Notable & Quotable

MEPPA [Multi-employer Pension Plan Amendment Act] is not only bad for industry and tax payers, but it is bad for the unions and their members.

Your editorial . . . recalled the nightmare that we lived through in the clothing industry during the 1980s. We had for years been a privately held business, employing several hundred and fulfilling our entire contractual obligation with the union. As a small business in the industry we had negligible input into the agreement. A few large producers agreed upon a proposal. The union summoned us, gave us the agreement and ordered us to sign.

Suddenly with the passage of MEPPA, we were faced with a contingent liability greater than our entire net worth. The 80s were a period of declining clothing consumption and fearsome competition from imports. We tried to devote our attention to competing but instead our basic concern became financing. The banks were now asking to be informed of our MEPPA liability and at the same time were reducing our lines of credit. The possibility of being stuck with the liability, discouraged the entry of new companies and depressed reinvestment by others in the industry.

In addition we had thirty years of self financing at risk. Publicly traded companies had their liability limited to a percentage of net worth. Private companies were liable for everything they had. To save some portion became more important than the ultimate survival of the business. We did manage somehow to hang on for 10 years and were one of the last manufacturers in the Metropolitan NY area to liquidate.

Today the industry is gone, the union is gone, the workers are gone and the pension fund has paid almost nothing to retirees. Congress could not have legislated a worse program for all concerned.