The plan to shift production to U.S. mills has infuriated the United Steelworkers, which represents about 1,500 workers at the two mills.MIKE CASSESE/Reuters
The union representing workers at United States Steel Canada Inc. will ask the Ontario Superior Court to block a plan by the company's parent company to shift production of some its highest-value-added steel out of Canada.
The plan to shift production of automotive steel from mills in Hamilton and Nanticoke, Ont., to U.S. mills has infuriated the United Steelworkers (USW), which represents about 1,500 workers at the two mills and is fighting to maintain jobs and save pensions at the Canadian unit.
"The USW believes this 'move' by USS [United States Steel Corp.] is designed by USS to have a devastating impact on the revenue earnings and cash flow of Hamilton Works and Lake Erie Works at a critical and vulnerable time," the union's lawyer Ken Rosenberg said in a letter Thursday to Justice Herman Wilton-Siegel, the Ontario Superior Court judge who is overseeing the restructuring of the Canadian unit.
"The urgency of this matter supersedes all others before this court regarding USSC [United States Steel Canada]," Mr. Rosenberg said in the letter, which added that the union will be seeking "injunctive relief" to halt the U.S. Steel move.
The actions by the company and countermoves by the union escalate a battle that has been building as U.S. Steel Canada approaches the end of its first year of restructuring under the Companies' Creditors Arrangement Act.
"This is where things heat up," said Bill Ferguson, president of Local 8782 of the union, which represents workers at the company's mill and pickling plant in Nanticoke.
Part of the restructuring includes the potential sale of the Canadian operations. Two bids have been submitted for the entire Canadian unit, one by Essar Steel Algoma Inc., which has a deep-pocketed parent company in the form of Essar Global of India.
U.S. Steel has also bid to buy back the Canadian unit it placed into CCAA protection last September.
Shifting the automotive contracts means the loss of about 17 of 550 jobs that remain at the Hamilton operations, said Gary Howe, president of USW Local 1005, which also represents more than 10,000 pensioners.
"With the value of the dollar, we're probably a lower-cost location," Mr. Howe said.
The remaining Hamilton operations are coke ovens, a cold mill and a galvanizing line that finishes steel for automotive body applications, which are among the highest-value steel coils sold by U.S. Steel.
The shift of production of 180,000 tons annually out of Hamilton and Nanticoke was identified by the court-appointed monitor last month as a move that would harm the Canadian unit.
"The product generated at USSC's mills is ultimately one of the key drivers generating revenue and cash flow, as semi-finished or finished mill products are ultimately sold to Canadian and U.S.-based customers or to other USS mills for further processing," the monitor's report said.
The shift in production is scheduled to be made by the end of October, despite requests by the chief restructuring officer of U.S. Steel Canada – whose appointment was approved by the parent company – that any change be delayed until Jan. 1.
Lawyers for U.S. Steel fired back earlier this month in a letter on the monitor's report that its Canadian operations have not "suffered the effect of the downturn in the steel market as keenly as some of its sister plants in the USS organization."
Separately, spokeswoman Brenda Stenta of Essar Algoma said that if the Sault Ste. Marie, Ont.-based company has made a bid, "we wouldn't comment."
Court filings show that Algoma and ArcelorMittal Dofasco Inc., which is U.S. Steel Canada's neighbour in Hamilton, have hired lawyers who are now part of the CCAA process.