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ArcelorMittal’s actions cloaked in trappings of deception: the story behind the exit

The following letter on ArcelorMittal’s retrenchment of hundreds of Trinidad and Tobago employees was written by Communication Workers’ Union (CWU) education officer Bryan St Louis:

Retrenchment is defined as the forced layoff of employees by a company usually to cut down or reduce payroll expenses. In our jurisdiction and in accordance with the Retrenchment and Severance Benefits Act No 32 of 1985, it is defined as the termination of employment of a worker at the initiative of the employer for the reason of redundancy.

Photo: You're fired. (Courtesy Eremedia)
Photo: You’re fired.
(Courtesy Eremedia)

Redundancy means the existence of surplus labour in an undertaking for whatever the cause.

Subsequent to a statement by the former Governor of the Central Bank in December, 2015 that Trinidad and Tobago is officially in a recession, the retrenchment phenomenon began to take root in our beloved twin island republic. Our local Steel Industry has so far been most affected.

Multinational ArcelorMittal which is classified as the world leading Steel Mining Company is the manufacturer of Iron and Steel in Trinidad and Tobago and has since stated that because of trends in the Global Market and the continuing poor international Market conditions in the Steel Industry, it has no choice but to retrench its workers.

An analysis of developments at ArcelorMittal would however suggest that it is using the issue of recession and Global trends in the Steel industry as a cloak to disguise its attempts to avoid the implications of a recent Privy Council judgement.

On 6th August, 2015, the Steel Workers Union of Trinidad and Tobago (SWUTT), was victorious in an appeal judgment at the Privy Council brought by ArcelorMittal Point Lisas Ltd.

Photo: Steel workers protest at an ArcelorMittal plant in Chicago. (Copyright Chicago Times)
Photo: Steel workers protest at an ArcelorMittal plant in Chicago.
(Copyright Chicago Times)

Mittal had appealed an Industrial Court ruling dated 31st July, 2009, which found that Contract workers were engaged by agencies for the purpose of providing their services to Arcelor Mittal.

In the judgement, Arcelor Mittal was deemed to be the employer of the said Contract workers under Labour only Contracts and as such existing terms and conditions of employment contained in the collective Agreement between Mittal and SWUTT applied to the said Contract workers.

This determination was clearly defined in the IRA Section 2 (4) (b), which states “When a person engages the services of a worker for the purposes of providing those services to another, then such other person shall be deemed to be the employer of the worker under  a labour only Contract.”

To date Arcelor Mittal has not honoured this judgement which is applicable to numerous Contract workers, some of whom has as much as seventeen (17) years’ service.

It must be noted that the matter began on or around 1998 at the Industrial Court which gave its judgement on 31st July 2009. Mittal appealed and the Appeal Court gave judgement on 9th December 2011. Mittal again appealed to the Privy Council and this judgment was given on 6th August 2015.

Photo: Steel tycoon and Indian billionaire Lakshmi Mittal is the owner of ArcelorMittal. (Courtesy LiveMint)
Photo: Steel tycoon and Indian billionaire Lakshmi Mittal is the owner of ArcelorMittal.
(Courtesy LiveMint)

This sequence of event reveals the extent to which Mittal used its deep pockets to deny workers their just dues. It is also a demonstration of the inefficiency of our judicial system in the dispensation of Justice.

So having been defeated at every step of the judicial process, ArcelorMittal was faced with the prospect of an increased wage bill. So, at the announcement of a recession by the former Governor of the Central Bank, they initiated the Retrenchment process because they could no longer employ contract workers and pay them low wages without benefits.

This development meant that they could not continue to enjoy increased profits because of reduce labour costs. The Privy Council judgement meant that ArcelorMittal now had to facilitate a larger wage bill as its use of contract workers was really a cost containment strategy.

The SWUTT subsequently challenged the action taken by ArcelorMittal in December 2015 to retrench the workers at the Industrial Court and was again victorious with the Industrial Court declaring that: “There is not a scintilla of evidence to justify the layoffs without proper consultation other than disdain for orderly negotiations and good Industrial Relation Practices. Having the right to lay off does not mean it can be applied arbitrarily or unfairly.”

Photo: The Joint Trade Union Movement protests against Section 34 during the People's Partnership Government's administration.
Photo: The Joint Trade Union Movement protests against Section 34 during the People’s Partnership Government’s administration.

And so, in a show of disrespect and contempt for our Citizens, Labour laws, Industrial Court and other Industrial Relations processes, ArcelorMittal fired every single employee indicating that it was no longer economical in the short or long term to carry on business in Trinidad and Tobago; thus leaving it with no choice but to recommend a Creditor’s Voluntary wind up.

