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USW 1005 exposes "Big Score"
(The
following article is from
the September 16-30, 2007 issue of People's Voice, Canada's leading
communist newspaper. Articles can be reprinted free if the source is
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Labour
Day Message to workers of Hamilton and all of Canada from Rolf
Gerstenberger, President of Local 1005 USW, September 3, 2007
Local 1005 on this Labour Day 2007
alerts the workers of Hamilton that Stelco steelworkers are well aware
of the dangers to us and Canadian sovereignty with the sell out of
Stelco to U.S. Steel (USX). We are making full preparations to defend
the well-being and economic security of our active and retired members
in the face of the takeover by this giant U.S. monopoly. Just as
before, steelworkers will rely on their unity and determination to
defend their dignity and economic security. We are under no illusions
that USX is going to guarantee jobs, pensions or anything of value in
the community that comes in conflict with its primary mission to make
profit for its U.S. owners.
We would
like to retell some facts of the Stelco bankruptcy fraud that has now
ended up in this sell out of the last remaining major Canadian steel
company. Local 1005 is not going to let these facts disappear from our
collective memory and will be pursuing a just accounting of this case
in any way we can, which includes compensation for all shareholders who
lost money and for all suppliers in the Hamilton area who were not paid
in full when Brookfield/Tricap seized control during the Stelco
bankruptcy. Our sense of justice as Canadian workers will not allow a
small gang of rich people to walk away from this sell out fattened by a
billion dollars while so many others lost money, not to speak of the
terrible blow to Canadian sovereignty, which upsets us all.
The Stelco
Companies' Creditors Arrangement Act (CCAA) Plan of Arrangement March
31, 2006 sealed the loss of millions of dollars in shares and money
owed to suppliers and set the stage for the sell out to USX. That Plan
of Arrangement handed over Stelco's material and human assets to
Brookfield/Tricap and others. It was completely unnecessary and a fraud
concocted by those in control of the CCAA process and aided and abetted
by the Ontario government and the Ontario Superior Court. To grease the
wheels of the Plan of Arrangement the Ontario government gave the
conspirators a $150 million loan at 1 per cent interest rate, with $100
million to be forgiven if the deficiency in Stelco's pensions was fully
paid in 10 years. Those in the Ontario Legislature and Parliament did
not explain and could not properly say why the provincial government
did not simply buy up all the outstanding shares for about the same
amount as their loan, assume the outstanding debt, which is now being
fully paid off, and turn Stelco into a Crown corporation. Instead the
financial speculators from Brookfield/Tricap, Appaloosa and Sunrise
were handed over 70 per cent ownership in the "new" Stelco at $5.50 a
share, with the entire share offering amounting to around $140 million.
After barely seventeen months that $140 million has magically ballooned
to a payoff of $1.1 billion or $38.50 a share.
In our view
the CCAA Plan of Arrangement facilitated by the Ontario government and
Superior Court and the provincial loan were simply to allow these
financial speculators to make a big score at the expense of "old"
shareholders, suppliers and Canada's sovereignty. Who valued Stelco at
$5.50 a share under CCAA? Apparently the Stelco Board of Directors. Who
gave them the right to do so and then watch them trade the shares for
$16 per share as soon as they hit the floor of the TSX and now explode
to $38.50, when Stelco was supposedly bankrupt and the old shares were
worthless? Who gave them the right to give the U.S. CEO Rodney Mott
over 2 million shares at a cost of $5.50 per share, which are now worth
almost $70 million? Apparently the same Board of Directors controlled
by those with vested interests in the outcome. And no one in government
said boo. If it smells and looks rotten, it most probably is rotten.
It did not
have to happen that way. In a media release dated November 2, 2005
Local 1005 proposed that "various governments could lend Stelco enough
capital to pay off the secured and unsecured creditors, current
shareholders, the Brascan Group (Brookfield/Tricap), the insolvency in
the pension plans, upgrading of Lake Erie and Hilton Works and
construction of the co generation plants. The same interest rates and
fee structure proposed in the Brascan plan could be applied to the
government loan with one proviso: all interest and fees paid to the
government should be invested in social programs, acting as new social
funding." Local 1005 estimated that about "$1 billion would be
necessary. This would include an amount that could function in
replacement of the proposed $600 million asset based loan."
