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March 11, 2010 - No. 52 U.S. Steel How Many More Ways Can U.S. Steel Get a Break on Their Pension Obligations!
U.S. Steel U.S. Steel How Many More Ways Can U.S. Steel Get a Break on Their Pension Obligations!
BackgroundLocal 1005 USW has had a defined benefit pension plan since 1956. In 1987-88, the Ontario government changed the Pension Benefits Act (PBA) to add provisions that require companies with Defined Benefit Pensions to fund their plans on a solvency basis. This was done after workers complained of losing their pension benefits after companies went bankrupt. New provisions were added to the PBA to ensure enough money was in pension plans to cover the pensions of those workers with "grow-in" rights -- those whose age plus service equals 55 years or more. Soon after the new arrangements were in place the Ontario government again amended the PBA with a "5.1 Election" allowing companies that are supposedly "too big to fail" a way out of making their pension solvency payments. This amendment passed even though evidence showed that no company is "too big to fail." In 1996, Stelco took advantage of the 5.1 Election, secretly filing with the government to opt out of its pension solvency obligations under the PBA. This allowed Stelco to stop making their solvency payments because it was deemed "too big to fail." Yet in January 2004, Stelco filed for CCAA bankruptcy protection even though it was deemed "too big to fail!" One of the reasons Stelco gave for demanding CCAA bankruptcy protection was that the Stelco defined benefit pension plans were underfunded mostly as a result of Stelco opting out from making adequate solvency payments because they were "too big to fail." How is that for self-serving and self-fulfilling company logic! The New Stelco "Special" Pension AgreementWhen Stelco exited CCAA in 2006, the Court established a funding arrangement for the New Stelco pension plans. New Stelco and the Court agreed to the following arrangement: 1) New Stelco would fund the plans' solvency deficiency over a ten year period. 2) New Stelco would make payments into the funds of $65 million per year for the first 5 years and $70 million per year for the following 5 years. 3) New Stelco agreed not to pay dividends on its newly issued share equity until the pension solvency deficiency was eliminated. 4) New Stelco was obligated to pay a "cash sweep" into the pension plans if the company made a certain level of profit in any given year, which was designed to make the pension plans solvent as quickly as possible.
The "Special" U.S. Steel Pension AgreementWhen U.S. Steel purchased New Stelco October 31, 2007 it insisted the "cash sweep" provision and restrictions on dividend payments be removed from the pension agreement (because, guess what? It was "too big to fail!"). But that is not all. U.S. Steel wanted to maintain the ten-year solvency funding rule and $65 million and $70 million yearly payments rather than revert back to the PBA because the special arrangement was a huge saving for the company. For instance, according to the most recent report of the actuary, the solvency deficiency for the Local 1005 plan at the end of 2008 was over $950 million. If U.S. Steel had to fund this on a solvency basis according to the PBA, the yearly payments would be at least $200 million for five years. Under the "special" U.S. Steel arrangement, the yearly payments were $65 million and now $70 million dollars for the next five years. The company wanted the good part but not the restrictions and the Court agreed, dismissing Local 1005's objections. Quite a bargain.
What Are We Facing in 2016?In 2016 the chickens will come home to roost. First of all, the plan will still have a huge solvency deficiency because of lower payments into the plan, losses in the funds' investments and increased numbers of retirees. According to the PBA, in 2016 the plans must be made solvent in 5 years from that time. A second pension funding issue has arisen related to U.S. Steel's shutdowns and slowdowns of Hamilton Works and Lake Erie Works. This issue was not foreseen by the 2006 New Stelco or the "special" U.S. Steel funding regime. Over 700 workers retired in 2009 when U.S. Steel closed the Hamilton plant. Another 600 had already retired in 2006 and 2007. All these retirements, coupled with the problem of not replacing the workers or producing enough steel, have increased the unfunded pension liability because the plans are still being funded under the "special" U.S. Steel agreement at $70 million per year. Under the PBA, after 2015 these liabilities will have to be properly funded and made solvent within five years.
Why Do Companies Want Defined Contribution Plans?It was reported that one of the demands U.S. Steel has made during the negotiations with Lake Erie steelworkers is to destroy the universal defined benefit plan. U.S. Steel wants to place all new hires and employees with less than ten years service into a defined contribution pension plan with no defined benefits upon retirement that would last until passing away. At the least, this creates a very insecure future for retirees. The company would contribute $1.25 per hour into a pension savings plan for each hour worked and the cumulative amount would be the total payment upon retirement regardless of how long a retiree lives.
