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U.S. Steel in Hamilton.

Glenn Lowson/The Globe and Mail

United States Steel Corp. and the United Steelworkers reached a tentative agreement on a new contract at the company's Hamilton Works amid a lockout now in its 12th month.

Details of the tentative pact will be released to union members Wednesday by the leaders of Local 1005. The union has rejected previous offers by the company, refusing to accept the steel maker's demands that workers agree to the end of pension indexing for retirees and the creation of defined contribution pension plan for new hires instead of letting new employees join the existing defined benefit plan.

"After eleven months of a phony lockout and repeated decreed 'final offers' some headway was made and negotiations finally took place providing a tentative agreement," local 1005 of the United Steelworkers union said in a statement Tuesday.

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The deal was reached a little less than two weeks after U.S. Steel submitted what it called its final offer, which did not budge on the two pension issues that had been rejected by the union.

The letter said U.S. Steel had lost "massive" amounts of money since the Pittsburgh-based giant outbid OAO Severstal of Russia in 2007 to take over what was then Stelco Inc.

U.S. Steel's ownership of the two former Stelco mills – Hamilton Works and Lake Erie Works in Nanticoke, Ont. – has been tempestuous, with lockouts at both locations and a lengthy court battle with the federal government. Ottawa is seeking compensation from U.S. Steel under the Investment Canada Act after accusing the steel maker of breaking promises it made when it bought Stelco.

The company has responded that the 2008-2009 recession and financial crisis meant it could not meet the employment and production commitments it made to the federal government.

A U.S. Steel appeal of a ruling in that case was rejected by a three-member panel of the Federal Court of Appeal last week.

U.S. Steel Canada spokesman Trevor Harris would not comment on what is contained in the tentative agreement.

"We are hopeful that following the union's ratification process we will reach the end of what has been an 11-month lockout and see U.S. Steel Canada employees return to work in the very near future," Mr. Harris said.

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Charlotte Yates, dean of social sciences at McMaster University and a long-time observer of the labour scene, said it's likely there's something in the tentative agreement that addresses the pension issues that were central to the dispute.

"There's probably something in this deal for the existing pensioners so the union can say they're not selling out the current pensioners at the expense of the existing work force," Prof. Yates said.

The union leadership has done a good job of communicating with its membership and mobilizing retirees, she added.

John Surma, chief executive officer of U.S. Steel, said during the company's first-quarter financial results conference call in April that any agreement reached with local 1005 had to be competitive and could not include "pension provisions that are just singularly out of touch with what the rest of the North American steel industry has."

There are about 750 active employees at the Hamilton Works and 9,000 retirees.

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