Anxious Stelco pensioners await bankruptcy court...
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Feb 08, 2016  |  Vote 0    0

Anxious Stelco pensioners await bankruptcy court ruling: Wells

Courts decision affects pension plan valuation of what is now U.S. Steel Canada

OurWindsor.Ca

We’ve not been paying enough attention to the transformation of the industrial base in and around the Hamilton area.

In conversation with a pensioner the other day, I was reminded of my summer-time hope, circa 1975, to be taken on at the Procter & Gamble soap plant on Burlington Street. Good company. Good wages.

Dave Bennett was taken on as a machinist apprentice at Stelco that year. “I thought I hit the jackpot,” he says. “Benefits. Pension. $5.25 an hour. For a first year apprentice to be making those kind of bucks, it was awesome.”

He was 17. He soon bought a ’67 Chevelle Super Sport.

Bennett’s dad was at Dofasco. My boyfriend’s father was at Otis Elevator. Lifetime jobs both.

“In Hamilton at that time a lot of the industries used to come in and recruit out of the high schools. Firestone. Dofasco. Stelco. Westinghouse. Camco. Harvester. These were all very viable businesses at that time. Procter & Gamble. They’re all gone, except for Dofasco and, well, former Stelco. When I started in the plant there was almost 15,000 people working there. We’re down to 600.”

The former Stelco is the current U.S. Steel Canada Inc., a wholly owned subsidiary of United States Steel Corp. of Pittsburgh, Pa. The Canadian arm filed for bankruptcy protection in September, 2014, seven years after its takeover by the American behemoth. It’s bracing to examine the most recent actuarial valuation report for the Hamilton operation: 499 active members of United Steelworkers Local 1005. Retired members and beneficiaries: 8,267.

Ever since I wrote last week about the federal government’s determined stance to keep secret the deal it struck with U.S. Steel in 2011 — in exchange, it seems, for a rather short lifeline tossed to the Canadian subsidiary — I’ve been hearing from fretful retirees.

Their anxiety is not new and the Stelco trauma has a longer history than one that can be recounted here, including its earlier 26-month restructuring. The important crib note is that in 1992 the company was deemed exempt from pension deficiency payments due to a regulation in the Ontario Pension Benefits Act. Pension funds with assets in excess of $500 million were deemed, using our contemporary parlance, too big to fail. (Yes, like Lehman Brothers.)

That deficiency loophole has since been closed, not that that has done U.S. Steel Canada much good. That same valuation report shows a solvency deficiency for the Hamilton operation of $682.4 million, or, stated another way, the percentage of the retirement plan funded on a solvency basis was 71.1 per cent as of Dec. 31, 2014.

Andrew Hatnay at Koskie Minsky is the lawyer for all the non USW employees and retirees. In a Toronto courtroom Hatnay recently argued before Ontario Superior Court Justice Herman Wilton-Siegel that a vast infusion of cash from the parent company to the Canadian subsidiary — on the order of $2 billion — should be characterized as equity and not debt.

The distinction stands to impact pensioners greatly: if Wilton-Siegel finds the funds were clearly debt, U.S. Steel gains priority status over the unsecured creditors. “We’re facing pension losses,” Hatnay said in an interview. If the judge does rule in favour of the American parent, Hatnay will argue that pensioners take precedence based on what’s known as the deemed trust provision.

Little wonder that pensioners are anxious.

Dave Bennett is relatively lucky. His wife was a teacher and her pension’s rock solid. Bennett retired in 2005, “30 years to the day” from his start date. He has since lost his benefits, suspended by the company last fall, though a short term $3-million transition fund set up by the province took effect Jan. 1 of this year. His health is good, unlike many of his coworkers after spending a lifetime in what for many was an unhealthy workplace.

“Nobody seems to be fixing this,” says Bennett. He’s talking beyond pensions. And foreign ownership. The whole CCAA process has him vexed.

Meanwhile, the sales and investment solicitation process for U.S. Steel Canada is under way. There’s 813 acres of prime land in Hamilton Harbour up for grabs. Or how about 6,600 acres in Nanticoke? Steel making assets, anyone?

Toronto Star

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