June 11, 2007 - No. 94
Crisis in Manufacturing
Piecemeal Destruction of Stelco Continues
Crisis in Manufacturing
• Piecemeal Destruction of Stelco Continues
• Asset Stripping at Stelco
• For Your Information: CCAA Fraud -- The Ghost
of Justice Farley
Militarization of Culture
• Crisis in Canadian Hockey
• Over Hill, Over Dale: The Militarization of
Culture - Charles Sullivan, The Smirking Chimp
Crisis in Manufacturing
Piecemeal Destruction of Stelco Continues
Governments have a
duty to intervene to stop the stripping of
productive and potentially productive assets.
Stelco CCAA-imposed owners and management have announced
the sale of yet more of the company's productive facilities and its
potential for productive expansion. The latest victims are an iron ore
mine and pellet processing facility in Labrador and Quebec. The
certainty of having iron ore pellets available
within the integrated steelmaking capacity of Stelco without submitting
to the vagaries of an international market price and supply has been
considered a strength of the company. This feature has now been
compromised by the sale of its joint venture in the Wabush iron ore
mine. (See below for list of other productive
or potentially productive assets to be stripped.)
Those in command of Stelco's recent Companies'
Creditors Arrangement Act (CCAA) process put in place the current
ownership and management as part of the 2006 restructuring and exit
from bankruptcy protection. Both during the bankruptcy process and
subsequently, the CCAA-plotters
have stripped Stelco of its productive and potentially productive
assets. The cumulative effect of asset stripping leaves the rump
company dangerously close to being incapable of producing enough
added-value to meet the legitimate claims of Stelco retirees and all
other claims, especially the usury of owners of debt.
The bulk of Stelco's 9,000 steelworker pensioners and retired salaried
employees are from Hamilton Steel, the oldest productive asset within
the company. Hamilton Steel itself is being downsized with over 1,000
workers eliminated since exiting CCAA and more shutdowns already
announced. Other Stelco productive
and potentially productive assets in Hamilton and elsewhere are also
being stripped and money is not being reinvested in production at a
rate that will sustain let alone increase added-value. All this means
the essential relation between actual and potential added-value of the
rump productive facilities compared to
the number of retirees continues to deteriorate and become less capable
of sustaining existing legacy and other claims, especially interest and
fee payments. This will ultimately trigger another crisis and a plea
from the CCAA-imposed owners and management to do something to relieve
Stelco of those legacy claims.
They and the mass media constantly complain that too many Stelco
retirees from Hamilton Steel are dragging down the company and making
it unprofitable for owners of capital. They want the 9,000 retirees cut
loose from any connection with Stelco and if possible have the Ontario
government assume some of
their pensions.
Economic problems at Stelco have been deliberately
aggravated through destroying and stripping production. The
CCAA-imposed owners and management must be held responsible and be
forced to account for their negative actions. They are wreckers and
takers not builders.
In the CCAA pension loan agreement with the Ontario
government, Stelco is committed to invest around $70-million a year in
the pension funds. Other legacy claims cover healthcare and certain
benefits. The money to meet legacy claims comes from the pension funds
and directly from realized added-value
and is in contradiction with the claims of owners of equity and debt.
The CCAA-imposed owners and management and the monopoly
media conclude from this competition over the available realized
added-value that Hamilton Steel is unprofitable and should be
destroyed. This capital-centred attack has nothing to do with the
actual productive capacity of Hamilton Steel
but only the division of realized added-value among the main claimants:
active and retired steelworkers and salaried employees; owners of debt
and equity; and, governments. The capital-centred viewpoint
deliberately confuses productive capacity of a facility with the
division of added-value among claimants. Less
available added-value for owners of debt and equity is equated with
being unprofitable and having low productivity. How can Stelco be
deemed unprofitable when it has been capable of supporting over 9,000
retirees? That is a tremendous achievement and indicates a very
profitable and productive company but not
necessarily for owners of equity and debt.
