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Ottawa settles lawsuit with U.S. Steel

U.S. Steel Corp. is promising to keep producing steel in Canada for at least another four years, and will make major capital investments at its Canadian mills under a plan that settles a two-year long legal fight with Ottawa.

Industry Minister Christian Paradis announced that the big U.S. steel company has given significant assurances on jobs and investments in Canada under the settlement.

Paradis said he has asked the Attorney General to stop a lawsuit after U.S. Steel agreed to pump an additional $50 million in capital investment to upgrade the mills in Hamilton and Nanticoke, Ont., by 2015.

But the union representing the two plants called the settlement “capitulation” on the part of the federal government.

“It’s just an outrage,” said Ken Neumann, national director of the United Steelworkers, who said the union wasn’t even informed about the deal until just before Paradis’ announcement, and then by fax.

“There is no guarantee towards employment levels, there is no access for employees to go after their damages. It is a very sad day for Canadian workers and their families.”

Rolf Gerstenberger, the head of the Hamilton local, said his calculation was that U.S. Steel owed the workers about $44 million in damages. He said that under the agreement to buy Stelco in 2007, U.S. Steel committed to keeping employment at 3,105 for three years, but failed to do so. The government launched a lawsuit for breach of commitments under the Investment Canada Act after the Pittsburgh-based company shut down the two plants in 2009 and re-opened at reduced levels of employment.

Even now, Gerstenberger said there are fewer than 2,000 people employed at the Canadian operations.

“We are running now, but we are not even at half production,” he said. “They made some new commitments, but what are they worth?”

Opposition parties in Ottawa reacted with caution, saying more needs to be known about the deal’s details.

Aside from the capital investment, which is on top of the 2007 pledge to spend $200 million on its operations by the end of next October, U.S. Steel said it will also contribute $3 million towards community and educational programs in Hamilton and Nanticoke, two industrial communities in southern Ontario.

“U.S. Steel’s new commitments, many of which run to 2015, will provide benefits that in all likelihood would not have been obtained through the court process,” Paradis said in a statement.

In a separate release, U.S. Steel said that it was pleased to settle “this unfortunate dispute” with Ottawa.

“The resolution reflects our ongoing and long-term interest in doing business in Canada,” the steelmaker’s spokesperson, Erin DiPietro, said in an e-mail from Pittsburgh.

“We now turn our full attention to producing and selling steel products in Canada consistently with our core values of workplace safety and environmental stewardship. We intend to be valued corporate citizens in Canada.”

The company was charged in July 2009 in Federal Court with breaking its Investment Canada commitments after it shut down its Hamilton and Nanticoke, Ont., plants in March of that year.

The steel giant said the recession hurt its markets and forced the layoffs and mill closures.

“Going forward, this settlement means that U. S. Steel will continue operations in Canada that provide economic benefit to the communities of Hamilton and Nanticoke,” Paradis said.

The 2009 federal lawsuit was the first time a foreign company had been taken to court for breaching the conditions under the Investment Canada Act.

In its defence, U.S. Steel maintained it was forced to cut production in Canada because of reduced demand for steel in the wake of the global recession. However, the Steelworkers said the company chose to re-direct production to existing U.S. mills south of the border.

U.S. Steel Corp. is an integrated steel producer of flat-rolled and tubular products with major mills in Canada, the United States and Europe.