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Author Topic: Stelco - Labour's Response to Restructuring
Skye
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posted 05 February 2004 11:49 AM      Profile for Skye     Send New Private Message      Edit/Delete Post  Reply With Quote 
As the Steel Industry follows through on its plans to restructure, what should Labour's response be? Stelco Inc. has now filed for bankruptcy protection and has stated that lay-offs, pension reductions, and wage cuts are very likely.

After you have given your life to a company, and gone to work, day after day, for over twenty years, breathing in a factory's toxic fumes and hazardous conditions in order to earn a living to feed your family, do you not deserve something at the end?

I want to know if anyone has any ideas about what labour, and the community, can do to fight this. I also want to know what people think about taking concessions. Is it ever o.k? I know that concessions are unfair etc, but, on the heels of so many other plant closures, one has to think about keeping their job etc. I would appreciate people's thoughts on this subject.


http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20040130/STELCO30/ National/Idx

[ 05 February 2004: Message edited by: Skye88 ]

[ 05 February 2004: Message edited by: robbie_dee ]


From: where "labor omnia vincit" is the state motto | Registered: Jun 2003  |  IP: Logged
robbie_dee
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posted 05 February 2004 07:03 PM      Profile for robbie_dee     Send New Private Message      Edit/Delete Post  Reply With Quote 
Originally posted by Non-Partisan Partisan:

I couldn't find this statement at the Steelworkers website but it is from the Local President

quote:
At Stelco, what appears at first blush as just an issue between the Stelco workers and the company turns out to be an issue that strikes at the heart of what is happening to Canada and what is happening to countries around the world. Those of us long in the industry have been asking what kind of Canada will we have if the steel industry in Canada collapses. What happens if it becomes an appendage of what is called integrated North American production dominated by the U.S., or just a temporary tool of some vulture-capitalists who squeeze whatever they can from the industry and workers and then dump the business on the scrap heap when they decide more money can be made elsewhere?
Discuss.

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robbie_dee
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posted 05 February 2004 11:55 PM      Profile for robbie_dee     Send New Private Message      Edit/Delete Post  Reply With Quote 

[ 05 February 2004: Message edited by: robbie_dee ]


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Doug
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posted 06 February 2004 02:29 AM      Profile for Doug   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Guess who Stelco owes money to?

"It is the shudder that has all PMO staff bracing for the worse. How much does bankrupt Stelco owe CSL?"


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Skye
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posted 06 February 2004 11:15 AM      Profile for Skye     Send New Private Message      Edit/Delete Post  Reply With Quote 
http://www.canada.com/national/story.asp?id=CF334795-5A96-4FE9-B560-B72D6BAC5D19
From: where "labor omnia vincit" is the state motto | Registered: Jun 2003  |  IP: Logged
Polunatic
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posted 06 February 2004 11:25 AM      Profile for Polunatic   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
You would think that Stelco would be steel supplier TO CSL but I suppose CSL transports steel for Stelco. How else could Stelco owe CSL?
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weakling willy
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posted 06 February 2004 04:15 PM      Profile for weakling willy     Send New Private Message      Edit/Delete Post  Reply With Quote 
I think Steel may be too late off the mark on this one, but 1005 president Gerstenberger, who seems to have close working relations with the ML, is pushing the need for industrial policy, and particularly a national steel policy. This in some ways fits well with the CAW's call for a national auto policy. We have suffered through 15 years of federal and provincial governments who have taken free trade to be more or less sufficient as an industrial policy, and have not paid sufficient attention to the creation and nurturing of productive capacities in our communities and in key economic sectors, nor to how we might shield and restructure productive assets independently of private finance capital.

While I find some of Gerstenberger's rhetoric a little over the top, I think he is posing the correct questions, and the Liberal government that has ruled for the past decade has much to explain and answer for. Unfortunately, the broad left, not to mention the USWA and 1005 itself, must also ask why we've woken up to this issue only minutes from midnight. As Pierre Ducasse so eloquently noted in his campaign for the NDP leadership, we need to develop an economic vision that puts much more decision-making power in democratic locales.