This situation is now common in Canada and the U.S.
among older established monopolies such as GM, Ford and Chrysler, which
are tremendously profitable in that they are capable of supporting
enormous numbers of retirees but not considered profitable by owners of
capital. Supporting hundreds
of thousands of retirees is not the aim of owners of equity and debt
and they would never consider such a feat profitable because it is not
profitable for them. GM for example wants to destroy Oshawa Number 2
plant even though it is considered one of the finest and most
productive plants in North America. Owners
of capital are quite prepared to destroy profitable productive assets
such as Hamilton Steel and GM Oshawa Number 2 just to squirm out of
their social responsibilities to meet the claims of active and retired
working people and their communities. By destroying Hamilton Steel and
Oshawa Number 2, they will move
somewhere else whatever accumulated-value they have stripped, saved or
acquired in that destruction. They will move it somewhere that is as
free as possible from legacy claims by working people. Realized
added-value will flow in greater amounts to owners of equity and debt.
The new investment will be considered
profitable and productive by owners of capital, the mass media and
economic experts, and the working people will be left to fend for
themselves. The gap between rich and poor will increase.
To stop this destructive attack on Canada and its
working people, the government has a duty to uphold the public good and
restrict monopoly right. The government must intervene and stand up for
Stelco and Hamilton Steel, and stand up for the working people and
their communities that depend on
its production of added-value. The CCAA-imposed owners and management
should be removed immediately and blocked from stripping Stelco assets
and stopped from their sell-out of rump Stelco to foreign monopoly
capital. A joint federal, Ontario and Quebec government initiative
should place Stelco under trusteeship
and new management, and launch an investigation into the Stelco CCAA
process and restructuring. All pending interest payments and fees
should be put into a trust account while an investigation is carried
out. Stelco's stock equity should likewise be frozen while its
legitimacy is investigated and a plan is developed
to place ownership in Canadian hands under strict public scrutiny and
control. Importantly, a genuine national strategic review of Canada's
steel sector should be undertaken with an aim to strengthen the
sector's productive capacity, spread it to all regions and bring back
control and regulation of the sector into Canadian
hands.
The CCAA-imposed owners and management of Stelco have
shown they are not interested or capable of defending and building the
company's productive capacity. They only want to strip Stelco of its
accumulated-value and sell it out for a big score. They have proved to
be anti-worker and anti-Canadian
and must be replaced. Their activity during and since CCAA must be
considered criminal and they should be held to account. The government
must do its duty and demand that the CCAA-imposed owners and management
step aside and allow Stelco to grow as a Canadian steel company.
Whether public or private,
any investment must be under strict legal requirements that prohibit
stripping of assets, require a certain level of added-value be
regularly reinvested in existing and new productive facilities and that
all claims on added-value by retirees be fully met.
Asset Stripping at Stelco
The Stelco owners and management imposed by the Companies' Creditors Arrangement Act
(CCAA) process are stripping the company of its assets. They have
concocted the euphemism non-core assets to whitewash their criminal
wrecking of this great industrial asset and all its parts. After
denuding the company
of many of its productive and potentially productive assets, the
CCAA-imposed owners and management still expect to cash in on
selling-out the rump company for over $30 a share.
During the CCAA process large swaths of the company
were sold off piecemeal such as the very productive mini-mills in
Alberta and Quebec. Since exiting CCAA, the new owners and management
have concentrated their attack on Hamilton Steel resulting in around
1,000 livelihoods eliminated. Stelco
refused to upgrade the hot strip mill shutting it down; it closed
production dealing with galvanizing and pickling and eliminated work in
the shops. Other assets projected to be stripped at Hamilton Steel and
the surrounding area are the following:
* Hamilton bar mill expected to be bought by German bar
producer Stahlwerk Annaheute;
* Stelco's share of a steel coating line called Baycoat
Inc., which is jointly operated with Dofasco;
* Hamilton Steel finishing and steel coil-making;
* Important industrial land and sites to be sold near
Hamilton Steel and other areas of the city, which hold great potential
for expansion of steel operations including 5.5 acres on the west side
of Gage Avenue south of Industrial Drive; 2.71 acres on the northeast
corner of Queen and Barton streets;
44 acres on Windermere Avenue at Burlington Street; a 100-acre parcel
on the east side of Hamilton Steel;
* Last summer, Stelco sold to the Hamilton Port
Authority 103 acres of land at Pier 22 for $17.5 million; Stelco also
wants to sell the 100-acre plot of land that runs alongside Dofasco and
touches the water;
* Also said to be up for sale are 4,400 acres of land
near the Lake Erie mill in Nanticoke and an additional 18 hectares of
land on Lake Erie;
* Just sold was Stelco's 44.6 per cent interest in the
Scully iron ore mine near Wabush, Labrador, and pellet processing and
shipping facilities in Pointe Noire, Quebec.
