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In the Shadow of Steel 53:59

U.S. Steel will permanently close its idle iron and steel-making operations in Hamilton by the end of the year, but coke production at the plant will continue, officials say.

Mario Longhi, CEO of U.S. Steel Corp., said in a conference call Tuesday that it will close the operations by Dec. 31.

Forty-seven non-union employees will be "affected," according to U.S. Steel spokeswoman Courtney Boone. 

“Notice will be provided to those employees affected, and every effort will be made to reassign them," she told CBC News. “The permanent shutdown affects the iron and steel-making operations, which have been on temporary idle since late 2010.”

The blast furnace, steel shop and casters will be permanently shut, she said. “Coke making and finishing at the Hamilton works will continue.”

'It means we're not going to make steel in Hamilton. We're just going to roll it.' — Rolf Gerstenberger, United Steelworkers Local 1005

Rolf Gerstenberger, head of United Steelworkers Local 1005, said the announcement represents a loss of hope that the steel-making jobs would return.   

"It means we're not going to make steel in Hamilton," he said. "We're just going to roll it."

He said the announcement will have no effect on the 600 or so unionized workers still employed there. In its heyday in the 1970s, the plant, then known as Stelco's Hilton Works, employed roughly 14,000 people.

Gerstenberger does fear the implications it could have on the company's 8,000 pensioners.

The company said it will take a non-cash charge in its fourth quarter of approximately $225 million related to the decision.

U.S. Steel acquired the integrated steel-making operations when it bought Stelco, one of Canada's largest steel manufacturers, in 2007. 

The U.S. company pledged at the time to invest at least $200 million in its Canadian facilities, to produce an average of 4.3 million tons annually over a three-year span, and to employ an average of 3,105 employees.

'Today’s announcement makes it clear that U.S. Steel has no plans to make steel in Canada.'— Andrea Horwath

In 2011, U.S. Steel made a deal with the federal government to keep producing steel in Canada and operate its Lake Erie and Hamilton plants until 2015. It also pledged an additional $50 million in investment to settle with Ottawa, which had taken court action against the company over production cutbacks.

The two sides reached an out-of-court settlement under which U.S. Steel promised to invest another $50 million in steel production. But it leaves Ottawa with no recourse now, said MP Chris Charlton, who represents Hamilton Mountain. Had the case continued until completion, there might have been a fine.

"U.S. Steel is able to do essentially whatever it wants, which it essentially appears to be doing in spades," said Charlton, who called the permanent loss of jobs "devastating news."

"Clearly in both jobs and production of steel, commitments aren't being met."

Hamilton Mayor Bob Bratina said the city is still the "steel-making capital of Canada." With ArcelorMittal Dofasco's operations, 30 per cent of Canada's steel is made in Hamilton.

"We are not at the end of steel making by any means," he said. "I would predict that for at least another generation, steel making will be part of our identity."

But J.P. Marin, a former steelworker at the facility and retired union executive, said it's "a black day for Canada."

"It’s another example of a foreign takeover of a Canadian company," he said. "They promise everything and they just shut 'er down."

NDP Leader Andrea Horwath, also MPP for Hamilton Centre, called it the end of an era.

"Like many Hamiltonians, I had hoped that the blast furnace would reopen after it was idled in 2010, and I'm extremely disappointed with this decision," she said. "Today’s announcement makes it clear that U.S. Steel has no plans to make steel in Canada."

Steel industry under pressure

In an interview with CBC’s Lang & O’Leary Exchange, Ian Lee of the Sprott School of Business in Ottawa said the steel industry is under pressure because of enormous overcapacity in the industry.

“No company is expected to commit corporate suicide and lose money and go out of business to honour an agreement that is no longer viable because the entire industry structure has changed,” he said.

He said he is a strong critic of the kind of deal U.S. Steel made with Investment Canada, guaranteeing jobs and production targets.

“Markets move way too fast” for that kind of commitment, Lee said. He was critical of the steelworkers union for expecting U.S. Steel to make job commitments.

“What the unions should be doing is what the unions in Germany do, which is work co-operatively with their company. They’re saying, ‘We’re in this as a team. Can we work together to create a company that is going to be competitive in the world economy?'" he said.

Erin Weir, an economist with the United Steelworkers Union, said he didn’t know why U.S. Steel made those commitments, but he believed it should be held to them.

“It’s one thing for the company not to live up to its commitments because of the financial crisis, but yesterday’s announcement is an indication that U.S. Steel does not plan to ever keep its promises to maintain a certain level of steel production in Canada,” he said.

Weir said China is flooding the market with cheap steel and appears to have an unfair advantage that should be addressed by the federal government in trade negotiations or with tariffs.

“North America’s steel market has been hurt by imports from China," Weir said. "Is there a natural, inherent advantage to manufacturing steel in China or is China gaining an unfair advantage by undercutting internationally recognized labour and environmental standards?”