 Click image to download poster (PDF).
Vale Inco Striking Vale Inco Workers Stand FirmNo to Concessions! Fair Deal Now! Vale Inco workers in Sudbury and Port Colborne after nearly eight months on strike are standing firm for no concessions and for the company to agree to a Fair Deal Now! Mediated talks broke off on Monday, March 7. USW District 6 Director Wayne Fraser said he and the Local 6500 bargaining committee were frustrated and angry that despite the union having made "an all-out effort" to reach a settlement, Vale Inco "did not come close to reciprocating." Mediator Kevin Burkett formally broke off the discussions and following which the USW then made an unprecedented request to refer all outstanding issues to a binding arbitration panel with Burkett as the chair, and with the union and Vale Inco each appointing a representative. Vale Inco rejected that proposal as well. Striking workers are not cowed down by Vale Inco's
blackmail or its insistence that the workers surrender to the company's
demand that it can do whatever it pleases! Vale's "offer" and why the Local 6500 bargaining team rejected it are posted on the union's website www.FairDealNow.ca. Vale Inco for example insists that the threshold for triggering the nickel bonus be increased from $2.25 to $5.00 and that any cost of living allowance indexing the workers receive, be added to the trigger level, which amounts to continuous erosion of the nickel bonus. The company also has a formula to cap the nickel bonus which the union bargaining committee rejected saying the new formula would have paid members 42 percent less. Vale Inco is also still insisting the workers must agree to end the defined benefit plan for new hires to be replaced with a defined contribution plan. The USW has called for membership meetings on Thursday,
March 11 in Sudbury and Friday, March 12 in Port Colborne, to present
details of Vale Inco's "final offer." A USW press release said "Members
will have the opportunity to vote on an offer of settlement presented
by the company." Here is but a small sample of what the workers are saying about Vale's offer: - 5 years [contract term] with a cap on bonuses and less
than a dollar increase in wages! Vale Inco's demand for concessions is completely unjustified. Vale made twice as much profit from Ontario operations in their two years of ownership as Inco made in the previous ten. Vale's "one-mine" plan includes cherry picking the best ore bodies and discarding the rest, laying off hundreds of workers and refusing to reinvest social product into the nickel communities. In addition to seeing the strike through to a successful conclusion, the workers are demanding Vale Inco live up to its commitments when it purchased Inco. Vale's purchase of Inco has not delivered a net benefit to Canada. A proposal has been advanced to nationalize Vale's operations in Canada and run them as a public enterprise serving the well-being of Canadians and the general interests of society. If Vale will not bring itself into compliance it should hand over its Canadian assets as redress for the damage it is causing to the workers, the nickel communities and the economy so that the people of the region can provide themselves with an industry and economy which meet their needs and that of Canada as a whole. Canada Is Not for Sale --
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As we have pointed out,
most companies where workers
have a defined benefit pension plan are trying to get rid of their
defined benefit pension plans. They are trying to convince or force
workers to agree to some form of defined contribution pension plan.
This is the case with the lockout occurring at Lake
Erie Works. U.S. Steel has locked out members of Local 8782 since
August 3, 2009 because steelworkers would not agree to a defined
contribution pension plan. This is also an issue in the Vale Inco
strike. The current situation and history of the Stelco pension plans
clearly shows what these companies are up to.
U.S Steel has created this
problem in Canada with its
shutdowns and cutbacks and refusal to meet its obligations under
Canadian law including the Pension Benefits Act and Investment
Canada
Act (ICA). It was helped by the decisions of the Ontario
government and the court as well as
the federal government's toothless response to the ICA challenge.
Active and retired steelworkers are not to blame for this situation and
demand their rights as Canadian workers to defined pension benefits
agreed to under the Collective Bargaining Agreement. Local 1005 stands
with other workers across Canada
in defending the defined pension benefits we have and demanding similar
defined pension benefits for all!
