US Steel Ordered to Pay Fines For Idling Canadian Stelco Facilities

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More than a year ago, MetalMiner published several articles on the shutdown of Canadian steel mills acquired by US based US Steel. The move to shut down Canadian facilities (at the expense of less efficient US facilities according to some) met with controversy north of the border for a number of reasons. The primary reason centered on provisions of the Canadian Investment Act which, “gives the government the power to oversee foreign investment in the country, according to a recent Reuters article. Specifically the Canadian government can assess whether or not a particular foreign firm’s ownership of a Canadian firm will be a “net benefit to Canada. In this case, the Canadian government named job protection as one of the tenets of the agreement for US Steel to takeover the Stelco operations. When US Steel idled the Hamilton operation, locked out workers from its Lake Erie plant and in total laid off 2100 Canadian workers, while consolidating US operations, the Canadian government and United Steelworkers went into high gear.

US Steel faces a $13.5 – $14.6m fine (depending on your source of information). Looking through the lens of US Steel, “The company has lived up to 29 of 31 commitments it made before the acquisition, including paying off C$700 million of Stelco’s debt, funding the company’s pension plan and spending C$15 million on research, said Michael Barrack, U.S. Steel’s lawyer, according to a Business Week article. And in all fairness, the firm did lay off workers in the US as a response to deteriorating marketing conditions as well throughout much of 2009. But other issues remain.

MetalMiner published a follow-up post just after the Stelco closures in which another Canadian producer, Lakeside Metals, a producer of steel and pipe products for the oil and gas industries sought what is called an intervenor status, “alleging that US Steel failed to uphold both job and production commitments as part of it’s acquisition of the two plants, as we reported earlier. Lakeside has via court documents argued to purchase the Stelco plants as part of a court-ordered sale from US Steel based on its commitment to adhere to collective agreements, defined pension plans and fulfill production and employment undertakings at both plants.

In an interview, Lakeside president Ron Bedard said he was “pleased with the decision but deferred all future comments until the document has been thoroughly reviewed.

–Lisa Reisman

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Comments (2)

  1. Al says:

    The purchase and shutting down of the Canadian operation was totally unethical and uncalled for. Can you imagine the Chinese buying US Steel ( American plants) and then “idling” them and re routing orders to Chinese plants in China until the “economy improves”? That is precisely what US Steel did to Canada and Canadians. What this also did was gutted Hamilton and Lake Erie of quality knowledgeable workers who quit or retired as a result. Having equipment sit for a year causes all kinds of start up problems. Your car would have problems too if it just sat for a year in the driveway. It’s funny that the 2 other forein owned steel companies did not feel the need to idle their businesses. Essar Algoma and Arcelor Dofasco simply shortened the work week among other things.
    Hopefully US Steel and the government of Canada and the local unions will come to some sort of settlement. If US Steel is truly committed to Canada then they will now gear up once again and perhaps invest in new technologies etc. This company could improve its pension obligations by using the proceeds of the sale of the Bloom and Bar Mill and putting it towards funding the pensions of the Hamilton plant. They could also use the proceeds of all of the old scrap metal parts etc. to fund this as well. This would be using value of something they do not want to improve their bottom line. How about a partnership in wind turbines along the north shore of Lake Erie property? These turbines are going up all along the North shore as it is and having a partnership would improve future energy costs.
    I guess we will see in the near future if US Steel is truly committed to it’s Canadian operation or if they were simply plundering the resources of a Canadian operation while the economy was hot. If the latter is true it certainly does not bode well for their reputation or the reputation of the United States as well. Canadians are America’s friends to the north so lets hope that they do not develop the anti-American attitude that so much of the world now has. US Steel, the ball is in your court to show what sort of ethics and principles you truly have.

  2. Harry Greenwood says:

    The Court decision is small victory unless all displaced Stelco workers are rehired or compensated by the arrogant US Steel. I also hope that the Canadian in American clothing Preident of USWA in Pittsburgh recognizes that now is the time for Canadian autonomy within the Union and stand up for Canadian workers. I applaud the leadership that was shown by the President of Local 1005 in Hamilton who was the real catalyst in attending to this court decision.

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