MRO Magazine


Tentative deal reached in bitter 11 month US Steel lockout at former Stelco mill

Hamilton, ON -- A tentative agreement has been reached in the bitter 11-month lockout at US Steel's Hamilton mill, the former Stelco Inc. operations, as the industry slogs ahead amid a slowing global economy.

Hamilton, ON — A tentative agreement has been reached in the bitter 11-month lockout at US Steel’s Hamilton mill, the former Stelco Inc. operations, as the industry slogs ahead amid a slowing global economy.

On Oct. 11, 2011, the United Steelworkers union said that details of the agreement will be presented to the 900 union members, who have been off the job for nearly a year, at a meeting on Oct. 12.

”The union has stood united as one behind its negotiating committee in its opposition to company attempts to dictate concessions and its refusal to take up its social responsibilities towards its Hamilton Works labour force,” the union said in a statement announcing the new tentative contract.

”Local 1005 has stood as one behind the steadfast attempts of the negotiating committee to reach a negotiated settlement with US Steel [that] the workers feel they can accept.”

Steelworkers Local 1005, which represents 900 workers, and the company reached a deal on Oct. 10. A date for a vote on the agreement has not been set.

”We are hopeful that following the union’s ratification process, we will reach the end of what has been an 11-month lockout and see US Steel Canada employees return to work in the very near future,” company spokesman Trevor Harris said.

However, just how quickly the workers will be back on the job if the deal is approved was unclear.

”We will let the ratification process unfold and make our business decisions accordingly,” Harris said.

US Steel has been on an efficiency drive to become more competitive at its North American operations as it deals with a softening economy and weaker demand from some of its key industrial customers.

The deal at US Steel Canada’s Hamilton operations comes amid concerns about the slowing global economy.

A possible financial crisis in Europe and worries about government debt as well as a slower than expected recovery in the US have weighed on the economic outlook. A slower economy could reduce demand for steel, a key industrial component in manufacturing and construction.

Marvin Ryder, a business professor at McMaster University in Hamilton, said the tentative agreement was reached as the workers’ employment insurance benefits were set to run out.

”I can’t figure out what the heck US Steel would have put on the table that was significantly different, given their problems,” he said.

”The union is desperately trying to spin this as a victory of the collective bargaining process and union solidarity, but until I see the details, I don’t know.”

Ryder noted the steel industry appeared to be looking up in the first quarter of this year, but has since been mired in the sluggish recovery.

”Government money stopped being spent on projects, the private sector didn’t step up with any buying and so steel demand has at best stayed flat and more likely gone down,” he said.

”And there’s no sign that given the difficult situation in the American economy or in the European economy that that situation is changing dramatically.”

US Steel, a Pittsburgh-based steel icon, bought Stelco in 2007 for $1.9 billion in cash and debt in a wave of takeovers that has put almost all of Canada’s major steelmakers in foreign hands.

Some 900 workers were locked out last November in a dispute over the company’s demand for concessions on pensions, the cost of living formula and benefits. Details of the labour deal are not expected to be released until after Wednesday’s union meeting.

The last time there was a strike at the Hamilton steel plant was a generation ago, when it was owned by Stelco.

Since then, the steel industry has transformed itself into one dominated by big global players. Besides Stelco, other several other major Canadian steelmakers were acquired by foreign buyers during the economic boom before the most recent recession.

Dofasco was taken over by ArcelorMittal, the world’s biggest steel company, and Algoma Steel was acquired by India’s Essar group.

The Canadian dollar has also climbed to near parity with the US dollar, raising the relative cost of making steel in Canada compared with US Steel’s operations in Pennsylvania.

US Steel ran afoul of Ottawa when it shut down most of its Canadian operations, including the Hamilton plant and another in Nanticoke, Ont., during the last recession, breaking investment and production promises it had made to get regulatory approval for the Stelco takeover.

US Steel has admitted to breaking those promises, but said layoffs at its Ontario locations were necessary to cut costs during the 2008-2009 recession.

The federal government sued the company and the case is winding its way through the courts.

The Federal Court of Appeal dismissed a challenge earlier this year by the company and cleared the way for Ottawa’s case to go ahead.

If the steelmaker is found to have illegally broken promises it made to Ottawa when it bought Stelco in 2007, it could face a multimillion-dollar fine or be forced to sell its Canadian assets.