Articles of interest over the past week:

Naomi Powell
The Hamilton Spectator

(Apr 30, 2008)

United States Steel Corp. saw its first-quarter earnings fall 14 per cent despite record sales.

But with market prices soaring and the company pumping out steel at record rates, U.S. Steel CEO John Surma said he expects second-quarter income to "increase substantially."

The Pittsburgh-based steel producer earned $235 million US, or $1.98 per diluted share, down from $273 million, or $2.30 per share, a year earlier.

The company blamed the slip on a decline in income from its tubular and European operations and charges related to a court ruling and the acquisition of Stelco (now U.S. Steel Canada).

U.S. Steel's sales climbed to a quarterly record of $5.2 billion, up from $3.7 billion in the first quarter of 2007. Profit from European operations fell 22 per cent, while results from the tubular business plunged 50 per cent.

North American flat-rolled operations, however, posted a profit gain of 60 per cent.

Surma expects income in the second quarter to "increase substantially" as increases in market prices surpass rising raw material costs.

Global metals prices are skyrocketing in the wake of high demand from Asian countries and low supplies of key steelmaking materials such as coke and iron ore. The benchmark price for hot-rolled coil has nearly doubled since the fourth quarter of 2007, hitting a record $1,050 US per ton.

At the same time, a weak American dollar has meant lower steel imports into the U.S.

Those factors should result in "a huge second quarter" for U.S. Steel, said Chuck Bradford, a New York-based steel industry analyst. "I'm expecting the second quarter (results) to double from the first."

U.S. Steel is largely insulated from cost pressures related to raw materials, Bradford said.

The steel giant owns much of its own iron ore and has contracts for coke at fixed prices that extend into next year.

The steel giant, which bought the former Stelco last year, ran its operations at a blistering pace through the quarter. Its North American plants worked at an average 92 per cent capacity while its European plants ran at 103 per cent capacity.

An unexpected blast furnace outage at U.S. Steel Canada that hurt results in the previous quarter "is now well behind us," Surma said.

"We operated at 93.5 per cent of capability at U.S. Steel Canada in the first quarter, the highest operating level for those facilities in recent years."

The results included a $45 million reserve created as a result of an adverse court ruling over a power supply contract and $17 million in costs linked to the acquisition of Stelco.

Those items cut earnings by $45 million, or 38 cents per share.

npowell@thespec.com

Courtney Pratt was CEO of Stelco for two years, during one of the longest and most complicated business restructurings in Canadian history. His book, Into The Blast Furnace, comes out today. Reporter Naomi Powell talks to Pratt about the book, and the deal to save the steel mill.

The Hamilton Spectator

(Apr 12, 2008)

Q: Stelco went into bankruptcy protection in 2004 and you spent the next two years negotiating a deal with stakeholders. What was the toughest point for you personally?

A: (It) had nothing to do with the process. It had to do with when we found out that my wife had cancer. That was an incredible blow ... She showed great courage and was an inspiration to all of us, and we got through it and she's doing well now.

If I put that aside, I would say the low point for me was the failed mediation. I had built up my expectations that this might really lead to some breakthroughs ... What we came out with was hardening positions. We were further away from a solution than we were when we went in.

Q: What was the biggest mistake you made?

A: Thinking that I could build a trusting relationship with the union. I certainly hoped that I could, but it was probably very naive of me to think that taking a company into (bankruptcy protection) was a time to build trust. I think I learned that pretty quickly, and tried in the circumstances to push to ... develop good lines of communication with (Lake Erie union president Bill Ferguson and Hamilton Steel union president Rolf Gerstenberger) and the other groups. I think I was successful at that.

Q: Though most of the players are identified in your book, the bondholders are not. These were strong players in the process who had the power to scuttle any deal and nearly pushed the situation to the brink. Why not share their identities in this book?

A: The difficulty with the bondholders is their group kept changing and people bought in and sold positions so there was never any consistent leadership. If there had been someone who had always been there and had been a spokesperson, we certainly would have done the same thing we'd done with the others.

Q: You make it clear in the book that you would have liked to stay on at Stelco following the restructuring. Do you think the company would still have ended up in the hands of a foreign player?