The difficult question is building a politics to do that, and as can be seen in the Stelco case, we are starting from next to nothing -- Gerstenberger's appeal to the government of Canada clashes with the "common sense" view of economics held by the general population (including large segments of the social democratic left) and trade and sounds so "old school"/"that 70s Show" precisely because there has been so little popular education or leftist cultural engagement on industrial/trade policy.


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FPTP
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posted 06 February 2004 04:54 PM      Profile for FPTP        Edit/Delete Post  Reply With Quote 
This is all very interesting especially considering the recent WTO decision that claimed that US's steel tariffs were discriminatory.

The US was able to protect their flownering steel industry for a while by breaking WTO rules. Although they eventually had to back down to pressure from the EU, they did give the industry time to "restructure". (by the way, since the tariffs didn't apply to us, we benefiting somewhat).

Could Canada do this? How much power would Canada have before it runs afoul of both the US and the EU, causing us to potentially face massive santions.


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radiorahim
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posted 06 February 2004 10:49 PM      Profile for radiorahim     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
I also want to know what people think about taking concessions. Is it ever o.k? I know that concessions are unfair etc, but, on the heels of so many other plant closures, one has to think about keeping their job etc. I would appreciate people's thoughts on this subject.

As far as concessions are concerned it all depends.

Whenever there's a crisis in an industry be it the airline industry, the steel industry etc. the first demand that business and politicians make is for concessions from the workers. Everything will be rosy if only workers take less.

The truth is that when unions make concessions its often a big gamble. Making concessions can be seen by employers and governments as a sign of weakness. If you make concessions once, the next time the employer will be back at the table asking for more concessions.

This certainly happened in the U.S. during the 1980's where unions constantly found themselves going to the negotiating table negotiating what workers were going to be giving up. In the long run it played I think a big role in weakening the U.S. labour movement.

Canadian unions on the other hand resisted the demand for concessions. Its not that no Canadian union ever made concessions, just that they put up a much bigger resistance. In some cases, some Canadian unions turned initial employer demands for concessions into actual gains.

The concessions issue was a big reason for the UAW/CAW split.

In the long run I think that resisting the demand for concessions led to a much healthier Canadian labour movement.

I guess what Local 1005 will have to wrestle with is whether or not the demands for concessions are tied to any genuine job and pension protection for the workers and a real plan for restructuring the industry that will safeguard Canadian jobs.

If all they're being offered is alot of "hot air" then they would be quite right to stand tough.


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Rufus Polson
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posted 09 February 2004 05:38 PM      Profile for Rufus Polson     Send New Private Message      Edit/Delete Post  Reply With Quote 
What I wonder in a case like this is--
OK, so if Stelco goes bankrupt and the factory shuts down, are they going to be able to sell the factory for any kind of cash?

Could the union buy it and then have the thing run under worker control? If the local union doesn't have the cash, is there any way the local union could get a loan from an umbrella union, or even just a plain ordinary loan from a financial institution such as a credit union? If the union as an entity in itself doesn't have the collateral, is there any way the membership could pledge stuff of theirs as collateral to help out?

If Stelco don't *want* to sell their factory to a union, is there any way the union could set up a little shell company and send an unknown "representative" of that company to buy the damn thing without telling them who's behind it?


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Sara Mayo
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posted 09 February 2004 08:45 PM      Profile for Sara Mayo     Send New Private Message      Edit/Delete Post  Reply With Quote 
If a union wanted to buy Stelco, they would have to find enough money to buy the plant, and an extra $300 Million or so for upgrades. The plant is just completely unprofitable at the moment given its outdated technology and today's very low steel prices.
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Stephen Gordon
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posted 09 February 2004 09:40 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
A buyout by workers can be a risky business. Right now, the worst-case scenario is that they lose their jobs. If workers go into debt to buy the steel mill, the worst case scenario becomes losing their job, their house as well as whatever is left of their pension plan.

