UNITED STEELWORKERS

USW LOCAL 8782

 

 

Home

News and Newsletters

Local 8782 Collective Agreement

Group Benefits

S.L.C. and Pension Information

Health and Safety

Meetings, Public Events and Tournaments

Feedback

Contacts

Executive and Committees

Links

District 6 Savings Plan

Retirees

Womens Committee

Scholarships

Ways and Means Committee

Heckett's Multiserv

 

This page will display current news inside and outside the plant.

Newsletters, Quotes or Opinions of the week:  (newspaper articles after quotes).

Articles of interest over the past week:

Chinese merger to form one of country's biggest steelmakers



SHANGHAI, China - Tangshan Iron & Steel Group and rival Handan Iron & Steel Group will merge to form one of China's biggest steelmakers, the latter company said Thursday, though it noted that preparations were still in the initial stages.

The two state-owned companies, both based in northern China's Hebei province, which encircles Beijing, are preparing to form one new company, Hebei Iron & Steel Group, Handan's publicly traded unit said in a notice to the Shanghai Stock Exchange.

No financial details, including how the two companies shares might be merged, were released.

Top executives of both group companies are leading working groups to prepare for the merger, it said, noting that the new company has not yet been formed.

The official Xinhua News Agency, citing senior Hebei officials, said Hebei Iron & Steel would be inaugurated by July.

The newly formed Hebei Steel would have an annual output capacity of 31.75 million metric tons of iron and steel, exceeding the annual output of industry leader Baosteel Group, whose capacity is about 30 million tons, it said.

The government has been orchestrating an industry consolidation aimed at nurturing a corps of internationally competitive steel manufacturers. Xinhua said the merger was also aimed at preventing takeovers of the two provincial steelmakers by outside groups such as Baosteel and Beijing's Shougang Group.

Tangshan Iron & Steel produced 22.75 million tons of steel last year, while Handan Iron & Steel had an output of 9 million tons.

Handan Iron & Steel mainly produces steel billets, steel products, sintering products and coke.

Fast-growing China is the world's biggest producer and consumer of steel.

 

Steel price increases to help Russel Metals beat Q2 analyst forecasts



TORONTO - Metals distributor Russel Metals Inc. (TSX:RUS) says it expects second-quarter earnings per share to beat an average analyst forecast of a 78 cent per share profit by 35 to 45 per cent.

The Toronto-based company said Wednesday that "ongoing steel price increases have enhanced our margins in all three segments."

Based on the company's estimate, it is forecasting a profit of between $1.05 and $1.13 per share for the quarter.

"Consistent demand in the service centre segment and increased activity in areas serviced by our energy tubular products segment have favourably strengthened our projected results for the second quarter of 2008," the company said in a release.

In May, Russel Metals reported first-quarter net earnings of $29 million, 46 cents per share, compared with $28.4 million, 46 cents per share, in the year-ago period, as revenue increased to $712.3 million from $683.7 million.

The company also said its energy tubular products segment has booked strong volumes and higher profits on sales to the Alberta oilsands sector and drillers in the U.S. Rockies.

On Wednesday it cautioned that the rosy outlook won't necessarily continue into the latter half of the year as "current economic conditions and uncertainty on the sustainability of the steel price increases make it difficult to project the earnings levels for the second half of 2008."

Shares in Russel Metals ran up more than eight per cent in afternoon trading on the TSX, gaining $2.29 to $30.09.

U.S. Steel to defend itself in mine lawsuit


The Hamilton Spectator

(May 6, 2008)

U.S. Steel Canada says it will "vigorously defend itself" against ArcelorMittal Dofasco in a legal dispute over the Wabush iron ore venture.

In documents filed with the U.S. Securities and Exchange Commission, U.S. Steel Canada said it "does not believe it has any liability to Dofasco regarding this matter."

Dofasco is suing U.S. Steel Canada (formerly Stelco) and Ohio's Cleveland Cliffs Inc. over claims they unfairly pulled out of a deal to sell their 71.4 per cent stake in the mine. Dofasco wants the Ontario Superior Court to award $427 million in damages and to force its partners to go through with the deal. It seeks $1.8 billion in damages if the deal cannot be completed.