At U.S. Steel's Hamilton Works, if
this were to happen,
and keeping in mind the financial obligations coming due after 2015,
some have speculated that U.S. Steel hopes that not one member of the
existing Defined Benefit Plan would still be employed at U.S. Steel
Hamilton Works. If U.S. Steel moved to destroy
the defined benefit plan for all in 2016 saying it was too expensive to
maintain, no active steelworker with a stake in the plan would be in
the mills to defend the plan. Would active steelworkers in the year
2016, whose pension rights to defined benefits had been abandoned by
now retired steelworkers, put up a fight
to defend a plan they are not part of? Something to think long and hard
about. The trade union slogan, "One for all and all for one!" extends
across generations. Workers must support one another no matter what
their age or any other consideration. It is certain the monopolies have
no interest in our well-being. Our
unity and determination to defend our rights and the rights of all is
the deciding factor. Active and retired workers must consider the
future generations when they make important decisions affecting their
own well-being and the well-being of all.
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 USW Global Solidarity Rally in support of striking Vale Inco workers, Sudbury, September 19, 2009. |
The Vale Inco strike, which started July 13, is
approaching its eigth month and will shortly become the longest strike
in
Inco's history. On March 22 the United Steelworkers union is organizing
a mass rally at the new USW Union Hall in Sudbury to show the
solidarity and support that the striking workers and their union have
from the community, from workers around the province of Ontario and
around the world.
The rally is being organized under the slogan Bridging the Gap. Some 30 international delegates have already committed to attend -- from Brazil, Germany, Australia, Geneva, Indonesia, Zambia and more. Leaders of the Ontario Federation of Labour and a number of other unions have also pledged to mobilize support for the March 22nd event in Sudbury.
The organizers are calling for a vigorous show of support. "We need your help to show Vale Inco that we have the solidarity and the strength of our brothers and sisters everywhere- from around the corner to around the world. Come to Sudbury and help us stand strong and unblinking in the face of Vale."
For details, visit the Fair Deal Now website at www.fairdealnow.ca.
April 12 International Solidarity Event in Brazil
Another international
solidarity event is taking place
in Rio de Janeiro, Brazil from April 12-15, where more than 40
social justice, environmental and labour organizations in Brazil are
convening an international meeting for those affected by Vale. An
invitation to attend has been extended to social environmental and
labour movements in Canada, Chile, Argentina, Guatemala, Peru,
Mozambique, Australia, Norway, New Caledonia, South Africa and
Indonesia.
The announcement elaborates on the power of monopoly dictate exercised by Vale as a global mining monopoly.
The call for the international meeting says "we are organizing this international meeting of those affected by Vale with the objective of changing this situation … We call people from the communities that are suffering the impact of these mining mega projects, civil society, men and women employed by Vale, social movements and organizations, faith communities, students and professors to participate in the construction of this gathering, in the hope of building a more just and environmentally sustainable society."
"The natural; resources of each country constitute the sovereign patrimony of its people and belong to them, and not to Vale's national and international shareholders," states the call.
For more information contact: justicanostrilhos@gmail.com.
Xstrata
Ontario Government Must Uphold Public Right!
TML has learned that on Wednesday, March 3 Ontario Premier Dalton McGuinty met with Xstrata CEO Mick Davis and Xstrata Nickel CEO Ian Pearce at Queen's Park in Toronto in a closed door affair, where the Xstrata executives "outlined their decision to close the Timmins smelter [the Kidd Creek Metallurgical Site]. The Minister of Northern Development [sic] Mines and Forestry, Michael Gravelle made the announcement to reporters in Timmins on Thursday.
The premier is said to have "reluctantly accepted" Xstrata's decision. The premier reportedly "would like nothing more than to see Xstrata change their minds." Minister Gravelle said, "if I had my way I would have Xstrata change their minds no question about that."
This mealy-mouthed talk is totally unacceptable. It is a betrayal of the public right and public interest on the part of the Premier and the Government of Ontario in deference to monopoly interest and monopoly dictate.
The Xstrata executives should have been put in their place and told in no uncertain terms that their corporate interest in doing business in Ontario is subordinate to the rights of the workers in particular and the interests of society over all.
Mine Mill 599/CAW brought forward thought out alternatives to Xstrata's announced closure of the Kidd Creek Met Site this coming May. Mine Mill 599/CAW's proposals included:
1) that the provincial government institute a three-year moratorium on the closure of the value-added facilities at Kidd Creek so as to explore alternatives to shutting down the only metallurgical plant of this nature in the province;
2) for the government to work with both Xstrata and the union to find solutions to the company's alleged dilemma, including the possibility of a northern industrial hydro electric policy to reduce Kidd's massive electricity bills;
3) for changes to the Ontario Mining Act to stop Xstrata from going ahead with its plans and to ensure similar situations do not occur at other mines or yet to be developed mines in Ontario;
4) that if Xstrata refuses to listen then the company should hand over its Canadian assets so the workers can get on with the business of adding even more value to natural resources in Northern Ontario.
