UPDATED: Feds drop lawsuit against U.S. Steel

Industry Minister Paradis killed the lawsuit, saying the troubled steel-maker has promised to make capital investments worth $50 million over by 2015 at its Canadian mills.

December 14, 2011   by Staff with files from the Canadian Press

OTTAWA—Federal Industry Minister Christian Paradis has dropped the case against U.S. Steel and announced a deal to keep the company in Canada.

Under a new plan settling a two-year legal battle with the Federal government, U.S Steel Corp. has promised to keep producing steel in Canada for at least another four years and will make major capital investment at its Canadian mills

Industry Minister Christian Paradis says the big U.S. steel company has given significant assurances on jobs and investments in Canada under the settlement.

The steel-maker will pump an additional $50 million in capital investment to upgrade the mills in Hamilton and Nanticoke, Ont., by 2015.


Aside from the capital investment, which is on top of the 2007 pledge to spend $200 million on its operations by the end of next October, the company said it will also contribute $3 million towards community and educational programs in Hamilton and Nanticoke.

When U.S. Steel took over Stelco Inc. in 2007, the company agreed to keep the plant’s 3,300 workers employed.

But by the end of 2008, only 900 steelworkers remained and production at a standstill. Since, U.S. Steel has de-indexed pension benefits for 9,000 retirees and blocked new employees from pension security.

The company has locked out its remaining 900 employees since November 2010.

U.S. Steel said the mass-firings were justified and necessary to cut costs as the steel market went increasingly global and the near parity between the Canadian dollar and its American counterpart.

That also meant cutting concessions on pensions, the cost-of-living formula and benefits.

The United Steelworkers (USW) says the Conservatives have betrayed the workers and their families in Hamilton and Nanticoke by dropping the lawsuit against U.S. Steel.

“Instead of upholding a legally-binding agreement, the Conservatives have become party to a foreign corporation breaking commitments to Canadian families and communities,” said Ken Neumann, Canadian director of the USW.

The union suggests multiple court rulings—including last month’s decision by the Supreme Court of Canada—confirmed the government had a legitimate case against U.S. Steel for violating the commitments it made under the Investment Canada Act.

“The Canadian government allowed U.S. Steel to buy Stelco based on binding commitments, including maintaining 3,105 workers and producing more than 13 million tons of steel,” said Wayne Fraser, the USW’s director for Ontario and Atlantic Canada.

The union said it is shocked that the government cut a deal without the workers and families affected, said Bill Ferguson, president of USW Local 8782 in Nanticoke.

“Our communities and our working families—particularly those whose jobs have disappeared—have been abandoned by U.S. Steel and now our own government,” he said.

The union suggests the government’s secret deal with the steel-maker means other parties involved in the case will be deprived of their rights to demand compliance with the law and to claim damages.

Paradis said the new commitments, many of which run to 2015, will provide benefits that probably wouldn’t have been obtained through the court process.

He did not meet with the media following Question Period.

U.S. Steel said it was please to settle the “unfortunate dispute” with Ottawa.

“We now turn our full attention to producing and selling steel products in Canada consistently with our core values of workplace safety and environmental stewardship,” the steelmaker’s spokesperson Erin DiPietro said. “We intend to be valued corporate citizens in Canada.”

The 2009 federal lawsuit was the first time a foreign company had been taken to court for breaching the conditions under the Investment Canada Act.

In its defence, U.S. Steel said it was forced to cut production in Canada because of reduced demand for steel in the wake of the global recession.

But, the Steelworkers said the company re-directed production to existing U.S. mills south of the border.

The steelmaker makes flat-rolled and tubular products with major mills in Canada, the U.S. and Europe. It employs 42,000 people.

The company was an industrial giant for decades but streamlined most of its businesses and cut tens of thousands of jobs starting in the late 1970s.

U.S. Steel entered Canada four years ago during a wave of industry consolidations that saw the Canadian steel sector—from Dofasco, Algoma, Ipsco and Stelco—acquired by foreign steel companies.

Updates to come…

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