Steel union girds itself as Stelco eyes split

U.S. Steel Canada proposes plan to divest itself of Stelco

A plan laid out in an Ontario Superior Court hearing this week calls for the former Stelco Inc. to return to its independent roots with United States Steel Corp. divesting itself of any control or liability.

U.S. Steel Canada lawyer Paul Steep told the court Wednesday that the transition agreement, if approved by the court, would see “the two companies go their separate ways” with U.S. Steel maintaining services and arrangements for up to two years.

But the key part of the deal is that the American steelmaker would cut itself loose from future financial responsibilities of the Canadian operation.

The plan was explained in a hearing room packed with grim-faced retirees and United Steelworkers Union representatives that overflowed into the hallway.

The most contentious part of the plan involves freeing the company of pension obligations including benefit costs, as well as municipal taxes and other liabilities.

The fear of losing benefits is something that has sent ripples of fear through the U.S. Steel retiree community. Those trepidations were increased late last week when a report from the monitor overseeing the proceedings said “a near-term cessation of operations will be necessary” if the company isn’t given relief from those and other costs.

Lawyers representing retirees and United Steelworkers members argued there had to be other ways to cut costs. But Steep said investors are not interested in supporting a company carrying liabilities from a previous ownership.

While the United Steelworkers representatives have steadfastly dug in over the pensioner benefits, they do like the idea of an independent steel company no longer controlled by U.S. Steel.

United Steelworkers 1005 President Gary Howe said, “I think a lot of people would be happy about the company becoming Canadian again.”

Local 8782 president Bill Ferguson said, “I think it could make a go. The big problem now is steel orders being moved to the U.S. We could better keep the orders here with an independent company.”

United Steelworkers lawyer Gord Capern argued the court-managed restructuring process would not have been necessary if U.S. Steel allowed its Canadian operation to complete its orders.

“The reason we are here is because of a crisis that U.S. Steel created,” he said.

More than 150 U.S. Steel Canada pensioners came into Toronto on three rented school buses to “show the faces of the people who are affected by this,” said Ferguson.

Retiree Chris Young, a Nanticoke steelworker for 30 years, was among them. He said he relies on the drug plan for $1,000 to $3,000 per year.

“They should not be allowed to get away with this. The pension benefits we have are really deferred wages that we gave up in collective bargaining years ago,” he said.