Workers won’t let decision rest
U.S. Steel retirees want appeals court to reinstate health benefits
Angry steelworkers are taking their fight to get retirement health benefits back to the Ontario Court of Appeal. The organization of active and retired salaried employees and the United Steelworkers have asked the appeals court to overturn a decision by the judge overseeing U.S. Steel Canada’s restructuring allowing the company to suspend the benefits to 20,600 former workers.
Despite the company’s pleas of poverty, however, a new report from its court-appointed monitor shows it has just more than $160 million in cash on hand — $10 million more than when it argued it couldn’t pay the benefits.
In documents supporting the application for leave to appeal, lawyer Andrew Hatnay argues there’s no reason the company can’t afford the $3.6-million-permonth cost of the benefits.
“Given USSC’s cash position, paying that amount will not impair USSC in any way in its operations or restructuring efforts,” Hatnay argued. “Conversely, not reinstating health benefits causes significant hardship and prejudice to employees.”
Called other post-employment benefits, or OPEBs, the package covers prescription drugs, dental and vision care and other needs for retirees.
“OPEBs are of critical importance to union members, who have spent their careers working in USSC’s hazardous steel mills,” union lawyer Ken Rosenberg argued. “They have done so based in part on USSC’s promise that their future health care costs would be covered. Many retirees are elderly and are not eligible to obtain private health care coverage due to their age, medical conditions, or because they cannot afford to pay private health care premiums.”
The former Stelco was allowed to suspend payment of the benefits in October of last year as it struggled to deal with a decision by its parent company to move production of its highest-value product to American mills.
At the same time, the company was allowed to suspend top-up payments to its underfunded pension plans and to stop paying property taxes to Hamilton and Haldimand County.
Workers challenged the OPEB decision in court, but on Aug. 19 Justice Herman Wilton-Siegel accepted company arguments that reinstating the benefits would harm its efforts to sell itself as a going concern.
In written reasons for his decision released this week, WiltonSiegel said while he has sympathy for retirees going without medications, “I am not persuaded on the evidence before the court that the financial performance of USSC … evidences a material improvement in the profitability of USSC.”
His decision was contingent on the company contributing $2.7 million to a special fund to help the most needy retirees. The judge also approved a special $1.5-million fund to pay bonuses to 34 employees the company said are crucial to its operations until it can be sold.
The monitor’s latest report shows the company has lost $44.1 million on its operations to the end of July on revenue of $703.5 million. It started July with $131 million cash on hand and had $160.1 million at the end.
The monitor’s report, however, notes the increase is “largely driven by a net reduction of working capital that has been converted to cash.” (Working capital is defined as the capital of a business used to finance its day-to-day operations. It is calculated as assets minus liabilities.)
The report also contains a letter from U.S. Steel’s lawyers calling claims it forced the Canadian company to overpay for critical supplies of coal and iron ore “misleading and inaccurate.”
Lawyer Robert Thornton wrote the contracts for those supplies were negotiated “at arms-length under the supervision” of the company’s chief restructuring officer, independent board of directors and approved by the courtappointed monitor.
In a related development, USW Local 8782 president Bill Ferguson said in a YouTube video that some form of resolution to the restructuring should be concluded “before the snow flies, hopefully long before the snow flies.”
He also repeated criticism of the federal government for not doing more to help the situation — other than Hamilton West-Ancaster-Dundas MP Filomena Tassi, who is trying “to get some sort of meeting going between us and the feds.”