Laying the blame squarely upon the shoulders of its chief union, Stelco Inc. said Monday it has lost its largest customer – auto giant General Motors Corp.

Stelco said the United Steelworkers of America failed to offer reassurances by a Monday morning deadline that it would not strike in 2005, thereby threatening the supply of steel products to the world's largest automaker.

According to Stelco, that left GM with no recourse but to terminate its contract and seek out a more reliable supplier.

"General Motors required such assurance by 8 a.m. this morning," the company said in a statement. "Stelco provided to Local 8782 the General Motors position on Friday, Nov. 19 and had simply requested the union agree to General Motors' requirements.

"Unfortunately, the union placed unrealistic and unrelated demands on the

company as the price to maintain the General Motors business."

Union officials have so far refused to comment, other than to say they do not agree with Stelco's interpretation of events.

At the heart of the matter was the failure of Stelco and the union to reach a new collective agreement for workers at the company's Lake Erie Works facility, or at least guarantee there would be no work stoppage in the coming year.

During a short session before Justice James Farley of the Ontario Superior Court, Stelco lawyer Michael Barrack said GM has decided the contract is no longer available.

The loss of Stelco's largest customer raises doubts about the success of a $900-million refinancing plan offered to the restructuring steel maker by creditor Deutsche Bank of Germany.

After 10 minutes, Monday's court session was adjourned so that the judge could consider the impact of the latest development on Deutsche Bank's offer.

That financing offer from the German bank has already elicited criticism from the union on the grounds that if offers too little to the company's pensioners and doesn't ensure job security for existing workers.

It was a $1.2-billion pension shortfall that contributed to Stelco's decision to restructure under creditor protection in January.

On Friday, the union made a court filing to prevent Stelco's board from declaring Deutsche Bank's offer the benchmark against which all other offers for the company would be measured.

Stelco suitor OAO Severstal of Russia has made a similar court filing on the grounds that Stelco's management has through up roadblocks to it completing the due diligence for its own offer, believed to be worth about $1 billion.

Using the fact that Stelco has raked in $100 million in profits over the past two quarters, the union has argued that Stelco was never in as bad a shape as management claimed. Instead the entire restructuring process has been nothing but an attempt to squeeze labour concessions from workers.

Stelco has denied this claim and said its recent profitability is the result of a short-term improvement in the market that will not last. It says it still faces long-term problems covering its pension obligations for 11,000 retirees and securing the hundreds of millions of dollars its needs for mill upgrades.