Canadian Sovereignty: Hamilton Steelworkers extorted -- Pensions

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Employees of U.S. Steel in Hamilton finally have a collective agreement in place. But steelworkers in Hamilton have seen better days.

After a yearlong lockout, pensions have taken a significant blow and morale is not high. In October, Local 1005 of the United Steelworkers announced that it had reached an agreement with US Steel.

In November of 2010, workers at U.S. Steel’s Hamilton Works were locked out when the union refused to let their membership vote on the companies offer, an offer that asked for significant concessions.

The new agreement represents a serious setback for a local that helped shape union politics in Canada. The agreement sees no increases in wages over three years, but rather includes a $3,000 ratification bonus for each of the approximately 750 workers.

The primary fight, however, was over pensions. U.S. Steel wanted to force a defined contribution pension plan on new workers, rather than the defined benefit plan the union wanted to keep.  U.S. Steel won this concession and new hires will now be under a union-administered group RRSP. Under a defined benefit pension, workers are guaranteed an income upon retirement.  Under the new proposal this guaranteed pension will no longer exist and U.S. Steel will simply contribute $2.50 per hour worked to the group RRSP.

Several studies, and even financial institutions themselves, have noted that group RRSPs often provide little security upon retirement, as they are often open to market fluctuations and can be withdrawn by workers over the course of their working life, often leaving little left for retirement.

Also lost was pension indexing for current retirees. Retirees’ pensions will no longer be indexed to inflation but each employee will receive a $1,000 payment, in lieu of indexing, to retirees making less than $1,500 per month.

Pensions have been an issue since US Steel bought Stelco and renamed its Hamilton operations Hamilton Works in 2007.  At the time the new owners wanted to remove two provisions that Stelco had agreed to while it was restructuring and under bankruptcy protection.

At the time Stelco was prohibited from paying out dividends until pension plans were fully funded and required that the company put extra money into the pension plan if a certain amount of profit was made.  When U.S. Steel asked the courts for these to be removed, they agreed.  Given the profitability of U.S. Steel at the time, Local 1005 was immediately concerned that this was a sign of things to come.

Under the Investment Canada Act, a foreign company can be forced to agree to terms that provide a “net benefit” for Canada. In the case of U.S. Steel’s purchase of Stelco, required the steelmaker to produce just over 13 million tons of steel for three years and employ an average of 3,105 workers at its Lake Erie and Hamilton operations. This was to expire in 2010 but, in the spring of 2009, US Steel reduced its operations in Canada and fired many of its employees, breaking its agreement with the Canadian government.

The federal government subsequently fined U.S. Steel and is asking for $10,000 a day going back to November 1, 2008, and is demanding jobs and production promises for three years beginning whenever a final court decision is handed down.

As a result U.S. Steel filed a Notice of Motion challenging the constitutional validity of two sections of the Investment Canada Act. The steel company believed that its right to a fair hearing and its right to the presumption of innocence was violated under the Act and amounted to a violation of their rights under the Charter of Rights and Freedoms.

In the spring the Federal court of Appeal ruled against U.S. Steel, stating that it did not violate section 11 of the Charter because it did not meet the test for a criminal proceeding.  Last week the Supreme Court of Canada refused to grant leave for appeal.

U.S. Steel has claimed that the downturn in the economy has negatively affected its operations and has locked out workers at both of its Ontario operations as it has fought for union concessions over pensions. The downturn, however, did not seem to negatively affect the company’s president, who saw his salary rise from $3.5 million in 2009 to $12.1 million in 2010.

The federal NDP and the United Steelworkers believe that this is why closed-door deals with foreign companies should never happen. On November 24, Chris Charlton, MP for Hamilton Mountain, tabled a private members bill that called on the government to release complete details of the deal that allowed U.S. Steel to purchase Stelco in the first place.

In July, Pittsburgh based U.S. Steel announced profits of $209 million despite the lockout, which the company has claimed cost it $40 million dollars up to that point.

The pension troubles seem to be spreading as well. Hamilton’s other steel company, Dofasco, whose workers have not historically had a union, is also cutting 700 jobs and are switching to a the same pension system that Local 1005 fought against.  Dofasco has historically kept peace with workers by following closely with what Local 1005 has won in the past from Stelco and U.S. Steel.

These cuts come just a year after Dofasco was given $43 million dollars by the provincial government to improve its Galvalume production, as part of its Open Ontario initiative, which was designed to, “create new job opportunities and help promote economic growth.”

According to a Local 1005 newsletter, this is one more example of how, “the government’s schemes to hand over public money to subsidize private interests must be ended.“

Local 1005 have also stated that, “the government and media should stop disgracing themselves by spouting all these fine words about ‘job creation’.”

Local 1005 once numbered 14,000 members but has seen a steady decline since the early 1980s.

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