On November 7, US Steel locked out over 900 employees at its Hamilton plant. This followed failed attempts to bypass the union and directly force workers to vote on pension cuts dictated by corporate headquarters. United Steelworkers Local 1005 argued that the company was negotiating in bad faith, noting that it had activated two blast furnaces in US plants while shutting down production at the Hamilton mill, and refused to hold a vote.

Citing “the current economic landscape and Hamilton’s status as one of the most challenging steelmaking facilities in all of North America,” the company ordered workers to vote on its final offer, which included two key demands: an end to the indexing of pension payments for its 9,000 retired workers, and refusing new hires the existing pension plan by replacing it with a defined contribution retirement savings plan.

Pension indexing was negotiated as part of the 1990 contract between the former Stelco (bought out by US Steel in 2007) and the United Steelworkers. It makes payments ranging from between zero and three per cent based on an equation that balances the performance of Stelco pension plans against cost-of-living increases—in essence, increasing pension payments to adjust for inflation. That slight increase is crucial, since inflation can quickly erode the value of workers’ pensions.

As noted by the Hamilton Spectator, while direct benefit plans pay retired workers a set pension per month, direct contribution plans pay according to how much money has been saved and how much has been earned in investments. “Direct contribution plans also don’t require the employer to ensure there’s enough money in the pension plan to meet all former obligations if the company goes out of business. That’s important for US Steel because the former Stelco plans are underfunded by about $1.2-billion.”

Employees at the US Steel plant in Hamilton are almost evenly divided by age, with approximately half of workers under 50 and half over 50—the result of skewed hiring practices in past decades. The US-based steel conglomerate is exploiting those divisions by attempting to pit young workers against old. As union representatives commented, allowing 900 active workers to decide the fate of 9,000 retired employees’ pensions would be a cruel mockery of democratic norms.

Pensions are less of a concern for younger employees, who are more likely to bow to company demands rather than face an indefinite lockout and attempt to feed their families on strike pay of $200 per week. In addition, Local 1005 received a letter confirming that health benefits (prescription drugs, medical, dental, and vision), life and disability benefits had been temporarily suspended for all active Bargaining Unit members as of November 8. Management may be banking on a similar outcome as occurred in its Lake Erie plant in Nanticoke, where workers eventually acquiesced to identical pension cuts after an eight-month lockout.

Adding insult to injury, US Steel only three years ago made extravagant promises to workers that its acquisition of Stelco would not affect their livelihoods. The irony is too much to bear reading the letter today, dated 28th September 2007 and headlined “Stelco’s Pensions Safe with U.S. Steel”:

We would like to clear up any confusion and relieve any concerns Stelco’s employees and pensioners may have about the security of their pensions on the closing of our transaction to buy Stelco. U.S. Steel has agreed to significantly improve the security of the Stelco pension plans. We did so in two ways. First, we agreed to unconditionally guarantee pension funding obligations at the corporate (as opposed to Canadian subsidiary) level. Thus, instead of having to rely solely upon Stelco’s ability as a stand-alone enterprise to generate the cash necessary to meet pension funding obligations, Stelco’s employees and pensioners can now look to the strength of our entire company to do so. Second, we agreed to make an extraordinary payment of $32.5-million into the plans up front at closing. This is in addition to the pension payment schedule agreed upon by the Ontario pension regulator and Stelco.


Of course, all laws that presently apply to Stelco will continue to apply, as will all other provisions of the Stelco pension agreement, including those provisions requiring pension contributions to fully fund Stelco’s pension plans by 2015. We want Stelco’s employees and retirees to know that we understand the fundamental importance of sound pension funding. We have a large defined benefit pension plan for decades. We take our obligations very seriously and are proud of the fact that today that plan is fully funded. In fact, over the last four years, we have made over $700 million in voluntary contributions to that plan. We will honour our commitment to the Stelco pension plans. That is our history and track record.

Some track record!

In an article for the Hamilton Spectator, retired Stelco treasurer Robert H. Thompson argued that three critical macroeconomic factors outside the labour dispute contributed to the lockout decision.

First, the rising value of the Canadian dollar against a declining American dollar, helped in part by large Canadian energy exports, has wiped out any competitive advantages formerly held by Canadian industry. Second, the decimation of Ontario’s manufacturing base in recent years has severely decreased the amount of potential customers for Hamilton steel products; for example, fewer Ontario automobile plants means less demand for steel. Finally, Hamilton Works is less technologically-advanced than the company’s other plants. As a result of mill closures over the past decade (plate mill, strip mill), there is nowhere to process fresh slabs of steel, which must be shipped to other US Steel plants for processing.

However long the lockout lasts, its economic impact on Hamilton and surrounding areas promises to be devastating. 900 employees currently work at Hamilton Works, down from a peak of 13,000 in previous decades, but the lockout will also affect supporting industries and drastically lower the amount of raw materials flowing through Hamilton’s port. Aside from the loss of high-paying manufacturing jobs, Thompson estimates the city faces up to $1-billion in lost revenue.

