power industry," he said last week. The save-the-whales T-shirt seemed even more likely.
Wylie wasn't the only person to voice his concerns about plutonium's dangers at the meetings, and he isn't the only one concerned.
Steve Dolly, a spokesperson for the Nuclear Control Institute, a Washington, D.C.-based nuclear weapons non-proliferation group, characterized Virginia Power's recent decision to pull out of the same project Duke is now a part of, as prophetic and farsighted. Virginia Power originally planned to join Duke and the feds in the plutonium partnership. Dolly suggests the company got cold feet when it became aware of problems associated with burning MOX fuels.
Not so, says Virginia Power's spokesperson Jim Norvelle. He says that the company's decision to scrap the agreement was driven by its recent merger and was not related to any concerns about the safety. Nonetheless, Virginia Power's abandonment of the project leaves Duke as the lone partner with the Department of Energy. And many say that's testy.
The NCI also claims Duke's profits, "...would be hundreds of millions of dollars in government subsidies built into the MOX contract," says Dolly. Duke Energy CEO Richard Priory did not respond to Dolly's challenge during Thursday's stockholder meeting to disclose the company's anticipated profits for the program. Duke spokesperson Rebecca McSwain explained that the company policy is to treat all fuel cost negotiations with confidentiality. But there's little doubt the DOE contract represents a boon to Duke's bottom line. No one suggests that Duke would embark on this venture if the company was not convinced of its safety. But in business, increased risks are often tied to increased profits. There is at least some risk here. It's a new fuel that, in this precise form, hasn't been used anywhere.
Mike Tuckman, executive vice-president of Duke's Nuclear Generation division, generally dismisses safety concerns, saying the DOE, "... will not allow us to use this fuel if they are not confident it can be done safely." Of course, it was the DOE that was supposed to be ensuring the safety of the public around Three Mile Island when a reactor came bone-chillingly close to a meltdown. The landmark episode was contained before any deaths occurred but not before the core had been dangerously exposed.
And it's the DOE that's responsible for the safety of workers busy in the nation's nuclear arsenal, too. Just last week a plan was unveiled by the Clinton administration to compensate workers exposed to debilitating levels of radioactivity. Officials close to the case estimate the claims to be more than $400 million, according to a recent article in the Washington Post. Clearly the DOE's record of protecting the public welfare is suspect.
Duke Energy's safety record, meanwhile, is more laudable - at the top of the industry. But safety becomes a relative term when discussed on a scale of 33 tons of weapons-grade plutonium. History teaches us that even "the best and the brightest" have dull moments, and the notion that any human endeavor can be "fail-safe" is poppycock - or worse. This is doubly true when breaking new ground like MOX fuel use.
MOX fuel-fueled nuclear plants are new here, but plants burning a slightly different type of fuel than that proposed for Duke's plants have an established history Europe, Tuckman notes. Plutonium has been used to fuel nuclear reactors there for 20 years. Dolly is quick to note, however, that the plutonium used in Europe is different. It's 55 to 80 percent pure (before being diluted for use in reactors) as compared to the more than 93 percent pure plutonium intended for Duke's reactors. The laws of physics, experts say, suggest Dolly is fishing without bait on that line. The purity of the matter won't matter in case of an accident. It will be a disaster in any event.
Tuckman's case for the safety of enriched oxide fuel isn't pure either, however. Last October, 75 miles northeast of Tokyo, a nuclear chain reaction referred to as an accident of "criticality" was inadvertently begun because of human error. Forty-nine people were contaminated by radiation. Two received life-threatening doses. Workers told plant staff, "They saw a blue flame rising from the fuel." Eighteen hours later the reactor was once again under control.
When the Japanese facility was licensed in 1983, operators assured government regulators, "... critical fission chain reactions cannot occur."
What's significant about plutonium as a fuel, as opposed to good old fashioned uranium 235, is simply this: plutonium produces 30,000 times more low-level radioactivity. In the unlikely event that a nuclear accident happens, high-level radioactivity will not be the only potentially lethal agent if plutonium-based fuels are driving the reaction. According to former Duke technology strategist, George Garman, the low-level aspect of plutonium poses concerns. Still, Garman applauds the direction Duke has chosen and fears what will happen if Duke pulls out of the venture.