Michael Locker, a New York based steel analyst said,
"They [Stelco CCAA-imposed owners and management] are selling
everything but the kitchen sink."
Stelco production of semi-finished steel in 2000 was
5.594 million net tons. This fell slightly to 5.407 million net tons in
2004 the first year under CCAA. This current year after much asset
stripping during CCAA and subsequently, total production is forecast to
be around 4 million net tons.
Besides the two mini-mills, other large productive
assets stripped from Stelco are Stelwire, Stelfil, Stelpipe and Welland
Pipe.
For Your Information
CCAA Fraud -- The Ghost of Justice Farley
For the information of Stelco workers, TML is
posting below an article by Barry Critchley entitled "A Long Wait for
Cash." It shows that even today, the ghost of Justice Farley continues
to haunt the outcome of the CCAA fraud. Clearly, Stelco workers are
drawing very different morals from this
story.
A Long Wait for Cash
Barry Critchley,
Financial Post, June 8, 2007
The moral of the story is not to invest in those
companies that end up filing for bankruptcy protection. And moral
number two is don't invest in securities that end up before the courts.
Those two morals are being played out at Stelco Inc., a
company that emerged from restructuring in April, 2006. And Stelco,
which held its annual meeting this week, is in the news because a week
ago it confirmed that it is reviewing "strategic options" and had
appointed a special committee and hired
two firms, CIBC World Markets and UBS, to help with the process.
Indeed, those two events, but particularly the latter,
set off some alarm bells with holders of Stelco's 9.5% convertible
debentures. Those debentures -- $90-million worth -- were issued in
January, 2002, and were scheduled to mature five years later.
Well, the debentures have matured and the unitholders
haven't been paid, a situation that hasn't pleased the holders.
"It is bizarre in the extreme that some investors in the
pre-Companies' Creditors Arrangement
Act restructured Stelco still have not received their entitled
settlement," one holder said in a note to this columnist.
So, what's going on, given that Stelco said yesterday it
is not involved in the court proceedings? Here's a rundown:
- Just before emerging from bankruptcy protection,
Stelco said the TSE would delist the debentures.
- Soon after emerging from bankruptcy protection, Stelco
said that "securities and cash being distributed to affected creditors
under the restructuring plan began to be distributed April 3. No
securities or cash are being distributed to affected creditors who held
the 9.5-percent convertible subordinated
debentures due 2007, which the Ontario Superior Court of Justice has
ordered held in trust by its appointed monitor pending resolution of
litigation related to the entitlement to the distributions."
How the holders of the convertible debentures ended up
in this situation is a rather remarkable tale. And that tale is still
going on, given that last month the various parties appeared before the
Ontario Court of Appeal to present their cases. That court hasn't yet
made a decision. And depending on the
outcome, it's possible that the losing side may seek leave to appeal to
the Supreme Court of Canada.
Tom Ayres, a senior vice-president at Ernst & Young,
the monitor, said yesterday, "At this time, we don't anticipate a
distribution will occur for several more months and the amount of the
ultimate distribution will depend on the ruling of the court."