In effect ArcelorMittal has initiated action to file for insolvency under the pretext that it cannot pay its debts.

Subsequent investigations have revealed that on 8th March 2016, Arcelor Mittal signed a billion dollar contract to produce iron in Southern Iran. “Oh, what a tangled web we weave. When first we practise to deceive!”

These developments have clearly demonstrated the need to review and amend our Labour Laws, in particular, the Industrial Relations Act (IRA) to ensure that the rights and benefits of workers are secured and protected at all times and that measures are put in place to prevent employers from abusing the Industrial Relations process whenever there is a reduction in their profit margins.

In the meantime, we need to re-examine how we negotiate with foreign multi-nationals who come to our shores to conduct business.

Photo: Steel tycoon and Indian billionaire Lakshmi Mittal is the owner of ArcelorMittal. (Courtesy Rediff)
Photo: Steel tycoon and Indian billionaire Lakshmi Mittal is the owner of ArcelorMittal.
(Courtesy Rediff)

No longer must we allow them, as was the case with ArcelorMittal, to negotiate significantly low rates for our resources, such as  natural gas, electricity, water, property  rental  and  port charges.

Further, they cannot be allowed to capitalise profits in the good times and then want to socialise losses in the bad times to the detriment of our nationals.

Additionally, our Labour laws are outdated. We are in the 21st Century, yet we are governed by Prehistoric Labour Legislation in a Technological Age.

It is time to repeal the IRA (1972) and other Labour Legislation and replace them with legislation in keeping with our changed and evolved Industrial Relations Landscape so that the “playing field” could become levelled in the interest of all classes, as the existing Labour Laws are  not “Worker Friendly.”

About Bryan St Louis

Bryan St Louis is the education officer for the Communication Workers’ Union (CWU).

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15 comments

  1. This calls for an INTERNATIONAL army of forensic financial investigators,auditors ,FBI,CIA,MI5,Surete,Mossad,KGB and every person who wears a uniform.

  2. Interesting viewpoints. However, the piece doesn’t take into consideration that ArcelorMittal has a global debt of USD$15.7 billion, and has been shuttering plants since Q3 2015.
    During that period, 12.11.2015, ArcelorMittal’s investment rating was downgraded to Ba2, outlook negative,
    In SouthAfrica, ArcelorMittal SA has been a low performer but analysts have been cautiously encouraged and have increased the rating to “buy” but everywhere else the group’s performance has not been promising…
    http://www.losangelesmirror.net/201603/31/arcelormittal-sa-adr-mt-is-upgraded-by-berenberg-to-buy-347564/
    http://www.bloomberg.com/news/articles/2016-03-11/arcelormittal-to-sell-stock-at-2-20-euros-in-3-billion-offering
    http://www.forbes.com/sites/greatspeculations/2015/11/09/arcelormittal-q3-earnings-review-challenging-business-conditions-take-their-toll-on-results/#3a2220493063

  3. The global steel market is struggling due to Chinese Steel being dumped in other jurisdications.

    It is cheaper to import semi-finished steel products from China than to produce it yourself.

    This has been happening for the last 18 months and alot of steel producers have either significantly cut back their production or stopped operations entirely.

    The ones who are surviving are those that have low operating costs, have a wide product mix and / or have been able to reach agreements with their workers to reduce their wage bill

  4. Agree fully with what was written, save for the part that alluded to the announcement of a recession by the CB Gov which caused Mittal to take the action. A local recession would not have affected such a large company to such an extent.

    As such, it would not have been a good excuse for the Company to say that the ‘closure’ was due to a local announcement of recession. The announcement of recession had very little to do with the closure of the Company.

    • Governments should meaningfully embrace any initiative to address economical challenges which are happening globally in keeping with their own National Interests.

    • Well, those are the broad strokes. I don’t think the Govt has a responsibility to take over every private enterprise that goes belly-up though.
      I agree we have to consider the cost–in economic and social terms–to the country of the company’s collapse. And also whether it is an investment that gives much chance of financial returns for the State.
      If the answer to both is yes, then great. If only the answer to one is an unequivocal yes, then we have some maths to do.

  5. Bottom line for any company is whether it can continue to operate profitably. The writing was on the wall since the company stopped producing or reduced the number of days worked and instituted compulsory vacaation leave. If the union refused to see this, well! Other unions better understand that without the company there will be no jobs so that there must be some accomodation, even if it is retrenchement of some employees. A union cannot preserve jobs at all cost.