It would make more sense if steel mills operated in a generally stable and profitable environment. But if that were the case, there wouldn't be any crisis in the first place...


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Meow
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posted 10 February 2004 01:45 AM      Profile for Meow     Send New Private Message      Edit/Delete Post  Reply With Quote 
Its a difficult question. On the one hand, I feel sorry for all the workers who face losing both jobs and pensions. Many people in Hamilton have worked in Steel for generations, some of them don't even have high school education and have few skills outside the steel industry. This is going to really hurt hamilton (which is already hurting economically as far as i can tell). Steelworkers have also always been incredibly supportive of activism in the community.

On the other hand, I have some misgivings about handing out money to private corporations. I also resent the amount of industrial pollution the steel mills put out here in Hamilton...thats why Hamilton suffers from a high "burden of illness"....poor air/water quality b.c. of industry. I sometimes wonder what this city could be if the economy diversified.


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radiorahim
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posted 10 February 2004 02:05 AM      Profile for radiorahim     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Could the union buy it and then have the thing run under worker control?

I believe something similar to this happened at Algoma Steel in Sault Ste. Marie in the early 1990's. The Rae government was very involved in helping put a deal together that saved alot of jobs.

I understand the plant became profitable again for a time but is now back in a crisis again as is the entire steel industry.

Saw Sheila Copps doing an interview on CPAC. She was expressing anger that the feds have only put a relatively minor cabinet member on this file.


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Skye
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posted 10 February 2004 12:28 PM      Profile for Skye     Send New Private Message      Edit/Delete Post  Reply With Quote 
During this restructuring process I think it is also very important that the larger community come together to support the workers. People must understand what the possible closing of Stelco would mean to a city like Hamilton.

I have been reading a book called 'The Politics of De-industrialization.' The author, Dale Hathaway, looks at the situation in Pittsburgh in the 1980's, and the attempt, and ultimate failure, to save the Steel Industry there. He believes that to be successful in saving a local industry, community support is absolutely essential. However, in North America, we have been so influenced by capitalism, and the superiority of the market, that we tend to believe that plant closures and de-industrialization are inevitable - that it isn't our place to question business decisions, even when our jobs, livelihood and very communities our at stake! (Or, at best, the commmunity leave the workers, to fend for themselves against, management.) It was interesting to read some of the tactics that were tried in Pittsburgh; from interfaith leaders reaching out to help the workers, to radical activism.

I am glad that there have been a couple of community demonstrations in Hamilton already. However, I think that much more must be done. I am wondering if the community of Hamilton, in the face of a a fourth major plant closure in less than a year, is prepared to get involved in this battle.


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robbie_dee
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posted 10 February 2004 01:07 PM      Profile for robbie_dee     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Saw Sheila Copps doing an interview on CPAC. She was expressing anger that the feds have only put a relatively minor cabinet member on this file.

Copps is also co-sponsoring an NDP bill to protect the Stelco workers' pensions.

I hope that the ongoing political wrangling in Hamilton will draw Martin's attention to this crisis, and maybe prompt something good.

But along the lines of the Hathaway book Skye mentioned, I think the Hamilton community really needs to organize around this.

[ 10 February 2004: Message edited by: robbie_dee ]


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N.R.KISSED
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posted 10 February 2004 02:35 PM      Profile for N.R.KISSED     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
today's very low steel prices.

I thought this was due to a surplus of cheap foreign steel being dumped in North America. Maybe someone needed cheap steel to build steam ships.


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Rufus Polson
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posted 10 February 2004 03:36 PM      Profile for Rufus Polson     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Oliver Cromwell:
A buyout by workers can be a risky business. Right now, the worst-case scenario is that they lose their jobs. If workers go into debt to buy the steel mill, the worst case scenario becomes losing their job, their house as well as whatever is left of their pension plan.

Not if they do it through a shell corporation in which they are all stockholders. Sauce for the goose--capitalists always use companies to make sure they don't personally lose anything if it goes under, why not workers?