Lawyers involved with both sides claim the case is both
complex and academically interesting. One such matter of interest is
the doctrine of privity in contract, which in essence provides that a
contract cannot confer rights or impose obligations arising under it on
any person or agent except the parties
to it. Given that the senior debtholders aren't party to the trust
indenture that governs the convertible debentures, how can they enforce
the various decisions, runs the argument. Case law, especially some
decisions handed down by the Supreme Court, supports both sides.
- A good starting point is November, 2005, when Mr.
Justice James Farley, who guided the Stelco bankruptcy proceedings,
ruled that holders of Stelco's senior debt and its convertible
debentures form one class even though Stelco had more senior debt
outstanding than convertible debt. "Therefore I
do not see that ConCom [the convertible holders] has made out a case
for a separate class. That aspect of its motion is also dismissed,"
Judge Farley wrote.
- A week later, the Ontario Court of Appeal agreed with
Judge Farley. "In our view the appellants have not demonstrated a
different legal interest from the other unsecured creditors vis-a-vis
the debtor ... we see no legal error or error in principle in his
exercise of discretion."
- Over the next couple of months, the various parties
voted on the restructuring plan, the effect of which was that Stelco
was recapitalized with new equity and new debt. But the amount to be
allocated to the holders of the convertible debentures was held in
trust by the monitor pending the outcome
of litigation that pitted them against the holders of the senior debt.
The latter group argued they should get paid in full
before any monies make their way to the holders of the converts. And
because they took a haircut, they argue they are still owed some cash.
Not so fast, said the holders of the convertibles, who argued holders
of the senior debt have been paid in
full. Their reasoning: Holders of the senior debt were offered cash and
shares and those who accepted shares have done well. And besides, the
converts argue, the price of Stelco's shares should not be $5.50 -- the
price at which some other parties involved in the restructuring were
deemed to have paid -- but $17,
which was the price that the restructured Stelco traded at in the early
days as a "new" public company. If the higher price is used, the
converts would argue the holders of the senior debt have been paid.
- Last summer and fall, a trial was held before Mr.
Justice Herman J. Wilton-Siegel, who divided the case in two and gave
decisions that didn't satisfy either the debtholders or the convertible
holders. So appeals against both decisions have been launched; hearings
have been held into the two decisions.
And that's where the matter stands.
Militarization of Culture
Crisis in Canadian Hockey
Several things do not sit well with the direction of
Canadian hockey. U.S. continentalism and other factors have overwhelmed
Canadian hockey and is wrenching it from its national base and
destroying its connection with the social fibre of the country.
The Memorial Cup tournament took place in Vancouver
from May 19 to May 27 but something was wrong and something was
missing. This hockey tournament has been a permanent fixture in Canada
since 1919. It originated as a Canadian youth tournament in memory of
the 60,000 young Canadians
who perished in World War I.
WWI was a wretched inter-imperialist unjust war that
slaughtered an entire generation of Canadians. To memorialize such a
tragic event is to pledge to uphold peaceful coexistence and abolish
the use of violence in international affairs and to actively take up
organizing for an anti-war government. At
this juncture in our nation-building, memorializing the youthful
victims of WWI must be connected with opposing Canada's participation
in the U.S.-led war in Afghanistan and calling for the withdrawal of
Canada from NATO, NORAD and U.S. Northern Command.
The organizers of the Vancouver Memorial Cup slandered
the memory of Canada's generation of youth who died in the filth and
squalor of trench warfare in Europe by staging an obscene promotion of
the U.S.-led war of aggression and occupation in Afghanistan and by
encouraging recruitment of
the youth into the armed forces. In a blatant militarist style similar
to what occurs at every major function in the U.S., the Memorial Cup
was delivered to downtown Vancouver by the Canadian military. The Cup
travelled by military transport plane to Vancouver Airport where it was
transferred to an armoured personnel
carrier and given a military escort to the Pacific Coliseum. This is
not memorializing the youth who died as cannon fodder in WWI but
preparing conditions for another generation of youth to be squandered
in imperialist war.
