Steelworkers wary as U.S. Steel studies pension, benefits liabilities

• Flaviano Stanc remembers coming home from double-shifts at the steel mill so exhausted that his wife would have to take his boots off for him.

Seated in a Toronto courtroomon Wednesday, Stanc said hes worried that U.S. Steel Canada might cut his pension and benefits, making that hard work a waste.

I dont trust them and I dont trust the procedures that theyre going through.- FlavianoStanc

In court, U.S. Steel Canada won a bankruptcy courts approval to study how much the company is liable for in pension and benefit payments. Stanc didnt disagree with todays move it had to happen, he said but is worried about what it may mean down the line.

They keep saying everything will be OK but not as far as they way I see it. I dont trust them and I dont trust the procedures that theyre going through, Stanc said following theWednesdaymorning hearing.

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Despite steelworkers reservations, the motion put before Ontario Superior Court Justice Herman Wilton-Siegel passed without opposition or objections.

Beneficial process

U.S. Steel Canada, which runs steel plants in Hamilton and Nanticoke, Ont., sought bankruptcy protection under the Companies Creditors Arrangement Act (CCAA) onSept. 16.

The company continues to pay pensions and employee benefits at the moment, whichWednesdaysruling doesnt change.

According to court documents, U.S. Steel wants to get a handle on what its liable to pay in pensions and benefits something a prospective buyer would want to know. The company hopes to sell its Canadian operations by late October of next year.

U.S. Steel Canada is of the view that it would be beneficial to conduct a process to quantify, on a preliminary basis, the potential liability of the Company in respect of the Pension and OPEB Claims to facilitate restructuring discussions and the exploration of potential restructuring alternatives, a letter from its law firm, McCarthy Tetrault LLP, says.

But, the companys lawyers wrote: It would be premature (and potentially create undue uncertainty and confusion) to commence a formal claims process to determine such claims on an individual beneficiary-by-beneficiary basis.

According to the initial bankruptcy filing, U.S. Steel Canada has pension plan liabilities of as much as $838.7 million, on a solvency funding basis -- the method that would be used to evaluate the amount if the fund ended.The company is also liable for $787.9 million in post-employment benefits, frequently referred to as OPEBs in the documents.

Currently, U.S. Steel only knows what it had to pay as of 2013, and its possible the number has changed. Now that the motion has passed, an actuary will begin compiling the 2014 number.

They want to shaft us: union president

Rolf Gerstenberger, President of United Steelworkers Local 1005 which represents workers and retirees at the Hamilton Works, said todays moves may look innocent or innocuous but the next step is they want to shaft us.

Gerstenberger said he expects U.S. Steel will later argue that it cant afford to pay for the total amount of pensions or benefits and seek a reduction to either.

This gives them a handle of how big the problem is, Gerstenberger said, adding its a problem thats compounded by a slashed workforce U.S. Steel recently idled its coke battery, affecting about 100 employees -- that isnt producing value.

Today in Hamilton, 500 employees doing only steel finishing are working to support some 9,000 retirees, Gerstenberger said.

In total, court documents show there are over 12,000 steelworkers in pension plans.

U.S. Steel Canada cited years of major losses as part of its bankruptcy filing, but steelworkers unions have maintained throughout the case that the Canadian operations are profitable when operated at capacity.

Both steelworkers and the province which guarantees the workers pensions have expressed concern about the future of U.S. Steel pensions.

A motion put forward to Ontario Superior Court Justice Herman Wilton-Siegel lays out how the company plans to calculate how much it owes pensioners and how much its set aside.