These proposals made by Mine Mill 599/CAW are the kind of emergency measures that need to be legislated to deal with the economic crisis, measures which restrict the monopolies and serve the interests and well-being of Canadian workers and Canada's socialized economy.
Workers at Kidd Creek and their allies in Timmins have every right to organize themselves and their community to deprive Xstrata of its ability to deprive them of their right to keep the Kidd Creek Metallurgical Site operational, to keep it from being dismantled, to keep this productive asset of the society, which they created through their own labour, in existence.
Militant Rally at Nickel Rim South Mine in Sudbury
Our Resources Stay Here and Must Be Utilized in a Manner Beneficial to the Communities
Workers from Mine Mill Local 599/CAW in Timmins, where Xstrata Copper is planning to close the Kidd Metallurgical Site (Met Site) in May, eliminating 670 direct jobs and up to 3,000 in all, travelled to Xstrata's Nickel Rim South Mine in Sudbury on March 4 to hold a militant rally and further their Our Resources Stay Here! campaign to protect their jobs and their community. They organized the action to confront Xstrata CEO Mick Davis who was to visit Nickel Rim for an official opening ceremony with other Xstrata bigwigs and Ontario Minister of Northern Development, Mines and Forests, Michael Gravelle. When Xstrata learned of the workers' planned protest, they abruptly cancelled their celebration. Instead of coming to Sudbury, Davis met with Ontario Premier Dalton McGuinty in Toronto. The workers decided to not let the company and government determine the agenda and proceeded with their action.
The Timmins workers were joined by Vale Inco workers who have been on strike in Sudbury since last July fighting for a fair deal against a company who refuses to negotiate unless the workers accept concessions on pensions, bonus and transfer rights and which has been attempting to resume production with the labour of anti-worker mercenaries. Members of Mine Mill Local 598/CAW at Xstrata Nickel in Sudbury where Xstrata closed three mines and laid off 686 workers last May and representatives of Ontario Northland Railway (ONR) workers in North Bay and Midland also participated.
The March 4 demonstration and rally show the growing unity in action amongst the natural resource workers of northern Ontario. The demands and slogans raised by the workers were overtly political, speaking to who decides the direction of the economy: "We Demand Our Government Stand Up For Workers in Canada!"; "Our Resources Stay Here!"; "Jobs Not Severence!"; "Investment Canada Act -- Tony Clement -- No Net benefit!"; "Companies Must Not Be Permitted to Exploit Canada's Resources!"; "Harvesting and Mining Our Natural Resources Must Benefit Our Communities By Maintaining and Creating Jobs!"; "Enormous Profits for Companies Means Significant Costs to Our Community and Province!"; "The Nickel Is Canada's But Xstrata's Debt Is Not!"
March 4, 2010: Workers from Mine Mill Local 599/CAW in Timmins demonstrate against Xstrata with workers and supporters in Sudbury. Pictured are Mine Mill Local 598/CAW (Sudbury) Richard Paquin President (top right) and Vice President Anne Marie MacInnis (bottom right).
The rally was addressed by Richard Paquin and Anne Marie MacInnis of President and Vice President of Mine Mill Local 598/CAW respectively, Brian Watson, recording secretary of Mine Mill Local 599/CAW, Eric Delparte of USW Local 6500, Brian Kelly, President of CAW Local 103 (ONR), George Markic of the Mine Mill Retirees and a member of Community Activists Needing Answers Regarding Your Safety (CANARYS). The speakers dealt with the economic disaster that has befallen the workers and mining communities of Timmins and Sudbury in the less than four years since Vale and Xstrata took over the former Inco and Falconbridge in a frenzy of monopolization. They denounced the concept that these takeovers by global monopolies are of net benefit to Canada and the mining communities, as advocated by Tony Clement and Stephen Harper in Ottawa and Dalton McGuinty at Queen's Park. They called upon government to defend workers and the resource communities and demanded that ways be found so that harvesting and mining of natural resources benefits the communities by maintaining and creating jobs.
Following the rally, participants travelled to Garson Mine to bolster the picket line against Vale Inco and then to the Falconbridge Community Centre for a barbeque.
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