When Local
1005 made its proposal public, the local media labelled and dismissed
it as "ridiculous" and refused to have serious discussion. Why did they
do so? We believe the mass media wanted to stifle any discussion that
could prevent the financial speculators from making their big score,
which is exactly what happened. Not only have the speculators made
their big score in the sell out but they have made further millions
through fat fees and interest payments that have gone into their
pockets rather than to spending on social programmes as proposed by
Local 1005, and they are now to have the principal of all loans fully
repaid. We also note that the local mass media have led the
cheerleading for the sell out to USX to the extent that once again no
serious public discussion has been allowed.
The gross
profiteering and injustice to our city and people during the Stelco
CCAA fraud, the Plan of Arrangement and big score cannot be allowed to
pass without a just reckoning. Local 1005 is investigating the
possibility of mounting a challenge to this billion dollar payoff to
the speculators and have it returned to the people who lost money,
especially those Hamiltonians who bought Stelco shares in the nineties
upon the insistence of the company that it was broke, and to those
suppliers who have been left with unpaid Stelco bills. We call upon
everyone who has a grievance in this affair to contact Local 1005 at
our address below.
With regard
to the new U.S. ownership group, how could the perspective of
steelworkers be any different than before? We are acutely aware of the
pressure on us from various political parties and individuals who have
suggested cautious optimism in spite of the sellout and want
steelworkers to adopt a "wait and see" position with regard to the
company's intentions.
There is no
need to examine the fine print before commenting on the implications of
the sell out.
Just look
at Stelco after the Plan of Arrangement. We heard the same fine words
now spouted by USX from Stelco's current CEO Rodney Mott who expects to
walk away from Hamilton with almost $70 million in his pocket after his
less than two-year stint. Mott's pledges of great plans and proposals
collapsed in less than a year when suddenly he announced the closing of
the hot strip mill, the closing of the pickle line and the closing of
our shops. He then reduced the work force by retirements or layoffs. He
also threatened to close the coke ovens, shut down the galvanize lines
and even reduce Hamilton Steel to a slab producer with only Z-line
steel as a finished product.
We could
also repeat how Stelco under bankruptcy had record- breaking profits
yet continued the CCAA fraud plotting the big score. So whatever USX
says now, one year from now it could be a completely different story
with all kinds of fine reasons that stem from "global competition" or
some other difficulty. Besides, everyone knows how difficult it has
been to have any influence, control or say so over Stelco when the head
office was right here on Wilcox Street in Hamilton. What control will
steelworkers or any other worker in Hamilton have when the headquarters
is in Pittsburgh? And very importantly, all the claims by U.S. owners
on Stelco wealth we create here in Hamilton will flow to the U.S. and
to who knows where after that. How will this wealth from Stelco steel
production be put to use to serve the Canadian people? Also, USX is not
an unknown quantity. They have a long and sometimes violent history
with regard to U.S. steelworkers. They were the first billion-dollar
corporation way back at the beginning of the 20th Century. This
anti-working class history of the last 100 years is matched by our own
history here in Hamilton especially since 1946 in defense of the
dignity of labour where we have clearly learned that our security lies
in our fight, not fine print. Local 1005 will face the current
developments on the basis of the same working class perspective of
preparing to defend all active and retired steelworkers and the
community. On this Labour Day 2007, we pledge to our fellow workers in
Hamilton and across Canada that USW Local 1005 will fulfill its duty in
defending the rights of all.
On this
Labour Day we send our greetings to all workers across the country who
are in one way or another facing a situation similar to our own. Let us
together all pledge to Uphold the Dignity of Labour as never before!
Rolf
Gerstenberger, Local 1005 USW,
350 Kenilworth Avenue North,
Hamilton, Ontario L8H 4T3,
905-547-1417,
e-mail: rolf.gerstenberger@uswa1005.ca