October 5, 2017
Is Yet Another Fraud Unfolding at
Bedrock Files Prospectus to Sell
Shares in Stelco
• Bedrock Files Prospectus to Sell Shares in
Bombardier's Attempt to Enter U.S. Airline Market
• Boeing Aerospace Monopoly Uses U.S. State to
Crush Its Competitor
Is Yet Another Fraud Unfolding at Stelco?
Bedrock Files Prospectus to Sell Shares in Stelco
The Stelco steelworks, its thousands of steelworkers
and retirees and the surrounding communities in the Hamilton region
have repeatedly been the targets of legalized scams since 2003.
These pay-the-rich frauds have resulted in great losses to what belongs
to workers and retirees by right, and damage to their steelworks,
communities. The main weapon in these attacks has been the legalized
theft of the Companies' Creditors
Arrangement Act (CCAA) under the authority of the Ontario
Superior Court and federal government with the active collusion of the
Ontario government. Legalized thieves have taken millions of dollars
out of steelworkers' pockets, their
pensions and benefits, removing enormous actual and potential value
from the local communities and economy.
Stelco steelworkers and retirees led by USW
Local 1005 in Hamilton and their allies have waged consistent
resistance to this legalized theft that has rained down on them in
waves. Once again, plotters are back with yet another scheme to use the
Stelco steelworks in Hamilton and Nanticoke as a means to fashion a big
score. A gang of
U.S. investors called Bedrock seized control of Stelco out of CCAA
insolvency protection just last June. At the time, the U.S. oligarchs
bragged of having tons of money available to invest in Stelco and
restore its capacity. Apparently that was an empty brag to fool the
gullible, as they have filed official papers, a prospectus, for an
Offering (IPO) to sell shares in the steelworks they only recently
The IPO positions Bedrock to sell shares in Stelco to
institutional investors and then on a securities exchange. The money
from the partial sale of the company goes to the owners of Bedrock to
use as they decide. The total they are seeking has been estimated
from $500 million up to $1 billion depending mainly on how
institutional investors, quite often insiders or friends of those
issuing the IPO, are willing to pay and how high the stock price goes
up later on the open market. The entire process involves scores of
parasites who claim money from placing the IPO without producing any
value themselves similar in many ways to those involved in the CCAA
A summary of the Bedrock Prospectus highlights what the
New York oligarchs believe are the selling points of the post-CCAA
Stelco. Primary amongst those strengths is the elimination of "costs
associated with legacy liabilities," the defined benefit pensions and
Other Post-Employment Benefits (OPEBs). Those "eliminated liabilities"
from Stelco retirees are estimated at $1.4 billion. Those
obligations have been taken off Stelco's balance sheet allowing the
owners to claim more of the new value steelworkers produce.
The Prospectus also brags
of eliminating most of the risk and social responsibility of having to
deal with historical pollution from Stelco operations at both Hamilton
and Lake Erie Works. It says an agreement with the Ontario government,
and sanctified by the Superior Court within the CCAA process, "has
significantly lowered our exposure
to unforeseen historic environmental issues" in Hamilton and Nanticoke.
The social responsibility for environmental remediation of the
historical Stelco lands has been shifted to a land trust under the
authority of the Ontario government. Canadians must give serious
thought to how to deprive these socially irresponsible robber barons of
over Canada's land, economy and the social wealth the working people
produce, and in sharp contrast give the economy and country a new
pro-social direction and aim.
Prospectus Aims to "Maximize Profit"
The Prospectus makes clear the aim of Bedrock is to
maximize the claim of investors on the new value steelworkers produce.
The aim of maximizing profits on the backs of the workers who produce
the value is repeated again and again in the Summary of the Prospectus.
The terms used repeatedly are variations of "focus on maximizing
shareholder returns," "maximizing profitability" and the great benefits
derived from being "largely free from legacy liabilities in order to
ensure maximum free cash flow generation."