A: I think the die was cast, certainly when Dofasco was sold. There was arguably one of the best-run steel companies certainly in North America, maybe in the world. They were not able to maintain their independence. If Dofasco with all the wonderful things they had going for them couldn't stay an independent company, to me it was highly questionable whether Stelco could stand on its own feet independently.

Q: How much did Stelco's restructuring cost?

A: The tally on all the professional fees, lawyers, all that was $200 million. Because, remember we weren't just paying for our advisers, we were paying for everybody else's advisers. As this thing got more and more protracted, obviously the bill went up. That became part of the tragedy of the way the thing went on and on. We couldn't bring it to an end.

Q: Do you still believe entering bankruptcy protection was the right thing to do?

A: We did projections and we were convinced the company would run out of cash in nine months. We believed very strongly that the only responsible thing to do was to go into (bankruptcy protection) while there was still time to fix the company. The worst thing we could do, in our view, was string this out ... with no chance of fixing it. In that respect, I've never questioned our decision. If we'd known then that (steel) prices were going to go through the roof in two months, and change the whole course of this thing, we might have made a different decision.

EXCLUSIVE BOOK EXCERPT: WR4

For the complete transcript and video interview, go to thespec.com

Toronto businessman Courtney Pratt was hired to save the drowning Stelco Inc. His solution was to take the company into bankruptcy protection, and he would become a lead player in a controversial saga with 6,000 jobs and 10,000 pensions on the line. "I won't preside over a funeral," he writes in a book, co-authored by Larry Gaudet, about those turbulent months of backroom deals. These are exclusive excerpts taken from different sections of the book, released today.

The Hamilton Spectator

(Apr 12, 2008)

Prelude

When I joined Stelco in January 2004 after having served on its board of directors for nearly two years before that, my assignment was to help steer the revival of what had become an uncompetitive steel producer, struggling under high debts, including the $1.3 billion it owed to its employee pension plans. For two years or so, I was involved in making exceptionally difficult decisions that moved Stelco through a painful -- and insanely protracted -- process to emerge from the protection of the Canadian bankruptcy court into which we'd taken the company after years of losing money.

How to convey what that experience was like?

I was flipping TV channels one night a while back and found myself watching a show about a magician attempting to set a world record for holding his breath underwater, submerged in a glass tank with the cameras and lights on him, the crowd cheering. He intended to stay there -- and remain alive -- for something like eight or nine minutes. It was excruciating to watch. When it became clear that he was on the verge of unconsciousness and was inhaling water, his assistants went into the tank in scuba gear and pulled him out, just in time. All this was broadcast in prime time, a riveting spectacle, although also completely ridiculous, a manufactured crisis. But that's entertainment for you. The analogy to Stelco -- and it's not perfect, I realize -- is that we, as a company, were submerged underwater for the corporate equivalent of 10 or maybe 15 minutes, pretty much breathing water toward the end, floating face down in bankruptcy court and actually prevented from surfacing at times by those who put our survival at risk to serve their own needs.

None of this was produced for entertainment purposes, although there were certainly blockbuster costs. Our restructuring tallied $200 million plus in legal and consulting fees -- money that would have been much better invested in making the company more competitive.

But this was the price the company and its employees and shareholders paid for letting Stelco slide perilously close to ruin through years of losing money and of never resolving the fractious relations between management and the unions. Stelco's situation was far from unique, with dozens of steel companies in North America having already been through a major restructuring involving the courts. But Stelco was among the last holdouts to face the reality that it needed a total financial makeover to compete in a North American steel market increasingly subject to powerful global forces. And because restructuring had been delayed for so long, the disease of uncompetitiveness had progressed very deep, making our task much more difficult.

We stayed underwater until we fixed our finances. If we hadn't, in all likelihood a corpse -- not a company -- would have floated up. By the time we did come to the surface, we'd been in bankruptcy court for 26 months, an achievement one shouldn't be proud of. However, with so many cooks crowded into our restructuring kitchen -- company executives, a battalion of lawyers, a Superior Court judge, court monitors, financial advisers, creditors, restructuring consultants, angry shareholders, hedge funds, government bureaucrats, union leaders and media commentators -- it's a wonder we made it out at all.

