Workers rally in Hamilton over U.S. Steel pension debacle
Labour and U.S. Steel are sticking to their guns in a pension “fiasco” being blamed on waffling by the federal Conservative government.
ontario federation of labour
HAMILTON‑The Ontario Federation of Labour (OFL) led a demonstration of about 10,000 Saturday in Hamilton against U.S. Steel because the steel maker has failed to meet employment and production obligations since taking over Stelco. The group also decries U.S. Steel’s alleged intentions to index pensioners and block new employees from pension security.
When U.S. Steel took over Stelco Inc. in 2007, the company agreed to keep the plant’s 3,300 workers employed. By the end of 2008, only 900 steelworkers were left and production was at a virtual standstill. Now, U.S. Steel wants to de-index pension benefits for 9,000 retirees and block new employees from pension security.
The company has locked out its remaining 900 employees since November 2010.
U.S. Steel justified the mass-firings by saying it was 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.
Canadian Auto Workers economist Jim Stanford said the entire Stelco takeover was a complete fiasco.
“That deal and the situation now just prove that Canadian laws on foreign takeovers are too lax. The fact that the government went to court weak in the knees is just embarrassing to Canadians,” he said.
At press time the Federal Ministry of Finance and the Ontario Ministry of Finance had both declined repeated requests from CanadianManufacturing.com for comment.
The steel maker announced losses of US$51 million in the third quarter of 2010 and has not announced quarterly profits since the end of 2008. It’s been in a court battle in Ottawa for breaking employment and production obligations when it put its Canadian operations to rest, including a facility in Nanticoke, Ont., in early 2009.
Now, the company plans to remove about 9,000 pensioners and widows from benefits and will no longer offer pension security to new hires.
Labour organizations across Ontario are enraged, arguing the federal government has not done enough to protect Canadian interests from foreign investment. The OFL claims the government continues to undermine the Investment Canada Act that says foreign investments must deliver a “net benefit” to Canada.
“The federal government needs to enact tighter laws to avoid situations like this,” said OFL president Sid Ryan. “Foreign acquisitions need to be heavily scrutinized by the federal government to ensure there are benefits to Canadians. The government’s lack of action in the case of U.S. Steel is disgraceful.”
Stanford says the government must ensure it has the capacity to enforce the commitments of foreign companies that takeover Canadian organizations.
The Act directs government ministers to determine the organization’s “net benefit” to Canada before foreign investments are approved. The government is supposed to consider the degree and significance of Canadian participation, effect of investment on productivity and competition, compatibility with economic and cultural policies and how the investment will affect Canadian competition in world markets.
Foreign acquisitions were up 25 per cent in Canada in 2010; the materials sector led the way with 913 deals. Chinese investment also passed the $5 billion mark for the first time. The increases could be the result of cheap corporate tax rates here and a lack of federal intervention on takeover deals.
Since the Investment Canada Act was introduced in 1985, it has only rejected one foreign takeover. About 13,500 have gone ahead.
Labour organizations argue U.S. Steel has been unable to meet the “net benefit” requirements outlined in the act and that the government has done little to enforce rules in the legislation.
Ryan said the OFL has worked closely with the Ontario government to expand CPP and has continually lobbied the Liberals to keep them on his side.
Canadian Labour Congress (CLC) president Ken Georgetti says CPP reform would provide a solution to the pension issue for employers and employees.
“The Canadian pension system has been eroded away by Corporate Canada,” he said. “Reforms to the CPP would get both sides what they want.”
The federal government announced it would not be reforming the CPP last December, despite heavy reform talks in June 2010.
U.S. Steel intends to force its remaining 900 employees in Hamilton to sign contracts that would change pension benefits from the defined benefit plan they had with Stelco to a defined contribution plan. The contract would also include the 9,000 former employees still under Stelco’s pension umbrella.
If the company is to de-index pension benefits for these former employees, they would not receive any benefit increases usually designed to keep up with increases in the cost of living. A defined contribution plan wouldn’t guarantee remaining workers any benefits except what they’ve contributed and would pool contributions into risky stock investments. It also means U.S. Steel doesn’t have to make pension contributions.
“900 workers at U.S Steel have guns to the heads of 9,000 retirees,” said Ryan. “The government is playing Russian roulette with the pension plans of countless Canadians.”
These kinds of plans are better for corporate balance sheets, said Georgetti. “That’s why they’re popular with big corporations, but they can have severe consequences for workers.”
Being indexed to inflation, the CPP adapts to increases in costs-of-living expenses. If the cost-of-living goes up, so do the value of pension benefits.
“The CPP is indexed to inflation and it’s portable,” he said. “You can work somewhere for five years and go somewhere else and your pension benefits won’t go anywhere which wouldn’t necessarily happen with a corporate plan.”