"Duke can do the job soon and do it safely. Other options (for disposal) are many years away," says Garman. The NCI says that their research indicates a 25 percent increase in cancer deaths if MOX fuels are used in place of uranium during a "... severe accident resulting in a large radioactive release." The DOE says that plutonium poses no significant threat. Someone needs to recheck their numbers, or consult a dictionary. "Increase in cancer deaths" and "no significant threat" seem somewhat exclusive.
Duke Energy began its involvement with the project five years ago. At that time, 17 other utilities expressed an interest in the venture. In 1998, the DOE asked for request for proposals. Virginia Power and Duke were awarded contracts. Virginia Power's pullout leaves Duke poised to go it alone.
Duke's decision to proceed continues to draw criticism. The Blue Ridge Environmental Defense League wants to know more about the costs to taxpayers for the MOX fuel processing facility scheduled to be built by the government at its Savannah River site. Janet Zeller, the organization's executive director, says she is also concerned about an increased potential for terrorism. She believes that MOX fuels and plutonium-laden fuel rods increase the likelihood of terrorism in the Carolinas.
For the time being, the obsolete warheads are being stored in Texas and Colorado. Prior to Duke receiving the MOX fuel, it must first be transported to South Carolina where it will be converted to the final product ready for fueling Duke's reactors. The threat from international terrorism would likely be greatest before the plutonium was converted to fuel.
Or, it might not be great at all. Building a bomb is surprisingly easy, but it's still not that easy. And who wants to be handling that stuff all the time? It can make you sick.
We're talking about plutonium here although we could be discussing the side effect of the current debate, which just goes on and on. One by one, accusations are hurled. A few stick. Most don't. Duke Energy's MOX fuel project is still seven years from commencing. One imagines that as that time nears, more detailed information will be forthcoming and some of the fog surrounding the venture will lift.
That is, at least, what one imagines.
DOW JONES BUSINESS NEWS - 5/5/2000
NEW YORK -- The unemployment rate dropped below 4% for the first time in 30 years in April, fueling concern that the tight labor market might spark inflation and providing more ammunition for the Federal Reserve to aggressively raise interest rates later this month.
The jobless rate fell to 3.9% from 4.1% in March, the Labor Department reported Friday, matching a level not seen since 1970. The decline came even as employers slowed their pace of hiring. Nonfarm payrolls rose by 340,000, down from a revised 458,000 increase in March.
Average hourly wages jumped six cents, or 0.4%, to $13.64. Hourly wages rose 3.8% from a year earlier, logging the biggest gain in 10 months. March wages were revised to $13.58 an hour from $13.60.
The April numbers were stronger than expected. Economists had expected the unemployment rate to slip to 4%, with payrolls rising by 310,000 and hourly earnings rising by three cents, or 0.2%.
"What you're seeing is .. a tightening in the labor-market setting beginning to throw off some upward pressure on wages," said Kevin Flanagan, fixed-income strategist at Morgan Stanley Dean Witter & Co. in New York.
With the unemployment rate at a 30 year low and in the middle of a tight labor market, Duke continues to squeeze its employees. Duke sees attrition as a good thing, but they could get a little more than they want. Then again, they might suspect something. There have been people placed in procurement, not to procure parts, but to procure people!
TechWeb News - 5/4/2000
The aging of baby boomers will leave new economy companies high and dry if they don't change their ways, according to the Blue Ribbon Commission On Older Workers in a report submitted to Massachusetts Governor Paul Cellucci.
"In the next five or six years, employers here will actually run out of workers in their mid-20s and 30s," said Peter Doerringer, a professor at Boston University and one of the authors of the report. "There will be an actual decline of people in the workforce. The arithmetic makes it inevitable that employers here will have to change training and staffing patterns."
The Wall Street Journal - by Ellen E. Schultz - 5/4/2000
William Wyatt, a 50-year-old computer consultant, left International Business Machines Corp. in July and had a crucial decision: either take his pension as a lump sum of cash, or as a monthly payment in retirement.
About half of large companies offer lump sums, and 95% of employees eagerly choose them.
But Mr. Wyatt did an uncommon thing. He asked IBM for an apples-to-apples comparison of what the two payout choices were worth. 'The decisions I will be making are too important to rely on estimates,' he wrote to the human-resources department in October. "Please provide exact figures." He is still waiting.