The Stelco story, as I hope you'll come to agree, is rich with conflict and conflicted characters, including myself, and it has everything you'd want in terms of suspense and plot twists that brought out the best and the worst in the people involved. This is only one version of the Stelco story, my version, a snapshot through the lens of my memories and biases. It reflects my way of looking at the world, supported by the facts as I understood them to be, if not always how I wanted them to be. The stakes for Stelco and for me, as its CEO, had never been higher, and the consequences of failure would have been disastrous -- liquidation, layoffs, economic catastrophe for Hamilton. It was the wildest, most challenging assignment of my professional life. And while this restructuring process unleashed plenty of rage and a few tears, the sound that lingers in my ears is the laughter of my colleagues -- and pretty much everyone on all sides of the story -- as we worked together, argued, negotiated and fought through long days and even longer nights to save the company from being scuttled.

Even when things were at their absolute worst, there was laughter, the most redemptive of all human sounds.

Stayed payables #1

The dinner meeting is in a restaurant in Hamilton. The hosts are three Stelco executives: Colin Osborne and two vice-presidents. These men know the operations of the company inside out.

The guest is a supplier to the company, David Alvil, a senior executive of a large global corporation that's owed big money by Stelco.

"Gentleman, pay us our money or we'll remove our equipment from your mill forthwith," David Alvil says after drinks arrive.

"Stelco, by our current estimates, is in arrears in the amount of 7.86 million Canadian dollars. We'll have that before I leave, or our equipment will be decommissioned from your facilities, starting this week."

David Alvil is British, his tone measured, his threat delivered from a well-groomed middle-aged face. He glances at the menu and puts it down instantly. Clearly, the nourishment on offer is an affront to a man of acquired good taste. Alvil is all spit and polish, as Colin Osborne sees him, a man experienced at stepping off an intercontinental flight with his wits intact, suit unwrinkled, tie firmly knotted, no time for small talk, certain his reputation has preceded him.

"Gentlemen, are we in agreement?" Alvil asks.

"You gentlemen won't get a f...ing piece of equipment past the gate," says one of the Stelco vice-presidents, pleased to let his annoyance show. He's a man in his late fifties who has dealt with toughness before, but nothing nearly as tough as his own face in the mirror. "Nothing leaves unless we say it leaves."

The two go back and forth.

Osborne is taken aback, and he figures so is the other Stelco executive beside him, who is gulping Black Russians one after the other as the exchange gets increasingly hostile. Osborne expected civility at least until the appetizers arrived. So when Alvil just let it rip, he was distracted, blinking around the room, trying to get his eyes to adapt to the freaky medieval setting, the dim dungeon lighting, nearly every surface in the room draped in red velvet, weighed down by gold tassels, including the funny hats on the waiters.

"Are we ordering food?" he interrupts.

Alvil checks his watch. He looks like he's finding it an effort to treat Osborne, a much younger man, as an equal. "The salient matter," he says, as if speaking from a podium to a vast audience. "In Chapter 11, in America, companies can elect to pay suppliers who provide an essential service. Surely we can come to an arrangement. We get paid our money and Stelco can keep working with our equipment, which is in both our interests. Is it not?"

Over the next six minutes, during the foodless consumption of another round of drinks, the Stelco executives enlighten Alvil on the differences between creditor protection laws in Canada and in the United States. In Canada, there is no "essential service" provision that would allow Stelco to pay arrears to a single supplier, no matter how essential Alvil's equipment is to the operation of the mill.

Alvil leaves the restaurant before the food arrives.

"Let's get this straight," says the Black Russian guy during the meal. "Not only do we not have to pay them what we owe while in CCAA (bankruptcy protection), the law says we can force them to keep working for us?"

"We have to pay the new bills, likely on cash terms, but the payables are stayed," Osborne says. "And that's all she wrote. We can take them to court if we want. And they will have to keep working with us."

"How f...ed is that?"

"You're right," Osborne says, shaking his head. "The thing is, they have business all over the U.S. with the steel companies, and they just thought this was another Chapter 11 filing. They knew the risk of us going into CCAA--they just didn't know Canadian law."

"Where's he going now?"

"To fire someone in his Canadian legal office, probably."

"The money is a drop in the bucket for these guys," says the Stelco guy who'd fought with Alvil. "Does he look like he's hurting to you?"

"Still," Osborne says. "We owe them money, big time."