It reads, "Additionally, through the CCAA process, we
have significantly reduced our financial costs, including interest
expense and costs associated with legacy liabilities," the
defined benefit pensions, OPEBs and environmental problems. The
Prospectus even brags that Stelco has been extremely profitable
in 2017 while under CCAA.
Of course it fails to say that this is due in part because the Superior
Court denied the claims of retirees for their OPEBs and stopped
payments into the pension funds and for municipal taxes.
The Prospectus notes that Bedrock "indirectly acquired"
all of the company's shares (from U.S. Steel) for "cash proceeds
of $70 million" yet in another breath claims the net fixed value
of the two mills runs into the hundreds of millions of dollars. The
Prospectus adds, "Through the CCAA process, we were able to extinguish
approximately $3.0 billion of secured and unsecured debt
[paying 10 cents on the dollar to local suppliers and contractors
for outstanding payments due - editor WF] as well as
billion of pension and OPEB obligations." One can feel the excitement
of the robber barons anticipating yet more legalized theft of what
to Canadian working people by right.
To cover their tracks for the inevitable downturn in
the steel sector, the Prospectus in small print warns of "the cyclical
nature of the steel industry" and a possible third venture into the
CCAA Wild West. To ease the fears of possible investors, the Prospectus
reminds them: "Unlike many of our integrated peers, we are not
significant and uncapped liabilities associated with pensions and
OPEBs. Further, we have approximately $1.1 billion of non-capital
loss carry-forwards and other tax attributes on a pre-tax basis, which
may allow us to reduce our cash tax payments and increase free cash
You can see them in their posh New York offices
breaking into a chorus of the Gold Diggers' Song, "We're in the
money! We're in the money!"
The present direction of the economy is not sustainable
economically or socially. The direction is unjust in that it deprives
the working people of what belongs to them by right, their claims on
the value they produce to guarantee their well-being and security until
passing away. The present direction is anti-social in that it does not
take up its
social responsibilities to humanize the social and natural environment.
The present direction solves no problem of the Canadian economy but
merely sinks it farther into the abyss of the Fortress North America of
the ruling oligarchs, where anarchy and violence are the rule. The
Prospectus even admits as much with its warnings of the problem of
steel prices, which as one economist says, "fluctuate like a heartbeat."
The steel industry should be the backbone of an
independent all-sided self-reliant Canadian economy where internal
production of steel and other basic products of a modern economy
conform to internal demand, and prices are set and stabilized according
to the actual prices of production, where the aim is not to "maximize
the profits of a
few" but to guarantee the well-being of all and the extended
reproduction of the economy, and to harmonize the social and natural
How to arrive at such a new direction is the problem
steelworkers and others are discussing. How do workers mobilize and
organize their peers in a mass ideological and political way to deprive
the ruling oligarchs of their power to deprive the economy and country
of a new pro-social direction? Join the discussion and mobilization to
build the new!!
Bombardier's Attempt to Enter U.S. Airline Market
Boeing Aerospace Monopoly Uses U.S. State to
Crush Its Competitor
The U.S. Commerce Department has unleashed an attack on
Bombardier, a global transportation monopoly headquartered in Montreal.
Bombardier is attempting to enter the U.S. airline market with its C
Series mid-size airliner. The plane has already been sold in modest
amounts in Europe and recently secured an order for 125 planes
from U.S.-based Delta Airlines for delivery beginning next Spring.
Boeing saw the Delta order as a direct threat to the
airliner monopoly it enjoys along with its European rival Airbus. Aside
from being unwanted competition in a section of the market it plans to
occupy, Boeing considers the low price for the C Series jet as putting
downward pressure on the price of airliners generally. Tariffs and
the effect of raising market prices for the affected goods. Such has
been the case with the recurring imposition of duties on Canadian
softwood lumber exports to the U.S.
Boeing asked the Commerce
Department to impose an 80 per cent tariff on Bombardier planes
sold in the United States to compensate for the alleged low price.