This travesty of a national championship with
militarism on display comes at the end of a season when the Saint John
Sea Dogs of the Quebec Major Junior Hockey League dismissed a player
for expressing disagreement with Canadian participation in the U.S.-led
war in Afghanistan. These events
show that U.S.-style militarism is infecting every aspect of life in
Canada. Canadians must rise to the occasion and oppose this militarism
wherever it raises its ugly head and organize for an anti-war
government.
MasterCard Memorial Cup
It is also significant that a section of the U.S.
financial oligarchy has highjacked the memory of our fallen youth and
an old Canadian institution. MasterCard has purchased the right to have
its name directly associated with the Canadian junior hockey
championship. The
U.S.-led war for Empire in Afghanistan, military recruitment and
finance capital are now directly connected with Canada's historic
junior hockey tournament.
Missing Nation, Missing Regions
Significant as well were the teams participating in this
year's tournament. In the consciousness of most Canadians the Memorial
Cup tournament should represent the best teams in Canadian junior
hockey from its different regions. Vancouver Giants were there as
the host team. The Giants' participation was further legitimized, as it
was runner up to the Western Hockey League Champion Medicine Hat Tigers
from Alberta and actually won the tournament before their hometown fans
May 27.
A team represented BC, another from the Prairies but
what of the rest of the country and the nation of Quebec. Where was the
team from Ontario? There was none. Where was the team from Quebec and
the Maritimes? There was none. Vancouver Giants and Medicine Hat Tigers
played but there was no team
east of Alberta, at least east of Alberta in Canada. "Representing"
Ontario was a team from the suburbs of Detroit owned by the U.S.
monopoly Compuware. "Representing" Quebec and the Maritimes was a team
from Maine. Only teams from BC, Alberta and the United States were in
the tournament. The Memorial
Cup did not properly reflect the different regions of Canada and did
not include the nation of Quebec, which even the Parliament of Canada
has recognized. Like so many other Canadian institutions the Memorial
Cup has been annexed by U.S. imperialism. How can Canadians build a
country if they cannot even
hold national youth tournaments? How can Canadians forge unity with the
Quebec nation if it is unrepresented at such events? All this is
excused in a most neo-pragmatic manner that Canadian junior hockey
expansion into the U.S. may become very profitable. This self-serving
thinking is highly predictable because
the Canadian Hockey League is a private hockey empire that has seized
control of the Memorial Cup for its own narrow interests. The aim of
the CHL is to expand its private capital as much and as fast as
possible. Such a self-centred aim cannot possibly lead a national
public institution let alone a nation-building
project. Private narrow interests inevitably become annexed within the
most dominant Empire, which at this time is the United States.
Hockey and Disintegration of the Social Fabric
The choice of a certain player as Captain of the
Canadian team at the World Hockey Championship in Europe this year was
a deliberate provocation against Quebec. Hockey Canada knew very well
that its choice would cause controversy. The player
in question from rural Alberta is the subject of two court cases
involving a Member of Parliament from Quebec and is widely perceived in
Quebec as anti-French. These and other slights against Quebec are
provocations to whip up anti-Quebec sentiment in the rest of Canada and
block the movement of all Canadians
and Quebeckers for renewal of the constitutional arrangement between
Quebec and Canada to guarantee sovereignty of Quebec, Aboriginal First
Nations and Canada. Canadians and Quebeckers should denounce these
provocations and attempts to destroy the social fabric of the country
and generate ill will.
Canadians could assist the movement to affirm Quebec's
sovereignty even with regard to hockey. Such is the case with the
suggestion, which is gaining momentum in Quebec and appears to be a
normal development towards sovereignty, that a Quebec national hockey
team should represent the Quebec
nation in international tournaments and within the context of Canadian
championships such as the Memorial Cup.
As with everything else in Canada, hockey is in need of
renewal. To stem the tide of U.S. continentalism and disintegration of
the country, the people must demand changes. Hockey should not be used
as a vehicle to promote U.S.-style militarism and recruitment for
imperialist war. Hockey should
not be used to generate hostility between the Quebec nation and the
rest of Canada. Hockey should not be used to sponsor the domination of
the U.S. financial oligarchy and annexation of Canada into the U.S.
