The Stel Salaried
Pensioners Organization wishes to thank The Hamilton Spectator for permission
to post the following article by Reporter Tara Perkins published in the April
29, 2004 edition
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Apr. 29, 2004. 12:53 AM |
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Liberals Promise Stelco Bailout |
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Neighbour Dofasco posts $54.6 million profit in
first quarter |
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By Tara Perkins |
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Premier Dalton McGuinty has offered a provincial bailout to near-bankrupt Stelco. One day after the steelmaker said it faces liquidation unless it reduces staff and restructures its pension plans and debt, McGuinty said Queen's Park will help the company right itself. "We expect that we will be called upon to provide some assistance (to Stelco) and we intend to be there," he said yesterday. But the premier stopped short of saying what the Liberals will do - or when they'll deliver. As Stelco continues to lick its wounds, competitor Dofasco yesterday unveiled a first-quarter profit of $54.6 million, 16.4 per cent higher than a year ago, and announced it is working with the world's largest steelmaker to build a new plant in the southern United States. "We're seeing one of the strongest markets the North American steel industry has seen for a long time and we're well-positioned to take advantage of that," said Dofasco spokesman Gord Forstner. "The whole market is strong." The comments from the premier "are very encouraging," said Tim Huxley, vice-president of corporate affairs at Stelco. "It's yet another example of a stakeholder coming forward and being prepared to take part and we just look forward to ultimately getting on with the (restructuring) process," he said. Stelco has told employees that its workforce is too large and the pension plan needs to be changed so the company can lower operating costs to compete against steelmakers in the United States, who have been able to restructure in recent years and reduce so-called "legacy costs" such as pensions. Finance Minister Greg Sorbara tempered yesterday's enthusiasm by warning provincial help won't be immediate. "It will be many months before there will be any real discussions about what role the government might or might not play," he said. Ontario NDP leader Howard Hampton called on the government to step in with a worker buyout, a loan or pension guarantees. "When is your government going to show some leadership to sustain the jobs, the pensions, at Stelco and the economic future of Hamilton?" Hampton asked. But McGuinty sharply reminded him that the NDP needs to shoulder the blame for some of Stelco's woes. "Remember why we got into this mess in the first place," McGuinty said. "Because the NDP government in 1992 decided that they were going to relieve Stelco of its obligation to invest in the pension fund. "And the Tories stood by and did nothing for the following eight years. Now Stelco workers and retirees and pensioners find themselves in a terrible predicament." In 1992, section 5.1 was placed in the Ontario Pension Benefits Act allowing large companies to elect not to top up their pension funds. The belief was that large companies would not go bankrupt and their pension funds were not in danger. In 1996, Stelco applied for permission under the Act to discontinue topping up its pensions. The steelworkers' union launched a legal challenge but lost. The section was closed in 2002, but the province 'grandfathered' Stelco, so it still did not have to top up its pension funds. Chief executive Courtney Pratt this week cited Stelco's pension holiday as one of the major contributors to Stelco's struggles under bankruptcy protection. But the company didn't spot the problem until last year. "I don't recall that issue ever coming up as an issue at the pension committee for discussion," Pratt said yesterday. As a Stelco director, he sat on the board's pension committee in 2002 and 2003. "At that stage (2002) there was no discussion of it. And, quite frankly, I think the significance of the 5.1 election didn't really hit us until 2003." As a board member Pratt was barely aware of the company's 5.1 election. "You learn a lot of things when you come on to a board, and this 5.1 election was nothing I'd had any experience with before," he said. "So someone might have told me about it, but I had no idea. "We're not the only organization where the pension fund is in trouble," Pratt added. "It just makes it doubly difficult when a company is in financial difficulty." A study released yesterday found that the majority of Canadian Chief Financial Officers believe there is a pension crisis, but do not see it as permanent. The study was conducted by The Conference Board of Canada and Watson Wyatt. "It is imperative that companies and regulators work together to create a more equitable system so employers will still want and be able to offer pension plans in the future," said David Burke, national retirement practice director for Watson Wyatt. Finance Minister Ralph Goodale said yesterday Ottawa is considering giving Air Canada more time to pay the $1.2-billion shortfall in its pension plan. But he said that "if you adjust the rules in a one-off situation ... then you do run the risk of setting a precedent." McMaster University's labour studies program last night held a forum on pensions in the university's student centre. Guest speakers included Rolf Gerstenberger, president of United Steelworkers of America local 1005, Monica Townson, author and pensions expert, Bob Baldwin, director of social and economic policy at the Canadian Labour Congress, and Murray Gold, a lawyer at Koskie Minsky, the Toronto law firm representing Stelco's salaried retirees. tperkins@thespec.com 905-526-4620 |