Boeing used as proof of a price below market value the well-known facts
of federal Canadian and Quebec state funds given to the private
Bombardier monopoly generally and
specifically for the production of C Series airliners. Boeing refuses to acknowledge that all
monopolies within the imperialist system of states receive state
funding in varying amounts. The private monopoly Boeing consistently
receives state funds to pursue its empire-building. Boeing is one of the largest production
monopolies in the world. In 2016, it reported gross income
of $94.571 billion from the sale of 748 commercial
aircraft, 180 military aircraft and 5 satellites, plus its
services, leasing and supply of parts. Boeing reports
employing 147,683 workers
mostly in the U.S. but also 1,600 workers in Canada manufacturing
parts in Winnipeg, 2,000 in the U.K. in maintenance, repair and
overhaul (MRO) and 3,500 in Australia.
Bombardier Inc. reported a gross income of $16.34
billion in 2016 employing 66,000 workers worldwide in all its
divisions. Twenty-five thousand workers are in the aerospace division
with 17,000 in Montreal and 4,000 in Belfast, Northern
Ireland. The aerospace division had a gross income of $11.2
billion in 2015. The transportation (rail) division reported a
gross income of $9.6 billion in 2014. In January 2011,
the rail division had 34,900 employees, 25,400 of them in
Europe, and 60 manufacturing locations around the world.
The U.S. Commerce Department has upheld the Boeing
complaint and put a 219.6 per cent tariff on Bombardier airliners
sold in the U.S. not the 80 per cent requested. This tripling of
the price for the C Series jet effectively shuts Bombardier out of the
U.S. market. As usual in these trade cases, the specific findings of
of production versus the market price along with the influence of the
pay-the-rich schemes were not revealed other than in vague terms such
as "unfair" or an "absurdly low" market price paid by Delta for the
Canadian Foreign Affairs Minister Chrystia Freeland
said in a statement that the U.S. duty "is clearly aimed at eliminating
Bombardier's C Series aircraft from the U.S. market." Prime Minister
Trudeau threatened in retaliation to cancel the purchase of Boeing
fighter jets, which has yet to be finalized. Quebec Premier Philippe
militarist language to describe the situation saying, "Boeing may have
won a battle but let me tell you the war is far from over -- and we
shall win." He accused the U.S. government and Boeing of trying to
"eliminate a competitor that makes better products." Couillard said the
issue has nothing to do with state subsidies to Bombardier, declaring
Boeing itself a "giant created and fed by decades of government support
in the United States."
Captive within U.S.-Dominated Imperialist System
The Canadian and Quebec economies are overwhelmed within
the U.S.-led imperialist system of states. The terms of
monopoly-controlled trade worked out in NAFTA, CETA and the World Trade
Organization are meant to cater to the monopolies and their penetration
into nation-states without restrictions. However, when a powerful
monopoly or grouping of monopolies within the U.S. or European Union
consider it necessary to act in their own interests, it simply ignores
the established terms of monopoly-controlled trade and uses the state
machine directly to achieve what it wants. This is what Boeing has done
and any complaint filed within NAFTA or the WTO will take
years to resolve and the end will have already been achieved.
Boeing wants to eliminate Bombardier's penetration into
the U.S. airliner market and ensure market prices for airliners remain
high and that it continues to reap record money profits. To achieve its
aim, Boeing circumvents the existing conventions and defends its
empire-building by using the U.S. state machine.
Bombardier and the Canadian state are mostly impotent
in the face of the U.S./Boeing attack because they have become
completely enmeshed within the imperialist system of states and rely on
global trade and markets to sustain production. The U.S. amounts to
one-third of the global market for airliners and at least one half of
exists in having standardized parts, servicing and suppliers through
maintenance, repair and overhaul (MRO). Bombardier loses not only the
sale of airliners but the accompanying MRO.
Disruption in global trade either by this sort of
particular attack or recurring economic crises has a serious effect on
the security and livelihoods of Canadian workers and their well-being.
If Canada had a vibrant all-sided internal self-reliant economy
producing raw materials, other means of production and consumer goods
accompanied with a vast array of public services and social programs,
then international trade based on state-to-state mutual benefit would
be an added factor contributing to the economy. The economy would not
be susceptible to disruption from an attack like the Boeing/U.S.
assault on Bombardier, the tariffs imposed on softwood lumber or
economic crises within the imperialist system of states.
