Steel mill will start idling Sault operations this weekend

With no agreement to keep workers on the job after their contract expires Sunday, Algoma Steel is preparing to start idling its Sault steelworks that day.

"We have no choice but to commence preparations Sunday morning for the safe and orderly shutdown of operations," said Algoma president and chief executive officer Michael Garcia late Friday night.

"This is required to preserve the assets in the event of a work stoppage," Garcia said.

"At a high level, this would entail banking the blast furnace, low-idling the coke batteries, and implementing fire and flood protection."

"It should be noted that once banked, it will take 10 to 14 days to ramp-up the furnace for a return to production."

"Therefore even in the event of a resolution, callbacks for many areas of the operation could be delayed until we have returned to full production."

Garcia warned that if a work stoppage occurs, Algoma Steel customers may move to secure steel from the company's competitors.

"Lost market share is extremely difficult to recover, particularly in this declining price environment, as is revenue. As a result, we would expect to see a marked reduction in revenue and profit sharing outcomes this year," the CEO said in a message to all company employees.

As SooToday reported last night, United Steelworkers Local 2251 has established a strike headquarters at 162 Gore St. and is completing picket schedules for four locations for the month of August.

The local's negotiating committee is asking its members to ensure a smooth transition to idle operations.

"I am very disappointed to be writing this letter to you tonight to advise that Local 2251's bargaining committee has declined our best and final offer, and they have refused to allow you the opportunity to vote on the company's offer," Garcia said in his message to employees.

"They have also refused our request that the strike deadline be extended to allow time for you to vote. Although we have made our best effort to find common ground, we have been unable to reach a tentative agreement."

"We cannot compel your union leadership to put the company's offer to a vote but we feel you have the right to review the offer and decide on its merits for yourself."

"The company's best and final offer which we presented to the 2251 bargaining committee [this afternoon] includes further improvements to the already strong wage and benefit package we proposed to the union on July 26, 2022."

Local 2251 is seeking a total of 16 per cent in wage increases over three years.

There's considerable difference of opinion between the local and the company over whether cost-of-living adjustments should count as wage increases.

Here's how Garcia addressed that issue in his late-night message:

Algoma’s revised wage proposal (Guarantee of no less than 12.6 per cent increase over three years)

Effective August 1, 2022

5.1 per cent wage increase: In addition to the cost of living allowance (COLA) rolled into the base wage on July 31, 2022 ($1.54 / about 4.1 per cent), the company is offering a further one per cent wage increase on August 1, 2022.

Effective August 1, 2023

Minimum 3.5 per cent wage increase: The total amount of the cost of living allowance in effect as of July 31, 2023 will be rolled into the wage scales. If COLA is less than 3.5 per cent, the company is offering to top up the wage increase to a total of 3.5 per cent (inclusive of cost of living).

Effective August 1, 2024

Minimum four per cent wage increase: The total amount of the cost of living allowance in effect as of July 31, 2024 will be rolled into the wage scales. If COLA is less than four per cent, the company is offering to top up to provide a total wage increase (inclusive of cost of living) of four per cent.

Effective July 31, 2025

The total amount of the cost of living allowance in effect as of July 31, 2025, will be rolled into the wage scales.

Algoma’s wage proposal guarantees that hourly wages will increase by at least 12.6%. If COLA is higher than the guaranteed wage increases in Year 2 or Year 3, you will get the higher of the two.

I understand there is some confusion about what exactly COLA is and how the roll-in works.

Wages are just one element of your overall compensation package, which compares very favourably within the Canadian steel industry.

Algoma’s compensation package also includes shift premiums, uncapped profit sharing, and comprehensive pension and benefit coverage and our offer includes enhancements in these areas as well.

Meanwhile, the 500 members of United Steelworkers Local 2724, representing salaried employees, are being instructed by their local to report for work, but to only do Local 2724 work.

"We advise you to not do any 2251 work unless in an emergency situation," a memorandum suggests.

Local 2724 has reached an agreement with Algoma Steel and its members must report for work.

"We are in full support of our 2251 brothers and sisters and ask that if you are off or before or after your shift that you join them on the strike lines and show your support in solidarity."

"If you are scheduled to do work that is not 2724 work, we ask you to contact the [union] hall immediately."

"Do not refuse, but advise us so we can take action."