U.S. Steel announces shutdown

Coke ovens will remain in operation; only non-union jobs affected.

Hopes that Hamilton’s U.S. Steel blast furnaces will fire up again have burned out, along with more than a century of steel production at the plant.

The announcement Tuesday that U.S. Steel will permanently cease making iron and steel in Hamilton has been feared since the company idled the mills in October 2010.

The final blow came when CEO Mario Longhi told investors Tuesday those operations will wrap up Dec. 31.

“Decisions like this are always difficult, but they are necessary to improve the cost structure of our Canadian operations,” he said.

Tuesday’s announcement does not affect rolling, coating and finishing operations, along with coke making, according to Pittsburgh-based U.S. Steel.

Forty-seven non-union jobs will be lost, but company spokesperson Courtney Boone said it would try to move staff into other positions. That leaves approximately 600 members of United Steelworkers Local 1005 and about 228 salaried positions at the Hamilton plant.

Mayor Bob Bratina said he hopes to travel to Pittsburgh within days for a “very urgent” conversation with U.S. Steel officials.

Rolf Gerstenberger, Local 1005 president,said he always hoped the firm would restart steelmaking at the plant, but he wasn’t surprised by the move.

“It’s more of the finality of it, that you are written off, if you think about that … You guys aren’t making steel here anymore.”

Steel analyst Chuck Bradford said the move is only a confirmation of what was inevitable.

“The only question I’ve had is, ‘What took so long?'”

He says because the former Hilton Works lacks a hot strip mill, the only thing it could produce was semi-finished steel.

“There is no market for that product at all.”

NDP Leader Andrea Horwath said her party will fight to protect the jobs that remain.

“When Stelco was sold, it was the last Canadian-owned steel producer in the nation. That sent out alarm bells that it would be a huge loss for our country,” said the MPP for Hamilton Centre. “Years down the road, the result is the federal government had no interest in maintaining steelmaking in Hamilton.”

MPP Paul Miller, a 32-year veteran of Hilton Works, says U.S. Steel has not lived up to commitments made to the federal government when it bought Stelco in 2007 to make it a viable operation and maintain jobs.

Instead, the company locked out workers, went after wages and pensions and idled blast furnaces here while it retrofitted two older, smaller ones in the United States, said Miller.

“The promises made for Hamilton fell off the rail line really quick.

Hamilton Conservative MP David Sweet said his heart goes out to the workers who are affected. Sweet said he had a brief meeting with the Canadian Steel Producers Association in Ottawa earlier Tuesday — before the U.S. Steel news broke — and the conversation was focused on the significant pressures faced by the industry, including the cost of energy to the emerging countries that dump steel.

“In those conversations, it’s always about how highly competitive and difficult the steel industry is globally,” he said. “It just keeps reminding us of how fragile the whole global economy is.”

While U.S. Steel’s decision doesn’t mean heavy job losses, Miller says the move is a clear signal the company isn’t interested in investing in Hamilton. He added that many suppliers of material and manpower to the iron and steelmaking operations will be hurt.

“We were hoping they would start again in a better market and bring more guys back to work. These were good, middle-class jobs that won’t be in that section of the plant ever again,” said the NDP member for Hamilton East-Stoney Creek.

“When I started in 1975, there were 13,000 hourly workers and somewhere between 5,000 and 6,000 office and salaried staff … I put three daughters through college and university. It was a decent living and we had a decent home. Those types of jobs are falling off the landscape in Canada.”

Erin Weir, economist to the Canadian office of the United Steelworkers, said the end of steelmaking at U.S. Steel Hamilton is not surprising but is enormously disappointing.

“It sounds to me as though U.S. Steel is specializing Hamilton Works to make more coal and coke,” he said, referring to the closure of the two coke batteries in Indiana. “Keeping the finishing is better but it’s certainly not equal to creating employment at the blast furnace.”

In Ottawa, Industry Minister James Moore’s office said the move is a business decision and that the government does not get involved in the day-to-day decisions of any company.

Jessica Fletcher, communications director for Moore, also said that “the government’s settlement with U.S. Steel contains commitments that provide economic benefit for Canada.”

However, Weir said, U.S. Steel is not being held to its commitments.

“(The company’s announcement) underscores the contradiction between corporate interests and Canadian national interests. Clearly this is a step back in Canada’s capacity and development in steelmaking. One of the tools we had to protect that is the Canada Investment Act.”

Both are referring to the government’s tumultuous dealings with the American corporation. In 2007, when the steel giant was given federal approval to buy the longstruggling Stelco, U.S. Steel made specific promises, including that it would employ an average of 3,105 workers for three years and would produce more than 13 million tons of steel in the period ending Oct. 31, 2010.

Beginning in March 2009, however, the company shut down most of its Canadian operations, claiming demand for steel had collapsed. It also locked out workers in Hamilton and Nanticoke to enforce demands for radical changes in pension plans.

The company has never denied breaking its promises, but said the 2007 agreement with Ottawa allowed it to make cuts to meet changes in market conditions.

The government took the company to court in 2009, seeking financial penalties of $10,000 a day, retroactive to Nov. 1, 2008, in addition to forcing the company to meet its jobs and production promises. But in 2011, it dropped the suit and settled with U.S. Steel in an agreement in which the company promised to keep producing steel in Canada for at least another four years and to invest at least $50 million in the company’s Hamilton and Lake Erie plants by December 2015.

U.S. Steel said it will take a non-cash charge in its fourth quarter of approximately $225 million related to idling operations in Hamilton. On Monday, the company reported a third-quarter loss of $1.79 billion US.