The Stel Salaried Pensioners Organization wishes to
thank The Hamilton Spectator for permission to post the following article by
Business Reporter Steve Arnold published in the January 10, 2004 edition
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Jan. 10, 2004.
12:52 AM |
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Save Slater, judge urges |
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But steel company has little hope of survival in
'perfect storm' of problems, lawyers say |
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By Steve Arnold |
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Only a miracle can save Slater Steel's
Hamilton plant and more than 400 jobs now. The company lurched another step toward
extinction yesterday when it was given an extension to its bankruptcy
protection -- time it has declared will be used to shut down plants here and
in Quebec in a way designed to ensure maximum return to debtholders. About
830 worker would be affected. Justice James Farley approved the
company's motion for an extension, but urged managers, workers and bankers to
increase their efforts to save the century-old business. "If people put their minds to
matters, they can accomplish a great deal in a short time," he said.
"The participants here could be expected to work around the clock to get
a deal. "This is not a very happy situation
and everyone ought to appreciate that the crisis point is right now," he
added. "Nobody better hold back now and everyone should work around the
clock." Despite Farley's urging, lawyers for the
company and its syndicate of banks said there is little hope of saving a
business swamped by a "perfect storm" of problems. They include
soaring input costs and exchange rates, the reluctance of unions to agree to
critical wage cuts and of pension regulators to give the company more time to
cover a shortfall in its retirement funds. Ontario's pension regulator normally
requires shortfalls to be covered within five years, but Slater has asked for
15 years. "This company has run out of
liquidity," Slater lawyer Edmond Lamek said. "Without all of those
factors coming together, the restructuring of this company just can't happen.
"After seven very difficult months, time has just run out for this
company." During that time, the court was told,
prices for scrap metal that Slater melts down into new steel soared from $145
a ton to $220 and the cost of nickel doubled from $4 to $8. "This company has been hit with
severe, unexpected and unprecedented rises in costs that have completely
thrown off the assumptions of the restructuring plan," Lamek said. "Some of these factors are closer to
the goal line than others, but some of them are headed in the wrong
direction." Slater has operated under bankruptcy
protection since June, after buckling under the weight of $184 million in
debt and deteriorating business conditions. In an effort to restructure, the
firm's workers were asked for more than $9 million in wage and benefit
concessions but when union members balked at the company's initial request
and made counter offers, negotiations ended. Now, Lamek said, lenders are losing
patience after seeing the collateral securing their loans erode by $70
million since June. After yesterday's hearing, spokesmen for
the United Steelworkers of America and the Quebec-based Confederation of
National Trade Unions said workers have always been willing to bargain to
save the company. Future talks, however, will have to include a new owner.
"The purchaser needs to be at the table now," said Marie Kelly,
assistant director of the USWA's Ontario/Atlantic district. "The current
management has only come at this with a slash and burn attitude and the real
discussion now needs to be about how this company can be restructured." Marie Pepin, a lawyer with the CNTU, said
the union wanted to talk about saving money through work rule changes before
agreeing to wage concessions, but the company was only interested in
immediate savings. Before the hearing, Steelworkers from
several Hamilton locals demonstrated outside the courthouse, shouting their
anger at bankruptcy laws that protect banks before workers and retirees. MPP
Dominic Agostino also attended, urging the federal government to provide
money for retraining and other assistance for displaced workers. "I could see the difficulty and pain
of these people who feel they're being treated like dirt now after giving so
much to this company," he said in an interview. Slater's plan now is to fill existing
orders, sell off inventory and collect outstanding bills before locking the
gates for the final time. Efforts to find a buyer will continue even after
the closure. In a late afternoon news release, the
company said despite starting to shut down its operations it would seek
negotiations with the unions to cut labour costs in an effort to make the
facilities attractive to a buyer. Slater also announced six of its 10
directors had resigned. The company's shares gained 5.5 cents on
the Toronto Stock Exchange yesterday, closing at 21 cents, even though investors
have been warned they will get nothing when the firm is wound down. sarnold@thespec.com 905-526-3496 |