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Rufus Polson
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posted 10 February 2004 03:55 PM      Profile for Rufus Polson     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by N.R.KISSED:

I thought this was due to a surplus of cheap foreign steel being dumped in North America. Maybe someone needed cheap steel to build steam ships.

Well, that's what the Americans say. But they always say that. Personally, I doubt it.

I don't know why steel is particularly cheap right now. And I don't know whether the steel industry elsewhere is in trouble. I do know that steel production abroad is not primarily in low-wage places. Things I've read about the decline of the North American steel industry tended to fault the North American steel corporations' ongoing refusal to upgrade their physical plant. There has been a tendency among North American steel corporations over the last few decades to basically conclude that other industries have better rates of return so they'd really rather not spend their money on being in the steel industry any more. So they milk short-term profits from their steel plants and put the money into diversified investments. Eventually, they become uncompetitive at producing steel, although doubtless profitable at doing other things if their diversified investments didn't go into dot-com bubble stock. The Stelco plant would appear to fit this pattern if the massive need for reinvestment is true.

Incidentally, on the environmental question--one suspects that modernization and increases in efficency could go very well hand in hand with major improvements in environmental impact. Over and over in industry after industry it turns out that reducing pollution is synonymous with reducing waste.

Whether that's true or not, the point remains, if the industry's difficulty is not due to low wages (and given how capital-intensive the steel industry is I don't see how it could be) and it's not due to sagging demand (which is possible), there's no reason why North American producers shouldn't be able to match the prices of producers elsewhere.

Incidentally, on the environmental question--one suspects that modernization and increases in efficency could go very well hand in hand with major improvements in environmental impact. Over and over in industry after industry it turns out that reducing pollution is synonymous with reducing waste.


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robbie_dee
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posted 10 February 2004 03:55 PM      Profile for robbie_dee     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Oliver Cromwell:

A buyout by workers can be a risky business. Right now, the worst-case scenario is that they lose their jobs. If workers go into debt to buy the steel mill, the worst case scenario becomes losing their job, their house as well as whatever is left of their pension plan.
________________________________________________

Posted by Rufus Polson:

Not if they do it through a shell corporation in which they are all stockholders. Sauce for the goose--capitalists always use companies to make sure they don't personally lose anything if it goes under, why not workers?


The question is where is the money going to come from to invest in the company? The biggest pool of capital unions have available is usually the pension fund. The corporate form is a shield against personal liability for the investors, but it doesn't mitigate the risk to their capital investment itself.

The Stelco case is interesting because right now the pension fund is seriously underfunded. Perhaps Stelco could be allowed to replenish part of the deficit with shares? The trouble is that's replacing what was supposed to be a secure source of returns with a highly risky one. Sometimes worker-owners are able to make a business profitable where it wasn't under traditional capitalist management, because the workers have more information about and a bigger stake in the overall success of the operation. But it's a harder case when the business's biggest problem isn't labor-related, but rather due to outside forces like sagging demand or foreign government subsidies to their steel industries, which then export to us here in North America (IMO, those are two major reasons why steel is so cheap right now).

That being said, if the bigger problem is actually the previous owners' long-term neglect of physical plant improvements, then maybe the workers can do something about it. But if they buy the plant with the intention of making the upgrades, they may have to accept significant cuts to their current wages or future pension entitlements in order to fund such an investment, unless they could find some way to get the government to pay for it. OTOH, the pressing need for upgrades might also mean a reduced price for the plant if and when they bought it.

Generally, I am in favor of using pension fund money for social good ("pension fund socialism" some people have called it). I think it is often better to invest the money in the surrounding community that the workers live in, rather than in the employer itself. Like building affordable housing for the workers, for example.

I'm not really sure about this situation, though. It depends a lot on what's going on in the community, what the workers want and whether the government is willing to step in with any help.

[ 10 February 2004: Message edited by: robbie_dee ]


From: Iron City | Registered: Apr 2001  |  IP: Logged
FPTP
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posted 10 February 2004 04:13 PM      Profile for FPTP        Edit/Delete Post  Reply With Quote 
Just a quickie. The steel industry faces a considerable amount of increased competition from the imporved ceramics and plasitics industry nowadays.

