Renewal of Hamilton's steel sector within grasp

  • National Newswatch

Much like beauty, urgency is typically in the eye of the beholder.In the case of U.S. Steel Canada, however, the urgency is obvious to all: each passing week pushes the battered steel company further away from the possibility of attracting a White Knight and long-term prosperity.USSC is currently operating under bankruptcy protection, ostensibly to give it time to restructure. But recently-announced plans, such as the decision to divert auto steel production from Canada to the U.S., are actually damaging to USSC's long-term viability. In turn, that makes the company less attractive to a potential outside bidder.That, of course, is exactly the plan.The Pittsburgh-based parent company, US Steel, has made clear its intention to diminish the value of the former Stelco Canada assets, making them undesirable for any rivals. It would then scoop them up for a song by transforming $2.2 billion in debt into equity.The prevailing lack of urgency contributes to the likelihood of that plan's success.For example, by extending the deadline for resolution from the end of September to December 11, 2015, the court-appointed monitor for the restructuring is contributing – albeit unintentionally - to that value erosion.In an over-supplied global steel market, protracted uncertainty about the future of a producer, affects the ability to negotiate and win supply contracts. This is especially true of auto steel contracts which must be completed now for delivery to car manufacturers in time to make 2016 model cars and trucks.There are other seasonal decisions that are also affected by ongoing indecision. Before navigation channels freeze up for the winter, USSC needs to know how much iron ore and coal to stockpile for the duration.The greatest case for urgency, however, is the threat of the status quo.Since 2007, US Steel Canada, a wholly-owned subsidiary of its Pittsburgh-based parent, has locked out unionized workers three times, cut jobs and idled capacity. Amongst a number of other lawsuits, it is the only foreign company in history to be sued by the federal government for breaking employment and production commitments under the Canada Investment Act.U.S. Steel's move to divert production from Canada to the U.S. is just another example of its disregard for Canadian workers and their jobs. This is all the more disturbing at such a fragile time in the economy of the region – and the country.Nevertheless, the public disclosure of this strategy may yet fall into the category of “blessing in disguise.”U.S. Steel's actions hold the potential to create a sense of urgency among local, regional and provincial stakeholders. After all, they need to work closely together, align their agendas and forge a community that is committed to finding a new – and sustainable – way forward. But they need to move forward quickly.Many who have stayed silent out of restructuring fatigue or fear are finding their voices. In turn, that has led them to find one another.Hamilton city councilors have now formed a special committee to keep tabs on U.S. Steel's actions. Some retired Stelco executives are speaking out publicly, while others are resuming leadership by voluntarily advising unionized pensioners. Even the Ontario government is pushing back with uncharacteristically blunt force, publicly challenging financial claims that could undermine the pensions of thousands of Stelco retirees and workers.A powerful and diverse community united by urgency and common purpose could be a formidable opponent to U.S. Steel. It could also wield impressive political force at the provincial level: it's no secret that the Ontario government's Pension Benefit Guarantee Fund is insufficient to make up the potential pension shortfall. No one wants a repeat of the Nortel pension debacle.Success will require respect, leadership, discipline, co-operation and goodwill. But demonstration of those core values will attract the political support that will, in turn, attract new investors and capital. That will allow us, together, to re-build our steel industry. But we have to act fast.Bill Missen, now retired, served as Senior Vice-President, Commercial Operations, Stelco.