Update on Essar/ Local 2724 negotiations

NEWS RELEASE

ESSAR STEEL ALGOMA

*************************** The company is now three days from the strike deadline with USW Local 2724, the union representing our technical, professional and front line management employees.

It is becoming increasingly clear that we will not reach a collective agreement and will face a labour disruption on August 1, 2010.

In an effort to achieve a collective agreement, the company has given Local 2724 a full offer.

The highlights of the offer are:

- 3.5 percent wage increase over three years

- Continuing COLA rolled in quarterly throughout the life of the agreement

- Extending the pension windows

- Introducing a defined contribution pension plan for new hires

- Increasing the shift premium and boot allowance

- Improvements to extended health benefits

You can read the company’s full offer here.

We encourage you to read this.

This same offer was overwhelmingly accepted by the members of Local 2251 in last night’s ratification vote.

In return for these enhancements we need to make changes to the collective agreement to allow us to be competitive with all other North American steel producers.

Every one of these changes are part of the existing terms and conditions of employment of all of the major steel producers.

Here are the changes:

Job postings

Everything remains the same with continued promotion and movement opportunities for employees except the company (not the union) determines the legitimate qualifications required for the job.

The successful candidate will now be selected on the basis of qualifications, skill, ability and previous work experience.

If these factors are relatively equal between candidates, seniority will govern.

This is how it is done in all other major competitors.

We need to catch up to them.

Details can be found in Addendum 3, page 24 of the offer.

Shared services

We need changes to the collective agreement that allow us to benefit from and contribute to the shared services of the Essar Group.

Our competitors have global affiliations that give them greater access to raw materials, research and development, technology and international talent pools.

This access allows Essar Steel Algoma experts to contribute to special projects throughout the Essar Group and conversely, gives us the benefit of access to expertise in other areas of the Essar Group.

Cost savings achieved and productivity gains realized through shared services are essential to help make Essar Steel Algoma more competitive.

No employee will be laid off due to shared services and in case of reassignment to a new job, salary rate is protected.

Details can be found in Addendum 2, page 19 of the offer.

Front line supervisors (FLS)

Every other steelmaker in North America has their front line supervisors fully engaged with the management of their business and have conditions of employment similar to all management staff.

That’s not the case at Essar Steel Algoma and that needs to change for us to be truly competitive.

We have proposed nothing different from what exists elsewhere and in some cases the proposals are superior to our competitors.

The following compensation improvements have been offered;

- A one-time salary increase of 5 percent for all FLS in operating and maintenance roles,

- Two additional “C” days for all FLS,

- Giving FLS the right to receive the special discretionary bonus provided to exempt staff, and

- At the company’s discretion, improved health care benefits for FLS.

These are in recognition of proposed changes to FLS work terms including:

- Enhancing the company’s ability to fully utilize each FLS’ talent and abilities to maximize operational and succession planning goals,

- Providing that FLS may not serve in a formal union capacity due to the legally recognized inherent conflict of interest between union and management responsibilities,

- In the case of dismissal without just cause, an FLS will receive either severance of up to 18 months salary or reassignment by the company to an alternate position in Essar Steel Algoma, and

- No overtime up to 48 hours worked in a week, with “C” time or overtime pay at FLS option for hours worked over 48.

Details can be found in Addendum 5, page 33 of the offer.

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