The multiplier effect

Hamilton City Hall is an eight-storey building, concrete rectangles latticed in foreboding grids of reflective windows. It doesn't look to Pratt the way a city hall should. It's too opaque, unwelcoming, like the headquarters of a UN agency in a small European city, or a bunkerlike Soviet embassy spruced up with new windows in the spirit of glasnost. To Pratt's sensibility, the building lacks the soaring limestone gravitas of the older skyscrapers in the downtown.

"Come into my office, Courtney," the mayor says, in a hearty voice. He's a fair-sized man with a big bald head, a former high-school principal, a fact that Pratt mentions to get the conversation going.

"I was a teacher once, a long time ago," Pratt says. "And I worked in administration at a junior college in Montreal, too."

He spent a year teaching at a private boys' school, Lower Canada College, when he was fresh out of university, ready to change the world one math or English lesson at a time. There had been rewards in helping the youngsters learn and stay at their desks without killing each other or driving him to exhaustion. But there was much he wanted to explore about how the world worked, and he wasn't finding it in a classroom, no matter how idealistic he'd been going in.

"We know what you're up against, Courtney, it's no secret," the mayor says evenly. "Stelco has been in trouble for some time. But don't underestimate the pride Hamiltonians take in this company. Stelco is hugely important. Hamilton is the steel capital of Canada, and the steel industry has defined our community for generations."

"I didn't come here to preside over a funeral," Pratt says.

In the silence that follows this statement, the mayor seems to be waiting for more disclosure, to be taken into confidence. There is so little Pratt can say, yet. By the dictates of Canadian securities laws, he knows his words must remain mostly platitudinous right now, unless he's telling everyone the same thing, preceded by a news release or conference call. He's hoping his body language, which as far as he knows isn't regulated by any securities commission on the planet, conveys the message that Stelco is in a serious mess--and that he's well aware of what's on the line, and committed to fixing things up.

"Boy, it really hits home, how intense people are around here with respect to Stelco," Pratt says. "I've never felt on the hot spot before in quite the same way. It's like every set of eyes in Hamilton are on me. No offence, mayor, but it's like being in a mining town ... where there's nothing but you and your decisions stopping the town from flying apart."

The mayor laughs but keeps it coming, courteous but relentless, staying on message, rattling off his talking points. "Hamilton is facing serious financial challenges. For a decade now, Courtney, the downloading of costs from senior levels of government has forced municipalities into a very tight corner, and forced us to cut essential services. Both the federal and provincial government have taxing mechanisms that take away from cities like Hamilton and don't give enough back."

"I know these are difficult times."

"They are."

"I realize the importance of Stelco jobs."

"You know many local companies rely on Stelco business?"

They sit in silence for another moment, then bring the meeting to a close, offering the promise of openness to each other, moral support. There just isn't a lot to say right now.

"If I can be of any assistance, let me know," the mayor says.

"Thanks, Larry."

"I don't know how well you know Hamilton, but it's a city with many wonderful surprises. A proud city. Proud people."

"I see this every day at Stelco."

"Get to know us better. The city."

Once he's back in his car, before doing anything else, Pratt opens up his BlackBerry. It tells him that the operational review at the mill is still ongoing. He's needed there. He decides to drive back with a detour through downtown. It's an aimless drive, and he's not sure what he's looking for. But he heard the mayor: "Get to know us better."

He makes a left turn where he thinks he should. The road starts to climb through a neighbourhood of small bungalows and brick row-housing, a charming but dilapidated area of town. Some of the side streets provide glimpses of Hamilton Bay on the left, including a dockland reclaimed as a park and marina, all part of the program to make Hamilton beautiful again. But Pratt has seen studies on street crime, poverty, the drug trade. So many residents in this neighbourhood and others like it -- especially the most vulnerable, the elderly -- are afraid to go out, not just at night but in daylight, too.

At a stop sign, Pratt admires an old brick farmhouse. What is poignant to him isn't just that this farmhouse has survived a century or more, but that it's maintained an aged dignity amid the franchise coffee shops, donair palaces, tire distribution outlets and discount furniture stores all around it. He realizes he's made a wrong turn, so he doubles back downtown, intending to leave the city by a route that goes through a warehouse district, featuring wide boulevards and block-long brick buildings from a bygone era when this town was really hopping with industry. Plenty of these buildings are vacant or vastly underutilized now, their parking lots yielding weeds and discarded fridges. Near the curb he sees a powder-blue Lincoln, which he thinks is abandoned, but it's not. There are two men in it. Just sitting there.