Because of the vast size of Canada and Quebec and being
blessed with an educated experienced workforce and abundant raw
material and agricultural opportunities, the Canadian economy does not
have to depend on external trade. The five main regions in themselves
are quite capable of having a vibrant all-sided self-reliant economy
internal economic intercourse benefiting the development and stability
of the Maritimes, Quebec, Ontario, the Prairies and BC along with
vigorous support for the North.
The present direction of the economy held captive
within the U.S.-dominated imperialist system of states is wrought with
instability and dangers. The worry of Bombardier workers is
well-founded and must be urgently addressed. But it cannot be addressed
with calls for even more entrapment within the current direction. The
manufacturing plants within Canada could be immediately retooled and
the skilled workforce employed to provide means of production and
consumer goods now manufactured outside the country. This includes most
heavy machinery for construction, raw material extraction, agricultural
and even defensive military equipment such as tanks, all other
rolling stock, fighter jets and ships for defence, domestic use and
commerce. Many Canadians still regret and denounce the government for
cancelling the Avro Arrow CF-105 in 1959 under pressure from the
All those companies currently selling their industrial
products in Canada, especially heavy machinery, without manufacturing
them here could be put on notice that this will stop as soon as
Bombardier and other industrial plants are producing similar goods
using Canadian steel and other material. A timetable could be
established with a definite
plan of action based on the highest quality production on time using
state-owned enterprises and financing in the main.
The U.S. imperialists have the right to decide whether
they want to import the C Series airliners or not and at a market price
they find acceptable. Canadians have a similar sovereign right to
decide what commodities come into and go out of Canada and at what
price. Such a right is an affirmation of sovereignty. Whether that
sovereignty serves the common good and general interests of society is
up to the people in the sovereign country to decide.
The people do not want conflict and war over trade
issues or hooligan and brigandish trade partners. That is not the
modern way to engage in international trade, nor is violence the way to
solve internal or international problems.
A new direction for the economy is possible based on
self-reliance to guarantee security and stability and meet the needs of
the people and general interests of society where the rights of all are
recognized and upheld. The crucial aspect missing to make it happen is
the political will and leadership of the organized and mobilized
No to empire-building where might makes right outside
and in contradiction with any modern rule of law!
Yes to nation-building on a new basis where the people
decide and exercise their right to control the affairs of state within
a modern constitution and rule of law that guarantees their well-being
1. Pay-the-rich schemes for Bombardier widely reported
in the media:
Bombardier has received federal aid 48 times
since 1966 with similar largesse shown by the Quebec government.
Other payments specific to the C Series include:
- Equity infusion by
Investissement Québec ($1 billion)
- Equity infusion by Caisse de Dépôt et Placement du
Québec ($1.5 billion)
- Launch aid for the C Series by Canadian Federal Government ($259.9
- Launch aid by Québec Provincial Government ($86.9 million)
- Launch aid by U.K. Government ($145.9 million)
- Export Development Canada and Export Financing Investissement
Québec Export Financing ($1 billion)
- Technology Partnerships Canada Program ($103.7 million)
- Technology Demonstration Program ($40.1 million)
- Government provision of production facilities and land at Mirabel for
less than adequate remuneration
- Tax incentives and other support provided by the City of Mirabel
- Innovation, Science, and Economic Development Canada support for
Aerospace Research and Development ($14.9 million)
- CDPQ Line of Credit ($500 million)
- Emploi-Québec ($3.0 million)
2. Media in the U.S. have noted
the irony of Boeing suing anyone over government handouts. Boeing is
the No. 1 recipient of state funds from all levels of government.
The federal U.S. Export-Import Bank is often referred to as, ''the Bank
of Boeing.'' The website Subsidy Tracker has named Boeing the
No. 1 recipient of U.S. state pay-the-rich schemes. It reports
Boeing has received $14.4 billion in various pay-the-rich schemes
since the 1990s.
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