The Stel Salaried Pensioners Organization wishes to thank The Hamilton Spectator for permission to post the following article by Reporter Naomi Powell published in the June 16, 2006 edition

Stelco union gets 'win-win' deal

By Naomi Powell
The Hamilton Spectator
(Jun 16, 2006)

Unionized workers at Stelco's Hamilton Steel operation will get a $20,000 golden handshake if they retire by year's end under a tentative labour agreement announced yesterday.

The four-year deal will also see the workers, represented by Local 1005 of the United Steelworkers of America, receive an immediate cost-of-living increase of $1.40 per hour in addition to wage increases of between $1.06 and $3.98 per hour by 2010.

The deal, only weeks after Stelco cut benefits for salaried employees and salaried retirees, gives union members virtually all they sought in talks. It also grants Stelco the labour stability analysts say the company needs if it is to move on after two years of bankruptcy protection.

"I'm relieved it's over," said Rolf Gerstenberger, president of Local 1005.

"(Stelco CEO) Rodney Mott seems to be reflecting the view that the way to make Stelco viable is to look after the workers and the pensioners."

Although negotiations were expected to be rocky given the historically turbulent labour-management relationship at Hamilton Steel (formerly Hilton Works), Gerstenberger characterized the month-long talks as "very straightforward."

"There was no posturing, none of that," he said.

In a release, Mott said it had been a priority of the company to recognize the need for competitive wages and proper benefits for unionized workers.

"This agreement reflects that belief and will enable Stelco and all of its employees to work together, to pursue growth, and to generate value as we move forward," he said.

The deal will be put to a vote on June 21. Local 1005's current contract is set to expire July 31.

The deal at a glance:

The 1,000 unionized workers at Hamilton Steel who are currently eligible for retirement will each receive a $20,000 bonus if they agree to retire by the end of the year. If all of those workers accept the offer, which Gerstenberger says is unlikely, Local 1005 would see its membership of 2,400 workers cut nearly in half.

In addition to the wage increases, Stelco will introduce quarterly profit sharing tied to the performance of Hamilton Steel, Gerstenberger said. A bimonthly productivity bonus will see workers receive extra cash on their paycheque if their particular area or mill exceeds production quotas.

Life insurance for active workers would increase to $40,000 from $30,000, while pensioners would see their life insurance increase to $10,000 from $6,250. A grab bag of additional benefits would see healthy gains in vision care, long-term disability, orthodontic and hearing aid benefits. The continued elimination of a $70,000 cap on lifetime health care will also be included.

"It's perfect, it's beautiful," said Tony Liota, an employee in Hamilton Steel's cold mill operations. "I like the Jerry Maguire part of it: 'show me the money'."

The deal will also include a drastic restructuring of the unionized workforce, with 28 job classes reduced to eight and workers assuming a broader range of duties. The reduction in job classes mimics the pact Mott forged at International Steel Group, the Ohio-based steel operation that was nearly defunct before it was resuscitated by Mott and American billionaire Wilbur Ross.

"It's a win-win deal," said Tony DePaulo, area co-ordinator of the international arm of the United Steelworkers. "When you look at this local's past relationship with management, it's amazing."

But the deal will likely upset salaried employees and retirees, who learned only weeks ago that Stelco will reduce their benefits by cutting vacation time, changing the drug plan and forcing employees to pick up part of the cost of dental visits.

"The salaried guys are getting whacked while we get increases on dental, everything," said Gord Marsh, another Stelco employee.

Gerstenberger said last night he didn't agree with what was happening to the salaried employees.

"At the end of the day we've always said they should organize to protect their rights."

New York-based steel analyst Chuck Bradford said the early settlement with Local 1005 is a "distinctly good development" for the troubled company.

"From a business standpoint Stelco's customers will be relieved by this," he said in a telephone interview. "This development is distinctly good for the company and its employees."

Customers, he said, will value the early settlement, which gives them security of supply. Analysts have warned that a strike at Stelco could send customers fleeing after a difficult two years in bankruptcy protection.

Stelco emerged from bankruptcy protection in March with money provided by Tricap Management Ltd. and two other hedge funds.

npowell@thespec.com

905-526-4620

-with files from Steve Arnold

The deal at a glance:

* $20,000 cash bonus for eligible employees who retire by the end of the year

* Wages increases of up to $3.98 per hour by 2010

* Cost of living increase of $1.40 per hour for all employees

* Introducing quarterly profit sharing and bimonthly productivity bonus

* Reduce job classes to 8 levels from 28

* Increased life insurance, disability and health coverage

Local 1005 workers at Hamilton's Stelco operation will be asked to ratify a new pact that includes better benefits and profit sharing, but job classification cuts.