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 January
7, 2005 edition
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Jan. 7, 2005. 12:48 AM |
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Province wants Stelco pension
deficit resolved |
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By Tara Perkins |
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The province will not offer Stelco any financial help, but is making it clear that the steelmaker's pension deficit must be addressed quickly. "There's enough value overall in the Stelco situation that, one way or another, one would think somebody ought to start looking at how do we solve the pension issues?" said Jim Arnett, Premier Dalton McGuinty's advisor on the steel industry. He said the government is telling potential buyers for Stelco that they must come up with a plan to fix the steelmaker's pension deficiency of about $1 billion. Asked if the government might step in with loans or other assistance, Arnett said: "No, I don't think the government needs to put up any money. I think there's money there. What we've learned in the last few months is that there's quite a bit of underlying value in Stelco." The government's willingness to offer Stelco financial help disappeared when the steelmaker raked in $100 million over six months this year, thanks to a surge in steel prices. A report released yesterday by World Steel Dynamics forecasts that steel prices will start dropping somewhat by the middle of this year. Stelco employees fault both the steelmaker and the government for allowing the company's pension deficit to grow. And a company observer said the government has a huge bargaining chip that allows it to eliminate bidders from the contest for Stelco. In 1996, Stelco took advantage of a provincial law referred to as the too-big-to-fail clause. The law was based on the assumption that big companies could not go under, and therefore allowed them to scale back payments to their pension funds. If one of the offers for Stelco does not address the pension deficiency, the government could tell that bidder it will stop letting Stelco use the too-big-to-fail clause. That would force the steelmaker to pay hundreds of millions of dollars, and may scare off that buyer, or convince them to address the pension deficit. The government has hired Blair Franklin Capital Partners, which has extensive experience in corporate restructurings, as advisors. Stelco has more than 13,000 pensioners, most of whom are represented by the United Steelworkers of America. Yesterday, the local president for Lake Erie works, Bill Ferguson, said the union is "going forward to negotiate collective bargaining agreements with potential buyers." Fixing the pension hole is one of the items the union wants addressed, Ferguson said. This week, the union met with executives from U.S. Steel, Algoma, Severstal and Sherritt International. Two of Stelco's subsidiaries -- Lake Erie works and AltaSteel -- have open contracts. The union plans to bargain with each of the bidders over the next couple of weeks, to see which bidder is able to offer the best collective agreements. The Steelworkers will then choose the company they want to work with. tperkins@thespec.com 905-526-4620 |