Steelworkers split over Algoma Steel's cost-of-living adjustment

A schism has developed between two United Steelworkers union locals representing hourly and salaried workers at Algoma Steel.

As the clock ticks toward the July 31 expiry of Local 2251's collective agreement for hourly workers, the local's negotiating committee is accusing both Algoma Steel and sister Local 2724 of spreading myths about wage increases and cost-of-living adjustments.

Steelworkers Local 2251 represents about 2,000 hourly workers at the Sault steelmaker.

Local 2724 represents about 500 salaried workers who've settled with the company.

Local 2251 started conducting a strike vote Wednesday and will continue that process through Saturday.

In a message sent Thursday to Local 2251's membership, president Mike Da Prat and his negotiating committee said they wish to address a cost-of-living "myth perpetrated by Algoma and our sister local 2724."

"COLA definition is cost-of-living adjustment," Da Prat said.

"It was originally negotiated in the 1969-1972 agreement. It was used to protect wages during the wage and price control legislated by the government in 1975 to 1978."

"COLA was conceived and implemented to protect wages from inflation. It is a form of insurance that only pays if inflation rises. It should be noted that Algoma’s product price increases with increases in inflation to protect their profits. COLA does the same for our wages and is not a separate wage increase."

Da Prat continued: "During the negotiations culminating in the 2018 memorandum, COLA was negotiated for the period of the collective agreement. Memorandum of Understanding 11 addressed cost of living in Article 15.04."

"The collective agreement available for all to see in our current Collective Bargaining Agreement, Article 15.04.75, clearly states: 'Effective July 31, 2022, the total amount of the cost of living allowance in effect at July 31, 2022 will be added to the standard hourly rates. Why should the COLA payment for 2022 be considered a wage increase for 2023?"

"Our chief executive officer and senior managers receive share offerings as part of their compensation. Share value appreciation for shares received in the year 2022 is not subtracted from the compensation they receive for 2023," Da Prat said.

"When the shares rise in value during 2022 or thereafter, they do not subtract the increased value of the shares from their 2023 compensation, so why should Local 2251 consider COLA payments negotiated and paid in 2022 as a raise in 2023?"

"There is no explanation why Local 2724 agreed that a COLA payment generated and paid in 2022 should be considered part of a wage increase in 2023."

"Algoma’s CEO states that Local 2251’s proposal is more than 20 per cent over three years once COLA is rolled in. COLA is protection against inflation and is used by the company to prevent Local Union 2251 from requesting larger wage increases to protect against inflation. COLA is not a wage increase. It only pays if inflation rises above a certain threshold."

"In closing, our proposals outline a fair agreement. We asked for a six per cent, six per cent and four per cent, not 20 per cent."

"Algoma cites a number of employers. Our answer is we bought Algoma in 1992, we gave it up in 1995/1996, we invested in the company in 1990, we invested again in 2001, we contributed over 156 million dollars in 2013 and we contributed again in 2015 to 2018."

"No other union has contributed to the viability of their company like USW Local 2251. In a time of extraordinary profits we are entitled to a fair agreement."

Message from Michael

Da Prat indicated today's release was a response to a communication from Algoma Steel titled Message to all Members of Local 2251.

In that message, Algoma chief executive officer Michael Garcia said the company provided a written offer to Local 2251 early Tuesday evening including the same wage proposal ratified by Local 2724:

• Algoma’s wage proposal (about 10.6 per cent over three years) effective Aug. 1, 2022. In addition to the cost of living allowance rolled into the base wage on July 31, 2022 ($1.54 - about 4.1 per cent), the wage scales in effect as of July 31, 2022 will be further increased by 0.5 per cent on Aug.1, 2022 
• effective August 1, 2023, the total amount of the cost of living allowance in effect as of July 31, 2023 will be rolled into the wage scales. If the roll-in of the cost of living allowance results in an increase to the base wage that is less than three per cent, the base wage rate will be further increased to provide for a total increase (inclusive of cost of living) of three per cent
• effective August 1, 2024, the total amount of the cost of living allowance in effect as of July 31, 2024 will be rolled into the wage scales, if the roll-in of the cost of living allowance results in an increase to the base wage that is less than three per cent, the base wage rate will be further increased to provide for a total increase (inclusive of cost of living) of three 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 no less than 10.6 per cent over three years," Garcia said.

"If COLA is higher than the guaranteed three per cent wage increase in Year 2 or Year 3, you will get the higher of the two. You will also get another COLA roll-in on July 31, 2025," the CEO said. "It is important to note that Algoma’s current production wage rate is approximately $7.25 per hour higher than Stelco, and approximately $3.19 per hour higher than Dofasco. Closer to home, Algoma’s current production wage rate is approximately $1.54 per hour higher than Tenaris."

Garcia pointed out that Algoma Steel's wage package also includes an uncapped profit sharing plan.

"We have a very real opportunity in fiscal 2023 to achieve above-average profit share if we produce and ship according to plan every month," he said.

"A strike of any duration would dramatically reduce or eliminate profit sharing altogether for this year."

Garcia claimed Local 2251's proposed wage increase would actually be a wage increase of more than 20 per cent over three years once COLA is rolled in.

Other aspects of the company's offer include:

• increase in afternoon, night and Sunday shift premiums
• increase in company’s base (per hour) pension contributions
• extension of benefits coverage to spouses who are also employed by Algoma
• increase in STD and LTD reduced earnings continuance caps
• increase in major medical benefits, including lifetime maximum and visit allotments
• increase in vision care
• increase in dental benefits, including improvements to lifetime maximum for orthodontics and crown coverage
• increase in retiree health benefits, including increased lifetime maximum and more for hearing aids and eye glasses
• increase in meal allowance
• increase in boot allowance
• expansion of funeral and bereavement pay to include step-relatives

"Contrary to rumour, Algoma’s offer does not include any changes to the COLA formula, the profit share model, corporate seniority or vacation bonus," Garcia said.

"It also provides a process for the parties to continue negotiating and resolve important issues such as electric arc furnace transition and plate mill modernization without delaying the implementation of the new collective agreement. Algoma’s offer does not propose or require any concessions by Local 2251 or its members."

Solidarity forever

At Steelworkers Local 2724, vice president William Slater assures SooToday that sister Local 2251 will continue to enjoy Local 2724 support.

"We bargained for the benefit of our membership. Mike is bargaining for the benefit of his membership," Slater said.

"We respect that and we are going to help them out in any way we can."

"If they do go on strike, we will make sure that our members are not doing 2251 work."

"Anything that we see that's going on. Since we have people in there working, we'll make sure to support 2251 any way we can."

As for the COLA controversy, Slater said last year was a very different year in a lot of ways.

"We are getting a 3.2 per cent COLA increase on average. COLA is a fixed-dollar amount. I believe the the dollar amount is $1.54 that everybody will get July 31," he said.

"That was a phenomenal year. We used the national office research department to try to foretell the future."

"Although nobody has a crystal ball, based on what the Bank of Canada is doing right now, we believe that COLA would go back to more of what it's been in the past."

"The company was only willing to offer us a percentage above COLA."

"With the forecast we got of what COLA's going to be for the upcoming years, we decided to be creative."

"That's where we proposed to the company a three per cent minimum," Slater said.

Brenda Stenta, Algoma Steel's manager of communications and branding, tells SooToday that the parties met on Thursday.

"We expect negotiations will continue," Stenta said.

"The company continues to work toward reaching an agreement before the contract expires on July 31."