UPDATE 1-U.S. Steel's locked-out Canada workers reject contract proposal

Wed Jul 31, 2013 10:00pm EDT

By Allison Martell

TORONTO, July 31 (Reuters) - Workers locked out at United States Steel Corp's Lake Erie works in Canada have voted to reject the steelmaker's contract proposal, their union said on Wednesday.

The vote is likely to extend a labor dispute that has shut down raw steel production at the Ontario mill, weighing on U.S. Steel's financial results.

United Steelworkers Local 8782 President Bill Ferguson said 71 percent voted against the contract proposal, which had not been endorsed by the union.

U.S. Steel locked out about 1,000 workers at the Nanticoke, Ontario, facility on April 28, after they rejected an earlier contract offer.

Lake Erie accounted for about 10 percent of U.S. Steel's raw steel output in 2012. The integrated mill makes slabs and hot-rolled coil, and has the capacity to produce as much of 2.6 million tons of raw steel each year.

In a letter to its employees posted online before the vote, U.S. Steel said that if workers voted "no", they would stay locked out. "The consequences of this vote for you and your family are enormous," it said.

The proposal replaced a cost of living adjustment with a less generous scheme similar to those in its U.S. contracts, something the union had rejected in bargaining.

When U.S. Steel reported financial results on Monday it said its performance had been hurt by a drop in shipments linked to the labor dispute.

The lockout is the third at a former Stelco facility since U.S. Steel acquired the Canadian company in 2007.

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