Wednesday, the Treasury Department confirmed it is taking a serious look into just this issue: whether employers are giving people like Mr. Wyatt enough information about their pension-payout choices. Making the wrong decision - and the wrong decision, for many people, is choosing the lump sum - can cost an employee tens or even hundreds of thousands of dollars. The Treasury, in a letter to be released publicly next week, noted: "For many individuals, the choice ... is one of the most important financial decisions they will ever make."
The issue was raised after scores of employees at IBM complained that the company doesn't make the choices clear enough to employees leaving the company, according to a staffer for Sen. Tom Harkin (D., Iowa). It was Sen. Harkin's January letter to the Treasury and the Internal Revenue Service - which referred only to a 'technology manufacturer with over 100,000 employees' - that prompted the Treasury's interest.
Employers are forbidden by law from cutting a pension that has already been earned, but they are allowed to give employees a choice between the full-value pension annuity, and a lump sum worth less. If the employees then choose the lower-value option - essentially choosing to cut their own pensions - then the anticutback rule hasn't been violated.
"But the law does require employers to tell employees what the relative values of the pension options are. How well employers are following that rule is something the government is starting to look into.
COMPANIES SAVE MONEY
Few employees realize that lump sums are often worth less. For certain employees, typically those in their late 40s through late 50s, the lump sums can be worth 50% less. The practice saves companies money, which is one reason why companies began offering lump sums in the 1990s.
"Lump sums shouldn't be used by companies to save money," says Marc Machiz, former chief benefits lawyer at the Labor Department, who recently joined the law firm Cohen, Milstein, Hausfeld & Toll in Washington. 'The law ought to be changed so that employers are required to provide lump sums that have the equivalent value of the monthly pension,' he says.
In any case, companies should make the value of the choices clear to employees, says Sen. Harkin. 'Many employees end up forfeiting a very large share of the value of their pension' without even knowing it, he said. He added, "This abusive practice appears to be widespread and may impact millions of employees."
ACTUARY IS HIRED
While Senator Harkin's complaint did not name IBM, a staffer confirms that a key example in his letter regards a 55-year-old software analyst who left IBM in January after 23 years with the company. When she couldn't figure out whether to take the lump sum or monthly payment (known as an annuity), she hired an actuary at her own expense, who determined that the annuity of $1,473 a month for life starting at age 55 would have a lump sum value of $228,000, while the other option - a combination of an annuity of $200 a month and a lump sum of $107,300 - together had a lump sum value of only $138,500.
If the second option were available as an annuity, it would be worth only $901 a month, compared with $1,473. But that isn't disclosed. 'Very few people can do advanced actuarial calculations,' says Sen. Harkin.
Those most likely to experience a large gap between the value of a monthly pension and the lump sum are those who retire in their 50s, who lose the value of any early retirement subsidy their pension offers. People who leave in their 40s can also be affected, especially if they have many years at a company and forgo any option to delay their pension until age 55 when a subsidy would kick in. The decision can also affect a surviving spouse.
A few Duke Energy employees get a choice between plans. Those who choose the cash balance will usually lose, and lose big. Look at the numbers. You could lose 50% of your pension. You could lose over $100,000.00! Most employees get no choice. The "company of choice" has given the employees no choice. The company has already chosen for us. And, they chose what was worst for us. But, it leaves the company with more money to buy more companies in Timbuktu. This article also demonstrated the impact that a single employee can have, if he/she gets involved and poses the right questions to the right people!
The New York Times - 5/2/2000
"WASHINGTON, May 1 -- Soft-money donations to the political parties are on a pace to set a record this year, but more and more large corporations have quietly stopped giving them.
"In some cases, senior executives say they want to distance themselves from what they describe as the capital's unseemly culture of cash and influence, while others acknowledge that their companies are simply not getting much in return for the money."
Not getting much in return for the money? We suppose that vote buying is just not what it used to be.
"Only a few large companies -- General Motors, Monsanto, AlliedSignal, Time Warner, none of them among the most recent 31 -- have formally announced in recent years that they have sworn off soft money.
"A senior vice president at one company that has stopped giving soft-money donations said that "there was not much benefit" to them, especially inasmuch as membership fees of the parties' most elite donor clubs had jumped to $250,000 from $100,000."
There is an anti soft money sentiment among many legislators, also. The soft money issue is important to all employees. It is a hard game to win when employers take money from the employees. And, then use the money to buy votes to support legislation that is not in the best interest of the employees.