Steel Market Update received an interesting comment on one of our previous blog posts regarding the lockout of the U.S. Steel Hamilton Works (also called Hilton Works by the former Stelco employees). The individual making the comments questions U.S. Steel's management (and perhaps the union leadership) to tell the employees what the plans are for the Hamilton Works in the future?

USW Local 1005 which represents approximately 900 union workers at the U.S. Steel Canadian facility, has been locked out by the Company since Sunday evening, November 7, 2010. U.S. Steel has put an offer on the table which union management is not willing to present to the union members for a vote. The sticking points are the loss of indexing on the pensions of 9,000 retirees and the end of a defined benefit retirement plan for new hires. Both are unacceptable to the union management. For the most recent information from Local 1005 CLICK HERE

At the end of this blog post we will provide another link as we ask the same question posed by the person making the original comments: Does USS owe the workers of U.S. Steel Hamilton an explanation of the long term plans for the facility?

Below are the comments and questions asked by one of our readers:

"Where is US Steel coming from regarding Hilton Works? Why did they buy Stelco? What do they want from the Hilton Works facility?

I think US Steel would like to retain that which they do best, and either sell or scuttle all the rest.

I think that pretty much says it all – in a nutshell. But it’s only when we crack the shell open that we find what we are looking for. The pros and the cons.

The ability to make coke is a big PLUS for Hilton Works. The ability to produce cold rolled steel is also a plus. And of course when it comes to real estate – location, location, location, is another big plus. I believe we are still part of the industrial heartland of North America – and most certainly, of Canada. I believe US Steel has “plans” for Hilton Works, but I’ll be go-to-hell if I know what they are?

If this dispute between Local 1005 and US Steel becomes a lengthy dispute, as took place at Lake Erie Works, it is going to cost a lot of money. The federal and provincial governments will not collect any payroll deductions from the members of local 1005 – no Income Tax, no EI, no CPP. The government will lose millions of dollars. The Union will lose millions of dollars, how many millions I don’t know. The membership will lose millions of dollars, and again, how many millions I don’t know. All in all, these millions of dollars will never be recouped, with perhaps one exception.

The government cannot recoup their losses no-how! There is no way. It’s a total write-off.

The Union can only recover their losses by increasing their membership, or increasing their dues. Only time will tell if they recoup any of their losses.

The membership, the workers, will lose a substantial amount of money, and when we net it all out, it’s still in the millions of dollars. These (net) dollars lost by the members can never be recouped.

And the pension fund, what contributions are currently being made? A substantial amount of money is being withdrawn from the pension fund every month, but is any money going into the fund? I don’t know, but it might be interesting to find out. When people quit their jobs at US Steel Canada, and they opt to take their pension en****lement in cash, do they receive 100 percent of their en****lement, or do they receive only a portion of it because the pension is not fully funded – say 70%? I don’t know. Do they lose 30% of their en****lement when they take the cash and run, or do they get the full amount!

When US Steel bought Stelco - more than three years ago - the pension fund had a shortfall, or a deficit, or a debt, of 1.2 billion dollars. US Steel contributed 37 million dollars into the fund immediately. How much has been contributed into the fund during the past three years? How much was paid out? What is the current shortfall? What is the deficit today – 3 years later? Is it down to 900 million yet? 800 million? Has there been a lot of progress? Where is it at today? And where do you suppose it will be next year, or three years from now, or 10 years from now?

What role will future contributions play and where will these contributions come from? Who is going to cough-up this money? Will it be US Steel? The Canadian government – the taxpayers? Does anybody really want to open that can of worms? Where will the money come from, from US Steel’s profits? They didn’t have any profit last year and they don’t have any profit this year. IF US Steel has contributed funds to this pension plan during the last 21 months, they are funding it with borrowed money!

If we are going to have those smokestacks on Hamilton Bay belching smoke and fumes, I hope the community reaps some rewards from this dirty steelmaking process.

To respond to our blind survey question: Does USS owe the workers of U.S. Steel Hamilton an explanation of the long term plans for the facility?Click Here.

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