He steps on the gas, and within minutes he knows exactly where he is.

Hamilton, like a half dozen other small cities in Canada and the northern U.S., was once a proud regional power centre, a fiefdom of industry, the companies often locally managed no matter who owned the equity or the bonds. Then rampant globalization started to produce a different breed of conglomerate, which today has an increasing tendency to gut local representation in senior management and centralize many decisions in faraway places.

In the glory years, cities in this part of the continent such as Hamilton, Buffalo, Milwaukee, Rochester and Windsor didn't take crap from anybody and were wealthy enough to build tall buildings designed by famous architects, endow the local university and charities, hold a Santa Claus parade and send powerful politicians into the larger decision making arenas to do the pork-barrelling. Hamilton in particular was energized, or refuelled, over many decades by many thousands of immigrants, most from Europe, who had gotten off trains or buses here because they were exhausted from travelling oceans and they knew a cousin or army buddy in a tenement -- and anyway, they were down to their last 30 bucks from the 57 they had when they arrived in Canada; many of them were monosyllabic in English, ready to let their names be anglicized, shortened to be understood by the foreman who determined who got a shift at the steel mill and who didn't.

I won't preside over a funeral, he thinks. But it may mean living through a deadly circus all the same.

Vanishing act

Pratt soon discovers that he's dead wrong about the union's support for the Deutsche Bank plan. This happens during a bizarre lull in a meeting in a hotel conference room in Burlington, on the outskirts of Hamilton.

In a quiet rage, he watches ice melt in his water glass, wondering where the Lake Erie union leader, Bill Ferguson, and his guys have gone five minutes into the meeting to preview the plan. They just got up and left, claiming a need for a private powwow, abandoning Pratt and Hap Stephen, Stelco's chief restructuring officer.

"Where did they go?" Pratt asks.

"They said they'd be right back," says Stephen, a bearded, intense guy in his 50s.

A quarter hour passes, then a half hour. "This Houdini act is ridiculous," Pratt says.

"I could see something in Ferguson's face when we started talking about 'no concessions,'" Stephen says. "It's not what they expected."

"What did they expect?"

"I have no idea."

Pratt and Stephen are packing up when Ferguson comes back.

"Courtney, Hap," Ferguson says. "Thanks for your time. We like what we hear about the 'no concessions.'"

"Don't you want to hear more?" Pratt asks. "Hap's here to take you through the high points in the plan."

"Again, thanks for your time." Ferguson leaves.

Minutes later, Pratt and Stephen get into separate cars in the parking lot. Stephen pulls out first and Pratt follows him.

Pratt calls him on the BlackBerry as the two cars wind along the lakeshore toward the highway. "I really don't get it," he says. "Something is going on."

"Clearly, someone else is pulling the strings."

By Naomi Powell

Courtney Pratt was CEO of Stelco for two years. He led the steelmaker into a court-ordered restructuring that lasted two years and became known as one of the longest and most complicated restructurings in Canadian business history. His book about the process, Into The Blast Furnace: The Forging of a CEO’s Conscience, comes out today. Reporter Naomi Powell talks to Pratt about the book and the battle for a deal to save Hamilton’s iconic steelmaker.

Q: Why did you write this book?
A: It’s something I’ve always wanted to do. I’ve always wanted to write a book but I never really had something I felt I could write about.This Stelco experience was absolutely unique in terms of the kind of experience it was. It was unique in Canadian business history with  the complexity of the restructuring. It had everything I think that makes for a great book. Lots of plot twists and turns and interesting characters and it just seemed like the perfect book to write.

Q: Your integrity and conscience are explored as major themes in this book. Why is that?
A: In writing the book I could have chosen to write just a factual accounting of the story which to me would have been of real limited interest. Some people might have explored it but not a lot. I decided, along with my co-writer Larry Gaudet, that we wanted to write this like a novel and I think a good novel gets inside people’s heads. Certainly a big part of being inside my head during this whole process was all the pulls in different directions from various stakeholder groups saying look at me, see it my way, forget all those other guys. That was a big part of what made this whole thing so difficult. That’s why it had to be a centrepiece of the book.

