The Stel Salaried
Pensioners Organization wishes to thank The Hamilton Spectator for permission
to post the following article by Reporter Steve Buist, published in the
November 22, 2005 edition
By Steve Buist
The Hamilton Spectator
(Nov 22, 2005)
Shareholders, bondholders, trade
creditors and the provincial government are all preparing to share the pain as
embattled Stelco attempts to restructure its business affairs.
But what isn't part of Stelco's
restructuring plan are wage concessions and job cuts aimed at the steelmaker's
unionized workers, which surprises a couple of experts.
"It is unusual," said Richard
McLaren, a University of Western Ontario professor who specializes in corporate
insolvency issues.
Stelco's latest attempt to have
creditors vote on a restructuring plan was adjourned yesterday, so the company
will try again tomorrow.
In the United States, where about
three-dozen steelmakers have sought bankruptcy protection in the past seven
years, restructured companies have almost always renegotiated union contracts
as part of the the solution, said Dave Phelps, president of the American
Institute of International Steel in Washington.
"The problem that faces anyone who
might want to own Stelco without renegotiating contracts will be that Stelco
starts its new life against companies in the U.S. that have adopted
concessions."
In Canada, the restructurings of Algoma
Steel in 1991 and 2001 both involved wage concessions and job cuts for the
company's largest union.
Each time, the union also ended up with
an ownership position in Algoma, something that hasn't been proposed in
Stelco's case.
McLaren said that Stelco's financial
problems are related more to how the company has made its capital expenditures
rather than the size of its payroll.
"They need to change the overall
direction of the company, rather than cutting its workforce," McLaren
said.
"It's not that Stelco's labour
costs are too high, it's that its capital is deployed in the wrong
assets."
The fact that Stelco also made $150
million in profits during the first 18 months of bankruptcy protection didn't
help the case for concessions, he added.
"It's pretty tough to demand
labour cuts when, for the most part, they've been operating at a profit,"
he noted.
With the time remaining to find a deal
now being measured in hours instead of days or weeks, it's not likely that the
issue of concessions from workers will emerge as a bargaining chip.
"I think they're way past that
now," McLaren said. "It's too late in the game to be tinkering with
that now."
Besides, raising that issue would be
met with a short, sharp response, said Bill Ferguson, head of Local 8782 at
Stelco's Lake Erie mill.
"I won't entertain it," said
Ferguson bluntly.
Local 8782 has not ratified its latest
collective agreement with Stelco, and has indicated it will retain its right to
strike until after the restructuring is complete.
"Our position from day one is that
concessions aren't the solution to the problem," Ferguson points out.
"The guys who work on the shop floor make the money they deserve to
make."
Rolf Gerstenberger, head of Local 1005
at Hamilton's Hilton Works, still isn't convinced that the idea of wage concessions
has been completely abandoned.
"As far as we're concerned, it's
not over yet," he explained. "My fear is that the bondholders might
get to the point where they start saying 'We're so close to a deal, if only the
workers would agree to this or this.'"
Gerstenberger also noted that wage
concessions of 20 per cent were floated as a trial balloon by Stelco's
management in the few months immediately before and after the company filed for
bankruptcy protection.
"We wouldn't play ball with them,
and since then they haven't really pushed it," he added.
sbuist@thespec.com
905-526-3226