TORONTO -- Stelco Inc. has lost a contract to supply steel to its biggest customer General Motors, a lawyer for the steelmaker said on Monday, after the insolvent Canadian steelmaker failed to strike a deal with its workers.
"GM said the contract is no longer available," Michael Barrack, one of Stelco's lawyers told the Ontario Superior Court. "We worked hard to get there but we couldn't."
GM had given Stelco, which entered bankruptcy protection in January, a new deadline until 8 a.m. on Monday to reach a deal with workers at its Lake Erie Works that would assure the giant U.S. automaker of a supply of steel through 2005.
Stelco blamed its unionized workers for the contract loss. "Unfortunately, the union placed unrealistic and unrelated demands on the company as the price to maintain the General Motors business," Stelco said in a statement.
The United Steelworkers of America union blamed the failure of a deal on Stelco, saying that workers had given Canada's biggest steelmaker the labor-stability assurances it needed.
"Last week we delivered Chrysler and Ford. Early Monday morning we did exactly what the company wanted with GM, yet Stelco is still unwilling to accept our role in this restructuring process," Bill Ferguson, president of union local 8782, said in a statement.
The union last week agreed not to go on strike without first giving 90 days' notice on Dec. 31.
Stelco, which entered bankruptcy protection in January, ships about 10 percent, or 400,000 tons, of its steel to GM each year as part of what both companies call a good relationship.
GM had twice extended a deadline for Stelco to reach a deal with its workers. The latest deadline was extended from last Thursday at midnight.
A deal with GM is critical to a refinancing plan Stelco has worked out with Deutsche Bank, which requires the steelmaker to supply GM with steel from April to December next year and in 2006.
It was unclear what impact the loss of the GM contract would have on the Deutsche Bank plan. Stelco was not immediately available for comment.
Deutsche Bank and Stelco are looking to get court approval for their C$900 million ($756 million) financing plan on Monday, even though the union has rejected the plan, saying it offers no long-term commitment to Stelco's future.
"GM is gone, this is a de facto exit strategy of the company," a lawyer for the Steelworker's union told the court.
The refinancing is seen as key to the future ownership of Stelco, which is being courted by several suitors including OAO Severstal, Russia's No. 2 steelmaker.