Naomi Powell

The Hamilton Spectator

(Jun 13, 2009)

U.S. Steel is recalling 800 laid-off Hamilton employees, breathing some life back into its mothballed Canadian operations.

The Pittsburgh steelmaker will restart its Hamilton coke ovens and begin the partial recall as early as next week.

"There is no timeline, but it will be this summer sometime," Rolf Gerstenberger, president of the United Steelworkers local at the plant, said of the recall. "Obviously people are relieved but we don't believe this should have happened in the first place."

There are no plans yet to recall nearly 800 laid-off workers at U.S. Steel's Lake Erie plant, according to sources with knowledge of the situation. There is also no immediate intention to restart any operations other than the Hamilton coke ovens.

U.S. Steel declined to comment on its operations or the reasons behind the move.

With the steel industry experiencing a slight uptick in demand, the firm is planning to resume at least some production at its Granite City, Ill., steel mill, an operation that has an agreement to receive steam and coke from nearby Gateway Energy & Coke. With Gateway still under construction, coke produced in Hamilton and Nanticoke is expected to be sent south of the border, Gerstenberger said.

The recall in Hamilton also comes just ahead of an important Canadian deadline for U.S. Steel. Under Ontario's Employment Standards Act, companies must put aside enough money to offer permanent severance pay to workers who have been laid off for more than 35 weeks. Several hundred Hamilton workers will reach that threshold in mid-July. With Stelco's workers entitled to one week of pay for every year of service -- up to 26 weeks -- U.S. Steel would be on the hook for at least $15 million, according to union estimates.

U.S. Steel has also been under pressure from Ottawa to fulfil a set of commitments it made when it bought the former Stelco in 2007. Those promises included maintaining certain levels of production and employment and investing $200 million into the steelmaker.

Industry Canada had no comment on the developments yesterday.

U.S. Steel Canada began cutting Canadian jobs in November when it shut down its Hamilton blast furnace. In March it announced plans to temporarily shut down all of the former Stelco, with the exception of the coke ovens in Nanticoke. The move brought the total job losses at the ailing steelmaker to 2,190.

Since then, the firm's Hamilton workforce has been severely downsized, as about 720 of 1,700 Hamilton employees opted to retire rather than wait for U.S. Steel to resume production. U.S. Steel has shut down plants throughout North America, concentrating production in Indiana and Pittsburgh.

"A lot of these guys feel like they were forced into retirement," Gerstenberger said. "This will be frustrating for them."

Though the steel sector has been hit hard by the economic downturn, industry analysts have grown more optimistic about the industry's fortunes.

In a recent note to investors, Morgan Stanley's Mark Liinamaa said he expects production at North American steel mills to rise to about 65 per cent of capacity in the second half of 2009, up from a current rate of about 46 per cent.

Liinamaa expects a "sequenced" improvement in demand, beginning with the automakers and followed by the broader manufacturing sector. Demand from the construction industry will lag "due to the long-tailed nature of construction projects," he wrote.