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 February 5, 2004 edition
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Feb. 5, 2004. 12:55 AM |
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U.S. firm pursuing Slater |
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Alabama company meets with steel union |
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By Steve Arnold |
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An American company with a history of reviving distressed steel plants has stepped up with a plan to save Slater Steel's Hamilton operation and many of its 430 jobs. Pinnacle Steel, based in Alabama, met this week with leaders of the United Steelworkers of America to get their support for an effort to buy the bankrupt Sherman Avenue North factory. "We've met with them and had an in-depth discussion about them wanting to buy the Hamilton plant as a stand-alone operation," said Bill Baker, president of USWA Local 4752. "They really seem to want to make this plant run and be profitable." A letter asking for an extension to the company's bankruptcy protection has been sent, signed by Pinnacle and the union. Slater has been operating under bankruptcy protection since June, after buckling under the weight of $184 million in debt and deteriorating business conditions. When they were last in court in January, Slater lawyers said the company was swamped by a "perfect storm" of problems including soaring material 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. Slater had initially hoped to emerge from bankruptcy protection with two of its divisions -- Hamilton Specialty Bar, and Atlas Stainless Steels in Sorel-Tracy, Que. -- continuing to operate. It abandoned those plans last month, citing high costs and failure to reach cost-cutting deals with unions in both provinces. The current round of court protection expires March 1, and getting an extension to that deadline will be one of the first hurdles Pinnacle and the union will have to clear. "Right now the future of this plant rests with Slater and the banks," said Marie Kelly, assistant director of the union's Ontario/Atlantic district. "We've always thought that the Hamilton plant is a viable operation on its own because it has a long history of being profitable." A spokesman for Pinnacle could not be reached for comment. Kelly, Baker and USWA area co-ordinator Tony DePaulo met on Tuesday with Pinnacle CEO Gus Hiller to start setting the scene for a rescue of the plant. "Nobody is playing their face cards yet so we don't know everything that might be coming, but these people seem to know the steel business and they've done their homework about our plant," Baker said yesterday. "This was more of a 'get to know where everyone is coming from' meeting, but they really seemed interested in this plant and want to make it work." What will be needed, Kelly said, is agreement by Slater and its creditors to slow the liquidation of the company long enough for Pinnacle to complete its due diligence process and make a firm offer. The union, she added, will work hard to convince the company and its bankers to give that extra time. "Slater and the banks have an obligation to the Hamilton community to keep this plant alive," she said. "We want the banks and Slater to know that we are ready to sit down with Pinnacle and make this happen." Making it happen, union leaders acknowledge, will almost certainly involve negotiating cuts in wage and benefits packages. "I've told them plainly that our pensions are not for sale, but everything else we can talk about," Baker said. The only hints Pinnacle has given about the concessions it would want in Hamilton, Baker added, include an increase in production and reduction in the number of man-hours needed to produce a ton of steel. "What's important to us is that they're not just talking about reducing people-per-ton on the floor, they're talking about fewer management too," he said yesterday. Pinnacle Steel, which also has operations in Alabama and Texas, is a two-year-old operation which specializes in buying and reviving distressed steel companies. The company started as a steel management consultancy, Pinnacle Capital, led by Hiller, a veteran United States steel executive. One company turned around by Pinnacle was Kentucky Electric Steel Inc., a minimill operation in Coalton, Ky. That company shut down in December 2002 and filed for bankruptcy in February 2003 after defaulting on senior notes and an $18-million US revolving line of credit. Pinnacle, operating through a subsidiary called KES Acquisition Co. LLC, bought the plant for $2.65-million US. When it closed, the company had 290 hourly and salaried workers. It reopened with 120 and sharply lower wage and benefits costs. sarnold@thespec.com 905-526-3496 |