How many things in the past were made with iron or steel but are now made with plastic or other materials?

Furniture, electronics, cars....

Sometimes it's better quality, sometimes is just cheaper but does the job momentarily (and is lighter).

This is an old trend, this case hardly came out of the blue. The US industry faced similar problems, and Bush subsidized them for a little while. 'till the WTO stepped in.


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Stephen Gordon
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posted 10 February 2004 06:55 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
That was something I was thinking of too. It may make sense to make an effort to turn things around. It may not make sense to wipe out your savings in order to postpone the inevitable by a few years.

As you say, the long run trend in the steel industry is not a promising one. I was reading somewhere that China is a big importer of steel right now, but that they're building capacity very quickly. It won't be long before they're exporting as well.


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Rufus Polson
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posted 10 February 2004 08:11 PM      Profile for Rufus Polson     Send New Private Message      Edit/Delete Post  Reply With Quote 
If the major problem is declining demand and a world glut of supply, then I'd agree that spending everything they have to take over the plant wouldn't make a lot of sense.

But I might suggest it if and only if the plant was basically going to shut down with no buyer. In fact, it might be best to wait until it did and buy it, incognito, representing themselves as say, a developer reluctantly purchasing a piece of "brown field" real estate, possibly for some kind of tax writeoff. If it could be got at fire sale prices, it might be worth doing. Otherwise, probably not.
But considering that, first, it's not likely to be bought by anybody else for use again as a steel plant, and second, if anyone wants to use it for anything else they're probably looking at massive environmental cleanup costs, it wouldn't be too surprising if it could be had very cheap indeed. As long as the purchasers don't look like desperate unionists for whom this is their last chance of keeping a decent job.

But if it couldn't be had for ludicrously cheap, then no, under current market conditions probably not worth doing. Pity.


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robbie_dee
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posted 11 February 2004 12:16 PM      Profile for robbie_dee     Send New Private Message      Edit/Delete Post  Reply With Quote 
What's frustrating for me is how I see this situation exemplifying some of the basic injustices of a capitalist system.

As long as the price of steel was sufficiently greater than the costs of making it in Hamilton, the investor class happily pockets the surplus and grows rich in the process. In order to secure their rate of return, they make several explicit or implied promises to the workers in the industry. The workers sacrifice their health and well-being to do a relatively difficult and dangerous job over a long period of time. In return, the company explicitly promised the workers that they would be taken care of with a pension plan when they retire (and the workers further sacrificed current earnings in exchange for this deferred benefit). Implicitly, the company also promised that these workers could actually have the job until they were ready to retire.

Although the implicit promise of lifetime employment was widely understood by a lot of people for a long time, it was never an enforceable one. The pension fund, otoh, is an explicit, enforceable contract. The company deliberately ignored its obligations and underfunded the plan when the economy was good, so that they could keep the extra money for themselves instead. But now, because they've f*cked up bad enough to go into bankruptcy protection, they're allowed to walk away from this obligation too, and the workers are left holding the bag.

I somehow doubt there are any Stelco executives who will be hard-pressed for money because "negative market conditions" killed their company. This makes be so mad.

[ 11 February 2004: Message edited by: robbie_dee ]


From: Iron City | Registered: Apr 2001  |  IP: Logged
Skye
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posted 12 February 2004 10:59 AM      Profile for Skye     Send New Private Message      Edit/Delete Post  Reply With Quote 
http://www.newswire.ca/en/releases/archive/February2004/11/c9031.html
From: where "labor omnia vincit" is the state motto | Registered: Jun 2003  |  IP: Logged
Skye
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posted 03 March 2004 04:44 PM      Profile for Skye     Send New Private Message      Edit/Delete Post  Reply With Quote 
http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20040302/RSTELC02/Business/Idx
From: where "labor omnia vincit" is the state motto | Registered: Jun 2003  |  IP: Logged

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