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
February 5, 2005 edition
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Feb. 5, 2005. 12:49 AM |
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Stelco Sheds Jobs |
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Retirements cut steel giant's workforce, but
pension costs mount |
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By Tara Perkins |
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Stelco's workforce is continuing to shrink, with the steelmaker expecting to have 241 fewer workers by the end of this year because of retirements. And the company's pension costs continue to soar, with its pension deficit increasing by more than $200 million last year. Stelco has received 1,330 claims from creditors who believe they were owed money when Stelco filed for bankruptcy protection last year, amounting to $3.654 billion. Stelco expects many of the claims will be denied, significantly reducing that total. This new information about the steelmaker's restructuring and its year ahead were released yesterday in a report by the monitor overseeing the company's bankruptcy protection. There are some positive signs. The company has negotiated contracts with its steel customers at prices about 30 per cent higher than 2004. That should improve cash flow in the coming months, the monitor, Alex Morrison of Ernst & Young, said in the report. And Stelco believes it will improve its liquidity in 2005 if market conditions remain strong. In the months after the steelmaker filed for bankruptcy protection last year, steel prices soared to record levels, thanks to voracious demand from China. "Notwithstanding some softening in demand, steel selling prices have remained relatively strong through the first month of fiscal 2005," the monitor said. Stelco said yesterday it will not be able to release audited financial statements "in the near future" because it still doesn't know how they might be impacted by certain restructuring items. But it does expect to announce some preliminary results for the fourth quarter of last year by the end of this month. Another announcement of high earnings could fuel the fight between Stelco and the United Steelworkers, who argue that the firm never proved it deserved bankruptcy protection. This week, Leo Gerard, the Pittsburgh-based president of the United Steelworkers of America, said: "Stelco never should have been granted protection." He called on the provincial and federal governments to step in. Government "can't be let out of their obligations," he said. The monitor's report revealed that Stelco's pension and other retirement benefit plans are forecast to cost the company $155 million in 2007, compared to $106 million last year. The pension solvency deficit is now $1.279 billion, compared to $1.059 billion a year earlier. Those numbers are among the information Stelco has recently provided to companies looking to make a bid to buy or refinance the steelmaker. Algoma Steel, Sherritt International Corp. (in partnership with the Ontario Teachers' Pension Plan), U.S. Steel and Severstal have all announced that they are looking to top a $900 million floor bid from Deutsche Bank. Final offers are due on Feb. 14. Sources say Mittal Steel is also one of the bidders. Rumours that Stelco's bidding war is cooling off have circulated recently. Gerard said he doesn't believe Mittal Steel will submit an offer to Stelco. "If they were serious, they would contact us," said the head of the Steelworkers, who has worked closely with Mittal on previous deals. "They haven't contacted us." tperkins@thespec.com 905-526-4620 |