Empire.
Canadians cannot remain silent or passive before
attempts to make annexation by the U.S. appear normal and inevitable,
nor should Canadians remain silent when young athletes and hockey
tournaments are manipulated to promote hatred against Quebec,
imperialist war and Empire-building.
Over Hill, Over Dale: The Militarization of Culture
- Charles Sullivan*, The Smirking Chimp,
June 3, 2007 -
A very disturbing commercial is being shown on network
television in the United States with alarming regularity. I have seen
it frequently during the past few weeks on an NBC station that
broadcasts from the nation's capital, Washington, DC.
It opens with a male chorus -- perhaps a military choir
-- singing: "Over hill, over dale; we have hit the dusty trail." The
song has the cadence of a forced march. In muted light soldiers are
seen wading through fetid water with weapons aloft, while well
coordinated precision military operations are unfolding
all around, like a Rogers and Hammerstein musical. We are supposed to
be impressed with the military and technological prowess on display,
awed into admiration for it; awed into submission to it, the oracle of
our times.
As a montage of war images flicker across the screen,
each of them portraying military operations (none of them showing the
real horrors of war); a male voice extols the virtues of technological
warfare and the unification of all military branches. Air force. Navy.
Marines. Army. One force. The commercial
ends with the statement, "Northrop Grumman: Defining the future."
The infomercial clearly targets a male audience.
Northrop Grumman and other defense contractors are realizing staggering
profits from U.S. imperial policy in the Middle East and around the
globe. The social and environmental costs, as always, are born by
others. This is corporate welfare in its most
hideous form -- socialized costs and privatized profits. It is
parasitic capitalism in its most malignant incarnation. It is the kind
of propaganda Americans are exposed to their every waking moment.
No one who views the advertisement is going to run out
and buy an advanced weapons system from Northrop Grumman. Thus one must
ponder the real purpose of the ad. The message is not designed to sell
weapons systems; it was created to sell the American people on the
notion of superior technological
prowess, perpetual warfare and war profiteering that guarantees, for a
little while longer, at least, an unsustainable way of life: ideas that
have already won widespread acceptance among the slumbering masses and
the willfully ignorant.
We are supposed to believe that the Military Industrial
Complex, a conglomeration of defense contractors with its long
poisonous tentacles firmly lodged in the gangrened flesh of government,
is protecting us and our way of life from a hostile world intent on
destroying both. We are supposed to see
perpetual war in Orwellian terms of peace; ignorance as strength, evil
as good. Destruction of the commons and our civil liberties by fascist
corporatism is supposedly good for the country because it is good for
the war profiteers in government and Northrop Grumman -- which is only
the tip of a much larger malignancy
rooted deeply in the cadaverous flesh of American society.
If Northrop Grumman is indeed defining the future,
America -- and the world -- are in deep trouble. We are witnessing the
blatant militarization of our culture by the forces of darkness, the
machines of misery and death.
Hummers, a military vehicle, populate the roads and
highways of America, even as the last drops of cheap oil are being
sucked from the sands of the occupied territories. The human costs of
war that sustain patterns of conspicuous consumption and waste never
enter the minds of consumers. After all
we are an exceptional people. The costs are born by others and kept
hidden from view.
The glorification of war is nearly ubiquitous in the
culture. You see it in the vehicles we drive, aggressive behavior,
excessive national pride, flag waving, military style clothing, movies,
video games; and now -- television commercials. The American consumer
is essentially becoming a piece of computer
hardware programmed to download propaganda and to execute its commands
without thinking. It does what it is programmed to do.
Northrop Grumman, the neocons, and their timorous
accomplices in Congress are all peddling the same bogus image to the
American people. Like the forces portrayed in the television ad, they
are a well-financed, well-organized array of seemingly disparate forces
fighting as one. Who are they fighting?
We the people. Democracy. Truth. Peace. Organized labor. Working class
people the world over.
Read The Marxist-Leninist
Daily
Website: www.cpcml.ca
Email: editor@cpcml.ca
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