U. S. Steel to take production out of Hamilton without court consent
Bankruptcy protection monitor has yet to assess the production shift
U.S. Steel is moving production out of U.S. Steel Canada plants in Hamilton and Nanticoke against the wishes of the chief restructuring officer and before the court-appointed monitor has had a chance to review the plan.
The bankruptcy protection monitor, in his latest report from Aug. 31, says the company's American parent argues the shift in production is consistent with past practice.
The monitor, however, says he has yet to assess the impact or appropriateness of the plan. The U.S. parent company advised it would proceed without waiting for his verdict.
"USS has informed the Monitor that it has initiated the plant loading changes for customer deliveries in early October and does not intend to await any conclusions of the Monitor in that regard," says the report.
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The chief restructuring officer went further and asked for a delay of three months, but that request was also denied by the company.
Higher value products
The shift in production amounts to 27 per cent of production at Hamilton and the local operation has a limited capacity to try to replace the lost production. It will mean a loss in revenue of $40 million for the last three months of the year and approximately $160 million for all of 2016.
As well, the monitor notes, the parts production being moved represent the "higher gross margin production for Hamilton, so the impact on Hamilton's revenue, earnings and cash flow will be significant."
Stelco was purchased in 2007 by U.S. Steel. The Canadian operation sought bankruptcy protection last September, and entered into Companies' Creditors Arrangement Act (CCAA) protection. The company is looking to find buyers for the plants.