03) US STEEL OR US STEAL? By Sam Hammond, Hamilton

 

CSI - Crime Scene Investigation.

 

            Imagine, sisters and brothers, a Crime Scene Investigation where the investigators wear blindfolds supplied by the perpetrators, who themselves are ventriloquists for a chorus of second rate actors wearing legal robes. Meanwhile, the already violated victims are held in reserve waiting for the final degradation, the next stroke, the final cut. The victims are prisoners of the bottom-feeding speculators of the casino economy, the destroyers of real economic development.

 

            The crime scene is southern Ontario, the areas of Hamilton and Nanticoke; the perpetrators are US Steel, the neo-con agenda and the Harper Tories. The actors are a rogue’s gallery of lawyers, judges, politicians, and compliant wordsmiths - the cheering sections of the capitalist state. The victims are 20,000 surviving pensioners, a few thousand still employed workers, the already dead and maimed, and every tax-paying Canadian household. What a cast!

 

            The epic began in 2004 when Stelco, Hamilton’s largest steel producer with a subsidiary plant in Nanticoke close by, applied for bankruptcy protection. This was blatant fraud, because the assets far exceeded the liabilities. The fiasco dragged on for two years, during which time insider manipulation and outright theft were sanctified by the courts, in a gambit to wipe out the shareholders, re-issue shares and put the company on the market.

 

            The vulture capitalists had a feeding frenzy, wiping out the shareholders, bankrupting some of the creditors, charging exorbitant management and consulting fees for their efforts, and finally engineering a sale to United States Steel in 2007. During this farce, Hamilton’s second historic steel plant, Dofasco, was sold to Arcelor-Mittal, a Euro-Asian conglomerate. The only shining lights were the Steelworkers Locals which tenaciously fought the good fight, protecting their contracts, their pensioners and everything that had been won over the generations since unionization in 1946.

 

            When the smog lifted there were a lot of rich speculators and trough feeders. The entire southern Ontario steel industry was foreign owned, the European-Asians had a foot in NAFTA, and US Steel had a purchase agreement with the federal government guaranteeing jobs, investment and production. The American and Euro-Asian procurers had gained control of Canadian iron ore deposits and access to cheap power at the public expense. The unionized Steelworkers had fought to a draw and protected their contracts and pensions. Two billion dollars had changed hands. End of Act 1.

 

            Act 2 opens with US Steel reneging on every aspect of the sales agreement and engineering three lock-outs to force concessionary bargaining on the union. Not only did steel production cease during the lock-outs (a violation of the purchase agreement), but the blast furnaces were shut down and steel production ended in Hamilton after the labour disputes were settled. US Steel raffled off its rolling mill to a German firm that locked out its unionized workers, who are now on the tail end of a three year dispute. The company then began a long sob story of lost profits to justify its next moves. Of course it is impossible to make steel profitable when you cease producing it. The Feds finally sued in 2008-2009, but on the eve of a certain court victory to enforce the original sale agreement, the Harper government intervened, withdrew the court challenge and brokered a secret deal which can only be made public if US Steel agrees.

 

            Act 3. US Steel creates a wholly owned subsidiary (US Steel Canada, USSC) and loads it with debt to the parent company, which becomes Debtor-In-Possession (DIP), and starts hatching plans to rob the subsidiary blind before dumping it somehow. Along the way, another vulture investment firm, Brookfield Capital Partners, who were involved in the original Stelco fiasco, bought their way back in, and with a loan of $150 million become the new DIP, collecting 11% on the loan and a service fee of $150,000 per month. US Steel then files for Bankruptcy Protection for US Steel Canada, and submits a restructuring plan to the Superior Court.

 

            On Friday, October 9, 2015, the Superior Court gave US Steel everything they asked for. Prior to the decision, Justice Herman Wilton-Siegal said it was one of the hardest decisions he had been called upon to make. That is strange because the decision can be summed up in one word, “YES”.  Yes to everything.

 

            Here is what “YES” means.

 

            Yes to approval of a “Business Preservation Plan”, allowing USSC to stop paying municipal property taxes, special pension contributions and supplements, pensions, health benefits for retirees, salary continuance for employees who left their jobs under special agreements, payments to the provincial Pension Benefits Guarantee Fund, and some payments to its parent company U.S. Steel Corporation

 

            Yes to approving Brookfield Capital Partners as the new DIP, including their fees.

 

            Yes to plunder, Yes to impoverishment, Yes to an attack on pensioners and their medical necessities, Yes to cheating the municipalities of taxes, Yes to free water, Yes to free sewage treatment, Yes, Yes, Yes.

 

            Can any sane person not see that this is not the act of a bandit, but the essence of capitalism? A glimpse of the future? De-industrialization, corporate domination of the courts, corporate dictate to Parliament? And this is only the beginning. CETA and the TPP have not yet been implemented; the worse is to come and keep coming. This is only a warm-up to the main event.

 

            Canada is rich in resources - an abundance of iron ore, precious metals, coal and energy. US Steel Canada owns currently 813 acres of real property located on Hamilton Harbour, coke ovens, assets used for ironmaking, steelmaking and finishing, and other operating assets and business operations located in Hamilton. Another 6,600 acres of real property are located in nearby Nanticoke, along with coke ovens, assets used for ironmaking and steelmaking, hot rolling, and pickling, and other operating assets and business operations. The Nanticoke plant is the most modern in North America. Why are these facilities idle while Canada imports 60% of our steel consumption?

 

            A crucial test for Justin Trudeau and his majority government is here and waiting. Will they rip up the secret Harper deal with US Steel, put a freeze on all assets until workers and pensioners are guaranteed their wages and benefits, prevent the shifting of production to US plants, and develop a made in Canada Industrial Strategy? The only sensible thing to do is seize the company and its assets, under public ownership and control. If not, these plants will be dissected, dismantled and sold in bits and pieces, shifting the environmental cleanup disaster to the taxpayers.

 

            The clock is ticking. The time to act is now.

 

(The above article is from the November 1-15, 2015, issue of People's Voice, Canada's leading socialist newspaper. Articles can be reprinted free if the source is credited. Subscription rates in Canada: $30/year, or $15 low income rate; for U.S. readers - $45 US per year; other overseas readers - $45 US or $50 CDN per year. Send to People's Voice, c/o PV Business Manager, 706 Clark Drive, Vancouver, BC, V5L 3J1.)