Q: What was the biggest challenge your conscience faced in your two years as CEO of Stelco?
A: The biggest challenge my conscience faced was being able to be patient enough to make sure that we had a deal that everyone could live with while making sure that in terms of my conscience that as much as possible jobs were protected, pensions were protected and the city of Hamilton and the city of Lake Erie were protected in the process. There were a lot of people on various sides of this who didn’t care too much about that. So for me it was very important to stay true to that and to make sure how ever we came out of this there were positive outcomes on those scores.

Q: But was there a single event you can point out where your conscience was tested?
A: There wasn’t one that really challenged me. I guess there were times that were really challenging and those were the ones that we’ve written about in the book in detail. The mediation process which went over about five days, that was just continual challenges to my integrity and conscience. And then when we got into the negotiations with the government and then Tricap and then the union and then finally with the bondholders each one of those had its moments. But there wasn’t one defining moment in the whole process there was just a series of challenges.

Q: Give me one specific example, maybe one you write about in the book.
A: Certainly in the book we talk about the time in the mediation when Ron Bloom and Bill Ferguson called me over for a meeting at about 3 o’clock in the morning. They came on very strong about ‘Courtney you’re with us or you’re with them. Declare yourself for the workers, for the pensioners, for the city of Hamilton, for Lake Erie and forget those evil bondholders. I mean that was a real, a very, very aggressive push at a time when we were all tired and all exhausted. But there was never any question in my   mind that I couldn’t do that because I knew if I did it the whole thing would fall apart. Because in the end the people I was being told to forget have to vote on it. In my view, being true to my conscience in wanting to make sure we could deliver a deal at the end that would in fact help the workers, help the pensioners meant I had to keep those folks in the ring and deal with them and not walk away.

Q: Is there anything you regret about those two years?
A: I don’t think so. It’s easy to look back in hindsight and say ‘I could have done this, I could have done that.’ I think what I’m happy with  is the fact that with all the information we had at hand, I know we always looked at what we knew  and what we didn’t know and thought very seriously about what was the right thing to do. In that respect I don’t think we can look back with any regrets.
I’m not saying we didn’t make errors.

Q: What was the biggest mistake you made?
A: I think the biggest mistake I made was going into this process and we do talk about this in the book you know thinking that I could build a trusting relationship with the union. I certainly hoped that I could but it was probably very naive of me to think that taking a company into (bankruptcy protection) was a time to build trust. I think I learned that pretty quickly and tried in the circumstances to push to.. develop good lines of communication with (Lake Erie union president Bill Ferguson and Hamilton Steel union president Rolf Gerstenberger) and the other groups. I think I was successful at that. But to say that I was ever able to build the kind of trust I would have liked to see in a situation where there were so many players and so many stakeholders was probably impossible.

Q: What made that impossible?
A: The part of the process that makes it impossible is you have to be thinking of everybody’s stake in the game and you can’t just go to the union and say ‘okay guys we’re with you. We’ll let all the other guys go and by the way I can’t tell you what these guys are saying because by the rules of the game I have to have confidential relationships with those people as well.’ So some of the dynamics that enable you to create trust just weren’t available to us.

Q: What was the toughest point for you personally in the experience?
A:The toughest point for me personally had nothing to do with the process. It had to do with when we found out that my wife had cancer. That was an incredible blow. But she was wonderful through this. She showed great courage and was an inspiration to all of us and we got through it and she’s doing well now. But that was certainly the low point during that period of time.
If I put that aside, I would say the low point for me was the failed mediation. I had built up my expectations that this might really lead to some breakthroughs. In fact after that period of time what we came out with was hardening positions. We were further away from a solution than we were when we went in. I was a little bit at a loss to figure out how we would ever get this thing back on the rails and get to an end.

Q: Though most of the players are identified in your book, the bondholders are not. These were key players who had the power to scuttle any deal and pushed the situation to the brink. Though most of their names were never made public, you know who they were. Why not share their identities in this book?
A: The difficulty is that some of the players had clear leaders. So with the union it was Bill Ferguson and Rolf and Ron Bloom (special adviser to United Steelworkers of America president Leo Gerard). When they were talking it was consistent people who were talking. Same thing with the salaried people. Same with the pensioners. When you talk about the province there were some players who were involved but it was never  clear during the process exactly who was making the calls or how that was working. We started to get a sense of it. The difficulty with the bondholders is their group kept changing and people bought in and sold positions so there was never any consistent leadership. If there had been someone who had always been there and had been a spokesperson we certainly would have done the same thing we’d done with the others. In that instance it would have been very difficult to pick out one person. That’s why we chose to do a composite person.