Nor can the symbolic impact on Canadian workers be underestimated. Having tasted blood with their successful effort to overturn pension agreements at the Lake Erie plant, the bosses are now determined to set a precedent in Hamilton and break the union. Members of Local 1005 USW harbour no illusions about the company’s intentions.

“A foreign monopoly called US Steel has come into our corner of the earth and with utmost arrogance is dictating to Canadians that we should ‘be realistic,’” reads a recent Local 1005 information update. “To prove the union is not ‘completely unrealistic’ it is supposed to serve ‘American manufacturing and trading interests and policies.’ It is supposed to follow U.S. ways of ‘fend for yourself’ and agree to an endless downward slide in living and working conditions.”

The nationalistic undertones of the workers’ protest, epitomized by slogans such as “Yankee Go Home,” are understandable but misplaced. US Steel is a US-based multinational with significant reserves to ride out a lengthy lock-out. They want to make an example of the Hamilton workers not just to push down conditions in Canada, but also internationally. Here we see that the interests of workers in Canada are united with the interests of workers internationally, including in the United States. We may also note that the interests of the bosses are also united in the US and Canada. Therefore, rather than utilizing nationalist slogans that divide Canadian and American workers, wouldn’t it be better instead to strengthen those bonds of workers’ solidarity?

To replace the lost production in Hamilton, two new furnaces have been fired up in the USA. It is possible that these plants are unionized, perhaps even with the USWA. Hamilton steelworkers should send delegations down to these mills to explain that whatever concessions are squeezed out of Canadian workers will in turn be demanded of American workers. This brings to mind the fantastic solidarity movement around the Liverpool dock-workers in the 1990s. Every scab ship that loaded in Liverpool, England, was followed around the world by workers who set up picket lines on the East Coast, West Coast, and other international ports. The longshoremen refused to cross what Billy Bragg called “The World’s Longest Picket Line” in a song celebrating the struggle. With an internationalist appeal those two extra furnaces could be shut down and real pressure can be put on the multinational corporation.

Workers have appealed for help from Canadian politicians but have received little in return. Nothing illustrates this claim better than the pathetic performance of federal Minister of Industry Tony Clement, who was quoted by the Hamilton press as saying, “There’s nothing the federal government can do…The Pittsburgh-based steelmaker is free to do whatever it wants…They can make decisions, good, bad, or indifferent, according to their own timetable and their own sensibilities.”

Conservative cries of federal impotence were matched provincially by the odious Dalton McGuinty. When the Ontario premier visited Hamilton last week to announce 300 new green jobs courtesy of Liberal donors JNE Consulting Inc., locked-out steelworkers waited outside the building to confront McGuinty and demand that he guarantee pensions of the 9000 retired Stelco employees by forcing US Steel to the bargaining table. In a cowardly, but entirely typical display, the premier avoided the workers by using an alternative entrance, later blaming that gutless decision on his security detail.

Ontario NDP leader Andrea Horwath, alone among provincial and federal party leaders, visited the picket line on November 10 to support the steelworkers. She noted that since the provincial government lent Stelco $150-million to deal with its pension solvency issues, gutting the pension funds of former, current, and future Hamilton steelworkers was “unacceptable.” Horwath urged McGuinty to take action by supporting workers’ rights to pensions against the dictates of powerful multinationals. The Liberal premier responded with a characteristically weak and non-committal response, arguing that both sides have a responsibility to settle the issue through mediation. With this effective capitulation, he chose to ignore the vast differences in resources between a multinational conglomerate worth billions of dollars and a determined band of 900 steelworkers.

This struggle is important for a number of reasons, not least of which is the historical militancy of USW Local 1005. The local has been at the forefront of the fight for decent pensions, against manufacturing job losses, and in solidarity with the oppressed. A number of the local’s executive members consider themselves Marxists, including Local President Rolf Gerstenberger, who is also a prominent member and vice-president of the Communist Party of Canada (Marxist-Leninist). When Stelco was under bankruptcy protection before the US Steel takeover, Gerstenberger called for the nationalization of the company and the development of some form of economic planning.

While we at Fightback are wary of any appeal to Canadian nationalism rather than the international solidarity of the workers’ movement, Gerstenberger’s proposal is nevertheless more inspiring than the impotent declarations of Big Business and the politicians they own, who claim that “market forces” are to blame and that nothing can be done but to brutally decimate the labour force and wait for these abstract conditions to improve.

If the subservience of bourgeois politicians like Tony Clement to the whims of U.S. Steel is an indication of the global solidarity of the capitalist class, it also reminds us of the common plight shared by the international working class. Just as all Canadian workers must see their own struggle in the fight of the Hamilton steelworkers, all workers of the world must view their seemingly isolated battles in a larger context. In this epoch of capitalist austerity, all of the gains made by workers in the post-war period are in danger. With militancy and international solidarity we can hold these cuts at bay—but only by fighting for socialism and nationalizing the commanding heights of the economy under democratic workers’ control and management can we end these attacks forever.