TORONTO — A plan laid out in an Ontario Superior Court hearing Wednesday calls for the former Stelco Inc. to return to its independent roots with United States Steel Corp. divesting itself of any control or liability.



LATEST: Decision on U.S. Steel coming Friday

U.S. Steel Canada lawyer Paul Steep told the court the transition agreement, if approved by the court, would see "the two companies go their separate ways" with U.S. Steel maintaining services and arrangements for up to two years.

But the key part of the deal is that the American steel maker would cut itself loose from future financial responsibilities of the Canadian operation.

The plan was explained in a hearing room packed with grim-faced retirees and United Steelworkers Union representatives that overflowed into the hallway.

The most contentious part of the plan involves freeing the company of pension obligations including benefit costs, as well as municipal taxes and other liabilities.

The fear of losing benefits is something that has sent ripples of fear through the U.S. Steel retiree community. Those trepidations were increased late last week when a report from the monitor overseeing the proceedings said "a near-term cessation of operations will be necessary" if the company isn't given relief from those and other costs.

Lawyers representing retirees and United Steelworkers members argued there had to be other ways to cut costs. But Steep said investors are not interested in supporting a company carrying liabilities from a previous ownership.

While the United Steelworkers representatives have steadfastly dug in over the pensioner benefits, they do like the idea of an independent steel company no longer controlled by U.S. Steel.

What's at stake: The former Stelco is a shell of the industrial giant it once was. But U.S. Steel Canada — even as it balances on the edge of collapse — still casts an enormous shadow on Hamilton. $3.9 billion In debt $838 million Pension deficit 2,200 Workers 20,600 Retirees $43.2 million In retiree medical health benefits $5.8 million In municipal taxes United Steelworkers 1005 President Gary Howe said, "I think a lot of people would be happy about the company becoming Canadian again."

Local 8782 President Bill Ferguson said, "I think it could make a go. The big problem now is steel orders being moved to the U.S. We could better keep the orders here with an independent company."

United Steelworkers lawyer Gord Capern argued the court-managed restructuring process would not have been necessary if U.S. Steel allowed its Canadian operation to complete its orders.

"The reason we are here is because of a crisis that U.S. Steel created," he said.

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More than 150 U.S. Steel Canada pensioners came into Toronto on three rented school buses to "show the faces of the people who are affected by this," said Ferguson.

Retiree Chris Young, a Nanticoke steelworker for 30 years, was among them. He said he relies on the drug plan for $1,000 to $3,000 per year.

"They should not be allowed to get away with this. The pension benefits we have are really deferred wages that we gave up in collective bargaining years ago," he said.

The workers arrived for 10 a.m. expecting the hearings to start. But they were delayed until 3 p.m.

With that the assembled protesters walked down the street to Queen's Park, and 60 of them were allowed into the legislature to watch question period where the issue was being discussed.

"Both the provincial Liberal government and the federal Conservative government have allowed U.S. Steel to do what they please to its workers and pensioners," said Ontario NDP Leader Andrea Horwath. "There are tens of thousands of people in Hamilton who were promised a pension and benefits and spent their working lives contributing to those benefits. It is those pensioners, their dependents and the City of Hamilton who will now pay the price for those governments' failure to stand up for those hard working families."

Meanwhile, Hamilton Mayor Fred Eisenberger issued an open letter saying he "remains firmly behind the retirees and current workforce of US Steel Canada.

"We call on the federal and provincial governments to collectively commit now to ensuring that USS pensioners, employees and the City of Hamilton are protected during these trying times. "

The city would lose $6 million per year in taxes under the plan, and "compounded year after year would have a tremendously negative impact on the City's finances.

"But this issue goes far beyond tax revenues for the City; this speaks to the effect of a potentially higher and higher property tax bill on our workers, pensioners and senior citizens; who are our friends, family and neighbours."

Also, Wednesday's hearing heard that Haldimand County could be out millions of dollars in tax revenue as well because the company also wants tax relief from its Nanticoke operation.

"This would cause tremendous hardship in Haldimand. The municipality did not budget for that," said lawyer Peter Mahoney, who was representing the local government.