U.S. Steel Canada files for bankruptcy protection

(Updated)

Earlier this evening U.S. Steel Canada filed for bankruptcy protection from its creditors. The Pittsburgh-based company is looking to restructure its financial affairs leaving the future of about two-thousand Canadian employees in doubt.

After losing approximately 2.4-billion dollars over the last five years, U.S. Steel Canada applied for bankruptcy protection. If it’s granted, the company will have roughly 15-months to be profitable. A $185-million credit from its American parent company will allow business to run normally. But U.S. Steel Canada’s business landscape is about to change.

Marvin Ryder, DeGroote School of Business: “Likely what we’re going to see is parts of the operation dramatically reduced.”

Operations including the zinc coating line in Hamilton, the Nanticoke facility to company-owned mines could theoretically be sold.

Rolf Gerstenberger, President of Local 1005: “We think in the end these companies want to get out of their obligations using this process.”

For those who work in the industry, this is an all too familiar situation. Back in 2004, Stelco used the same legislation to rearrange their financial affairs. It eventually led to the selling of the company three years later to U.S. Steel.

Rolf Gerstenberger: “That whole period with Stelco, we called it legalized theft that they were trying to use the CCAA process to get our wages, benefits and pensions reduced.”

For those on pension, business experts are saying that they shouldn’t worry.

Marvin Ryder: “That whole pension plan is not part of this restructuring. It’s operated arms length from the company. So if you’re a retiree, just don’t panic. This doesn’t really affect you.”

But for the roughly two-thousand Canadian employees — about 850 of those are in Hamilton — a reduction in wages or benefits could be the least of their worries if U.S. Steel is unable to sell their operations to an interested party.

Marvin Ryder: “But that would be the worst case scenario that all 850 would find themselves out of a job. That would also be the worst case that they’re unable to sell anything to anybody else.”

Everything at this point is speculation. U.S. Steel hasn’t been granted protection yet. But if some operations were to be sold off, it would take a company willing to take a gamble since the global demand for steel have not reached pre-recession levels. In the meantime, union members are meeting tomorrow morning at 10am to get more details on this on-going story.