Q: With a story as dramatic and powerful as this was and filled with real characters, why fictionalize it at all?
A: Because we thought this would be a uniquely effective way to give the stakeholders’ perspectives a voice and to focus just on that stakeholder perspective. You’re right, I probably could have picked a character and had an exchange with them but I could have reconstructed a real exchange with a Bill Ferguson or a Ron Bloom or a Rolf Gerstenberger. So using these fictional characters and working it that way, just seemed to us, to me and to Larry Gaudet, to be  the most effective of getting this across.
We’re also conscious of not making this an overly complex book. I wanted it to be a book that everyone could read so you didn’t have to be an MBA in finance or someone who loves business books to first of all enjoy the book and secondly to understand it. So again, this seemed like just a great way to try and make that happen.

Q: You make it clear in the book, that you would have liked to stay on at Stelco following the restructuring to oversee its turnaround. If you had stayed would you have done things differently? Do you think the company would still have ended up in the hands of a foreign player?

A: I think the die was cast certainly when Dofasco was sold. There was arguably one of the best run steel companies certainly in North America maybe in the world. They were not able to maintain their independence. If Dofasco with all the wonderful things they had going for them couldn’t stay an independent company, to me it was highly questionable whether Stelco could stand on its own feet independently. Our goal quite honestly and my goal if I’d stayed in that job would have been to make sure that the company was strengthened so that it would be sold on the company’s terms rather than on the terms of somebody else. I do think to Rodney Mott’s credit that the company was strengthened and its ended up in very good hands.
Of all the alternatives that were available to Stelco I think this is probably the best one.

Q: Hamilton is a character in this book. You describe it in this paragraph:

Some of the side streets provide glimpses of Hamilton Bay on the left, including a dockland reclaimed as a park and marina, all part of the program to make Hamilton beautiful again. But Pratt has seen studies on street crime, poverty, the drug trade. So many residents in this neighbourhood and others like it - especially the most vulnerable, the elderly - are afraid to go out, not just at night but in daylight too.

Is this really how you viewed Hamilton?

A: I don’t characterize all of Hamilton like this, but certainly downtown Hamilton is a tough part of town. A very tough part of town and to deny it, to say there’s a lot of poverty, there’s not a lot of drug us, all the things - and again I’m not trying to single Hamilton out relative to a lot of other urban centres, it’s happened in a lot of cities. But it is a fact of life I think in Hamilton and there has been a long period of decay in the core. I don;t think anyone would deny that. I was part of the Hamilton Civic Coalition that was looking at ways to bring the core back. I say it with a sense of sadness, the same sadness when I look at parts of Toronto and other cities. It’s just a huge challenge in any big city to try and fix the problem. And when the city itself is having economic difficulty which I think undeniably Hamilton’s had for  a period of time, you don’t have the resources to be able to do what you’d like to do. So if anyone took that as a negative comment about Hamilton, that wasn’t the intent. It’s just a fact of life about the city and the tough times it faces.

Q: How much did Stelco’s restructuring cost in the end?
A: I think the tally on all the professional fees, lawyers, all that was $200 million. Because remember we weren’t just paying for our advisors, we were paying for everybody else’s advisors. As this thing got more and more protracted obviously the bill went up. That became part of the tragedy of  the way the thing went on and on. We couldn’t bring it to an end.

Q: Given that cost and everything that happened, do you still believe entering (bankruptcy protection) was the right thing to do?

A: When you say the right thing to do, you have to go back and look at what was the information we had on the table when we made the decision. We had done a tremendous amount of work to assess the financial condition of Stelco. We did projections and we were convinced the company would run out of cash in nine months. We believed very strongly that the only responsible thing to do was to go into CCAA while there was still time to fix the company. The worst thing we could do in our view  was string this out and then when we’re right on the precipice go into CCAA with no chance of fixing it. In that respect I’ve never questioned our decision. Now if we’d known then that (steel) prices were going to go through the roof in two months and change the whole course of this thing we might have made a different decision. But we didn’t. We worked with the information we had and I’ve always been comfortable that we made the right decision in the circumstances.