U.S. Steel flags disappear from plants minutes after court decision

It didn't take long for the U.S. Steel name to disappear from steel plants in Hamilton and Nanticoke. Moments after a Superior Court decision allowing the steel maker to sever ties with its Canadian counterpart, the flags were gone.

The Friday decision included suspending health-care benefits to pensioners

As soon as a Superior Court judge gave U.S. Steel Canada permission to sever from its American parent company, the flags were taken down. (Samantha Craggs/CBC)

It didn't take long for a well-known U.S. Steel symbol to disappear from steel plants in Hamilton and Nanticoke on Friday.

Moments after a Superior Court decision allowing the steel maker to sever ties with its Canadian counterpart, the flags were gone.

Typically, three flags fly in front of U.S. Steel Canada's facilities — a Canadian one, an American one and the U.S. Steel one. But Justice Herman Wilton-Siegal released his decision around 5 p.m. on Friday, and minutes later, only the Canadian flag remained.

Bill Ferguson, president of United Steelworkers (USW) Local 8782, says while he doesn't know who removed them, the workers were happy about it.

"(The flags) came down immediately and, as it stands right now, by party or parties unknown," he said.

Everybody is of the mind that we're going to work towards that and we're going to make it.- Bill Ferguson, United Steelworkers Local 8782, on forming a new company called Stelco

It's a symbolic move in a tumultuous story that involves 20,600 pensioners and 2,200 employees.

U.S. Steel Corp. purchased the struggling Stelco in 2007. The sale involved a private agreement with the federal government that USW and Hamilton city officials have long feared would eventually hurt pensioners.

Last September, citing millions in losses, U.S. Steel Canada (USSC) entered bankruptcy protection under the Companies Creditors Arrangement Act (CCAA). On Friday, Wilton-Siegal ruled that USSC could sever ties with its American parent company, U.S. Steel Corp., and go forward as a new entity.

With the decision, Wilton-Siegal also permitted the company to suspend paying health-care benefits to retirees and property taxes, although for how long is unknown. He is expected to release more details on Tuesday.

Province offers $3M

Reaction to the decision was swift: Ontario Finance Minister Charles Sousa said his government would spend $3 million to establish "a transitional fund" administered by USSC and the union.

"As the restructuring continues, it is important to remember that the company is still operating and retirees are still receiving their pensions," he said.

Andrea Horwath, Ontario NDP leader and Hamilton Centre MPP, was less measured, calling it "an outrage and a devastating blow."

(It's) like working on the side of a volcano.- Bill Ferguson on the health impacts of working in a steel mill

"This decision stems from the U.S. parent company's threats to immediately cease all steel production and from a lack of action from both the federal and provincial governments to protect well-paying jobs in communities like Hamilton," Horwath said.

Mayor Fred Eisenberger said the city still doesn't know the exact impact of the property tax decision. USSC pays $6 million per year in property taxes, and the remaining portion for 2015 is $1.6 million.

'We're going to make it'

The city can manage this year, Eisenberger said, but a longer-term loss would put more onus on all Hamilton taxpayers. The city will wait until it knows more before it decides to appeal, he said.

Meanwhile, USW and workers hope to form a new company — also called Stelco — to operate the facilities, Ferguson said on Saturday. 

"As it stands today, everybody is of the mind that we're going to work towards that and we're going to make it," he said.

In the short term, the union is spending Thanksgiving weekend talking to retirees. Many pensioners retired early because of the health impacts of the job, which is "like working on the side of a volcano," Ferguson said. Now they're scared they won't have benefits, he added.

Steel industry analyst Charles Bradford said on Friday that he's "perplexed by how the situation developed in the first place."

'Opportunity to move forward'

USSC's Lake Erie plant is valuable because it contains a rolling mill, a critical $1-billion piece of equipment, he said. The Hamilton plant doesn't have that, so it's only valuable in pieces, or when paired with the Nanticoke plant.

People have speculated that U.S. Steel bought the Stelco plant to eliminate the competition, but Bradford doubts that. If the plants close, he said, that would benefit nearby ArcelorMittal Dofasco more than U.S. Steel.

Marvin Ryder, a McMaster University expert, said U.S. Steel could end up buying the Lake Erie plant on its own now that it's severing ties with USSC, or it could get the plant in a "debt swap." Ferguson, though, said he's "not really" worried about that.

Right now, much is uncertain. But Ferguson said no one is heartbroken to be out from under the shadow of the blue and white flag. 

"There's a real sense that we have the opportunity to move forward now," he said.

samantha.craggs@cbc.ca | @SamCraggsCBC


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