Though ArcelorMittal Dofasco says the partners forged a "binding agreement" at the end of August, U.S. Steel says the deal was not binding. The company pulled out of talks "following several months of unsuccessful negotiations over many of the major terms of the purchase and sale," it says.

In allegations not proven in court, ArcelorMittal Dofasco has suggested the move was driven by a desire to secure cheap supplies of iron ore, which has soared in cost in recent months.

U.S. Steel earnings slide despite high sales


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

Steel giants begin labour talks April 28


The Hamilton Spectator

(Apr 15, 2008)

Steel giants ArcelorMittal and U.S. Steel will start labour negotiations with their American workers April 28.

The United Steelworkers of America (USW) represents more than 14,000 ArcelorMittal employees at 15 United States plants under a master contract that expires Aug. 31.

An additional 4,000 ArcelorMittal workers, also represented by the USW, have agreements expiring Sept. 1.

Labour talks with Pittsburgh's U.S. Steel are set to begin at the same time, with the USW negotiating a new master agreement for 12,000 workers.

U.S. Steel bought Stelco last year. Workers in Lake Erie and Hamilton are represented under separate labour agreements that do not expire in 2008.

ArcelorMittal is the parent company of Dofasco, one of the few non-union shops among its North American holdings. Last month, the USW made an unsuccessful attempt to organize Dofasco's 3,500 hourly workers.

 

The steel deal

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

 

Into The Blast Furnace

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."

The steel deal: Q&A with Courtney Pratt



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.

USW will be there for Dofasco


The Hamilton Spectator

(Apr 7, 2008)

Unions rarely hit the front page. Sure, tough strikes sometimes get lots of coverage. But great contracts, path-breaking settlements and victories in court defending members' rights happen regularly and receive too little attention in the news media.

Last month, the United Steelworkers made big news in Hamilton. The union used its bargaining leverage and a mature relationship with ArcelorMittal to be able to talk face-to-face with thousands of Dofasco workers. Dofasco, the storied bastion of nonunionism, the once-Canadian-run steel success story, now had union activists inside the plant. No wonder it made the front page.

Most employers traditionally display a primitive hostility to workers who are pondering union membership. As a result, unions are limited to handing out leaflets at the plant gate and having furtive meetings with supportive employees in coffee shops and houses around town. However, ArcelorMittal Dofasco agreed to take a different approach, to step back and allow its employees to engage directly with the union.

Fourteen United Steelworkers (USW) activists, many of them from USW-represented steel plants across North America, walked straight through the doors and into what almost everyone still calls Dofasco. For a week of often 12-hour days in the plant, we listened, we talked to workers, we answered questions and we debated.

Discussion centred on contracts, about how they were built, about what a union like the USW can do and what it cannot do. We discussed how bargaining issues have expanded beyond the traditional focus on wages, benefits and health and safety to new spheres such as corporate decision-making and governance.

For example, USW contracts with ArcelorMittal prevent the company from bringing low-cost steel from overseas into USW-represented mills if any union members are idled. Further, the company cannot sell any of its USW-represented operations without the approval of the union.

Dofasco workers were presented with an innovative opening -- the chance to make the choice about whether to join the union only after they had seen what the Steelworkers, with their support, could do at the bargaining table. It was unique. It was also challenging, both for Dofasco workers and for the union.

It is true that many ArcelorMittal Dofasco workers oppose the very idea of union membership, no matter what it might offer. But hundreds were open to learning about the process and open to thinking about what bargaining might bring. A number of workers wanted to get the process started right away.

But the pledge to Dofasco workers was that we would move forward only if there was enough support to move into bargaining with a democratically elected bargaining committee. That necessary level of interest was not there. We made good on our pledge, and we ended the in-plant access portion of our campaign.

Some may question what actually was achieved. After all of the discussions, the excitement and the headlines, after the sometimes hyperventilating anti-union blog postings on the Internet, some things have changed.

After the period of uncertainty over changes in ownership and global consolidation in the steel industry, workers at Dofasco have had a chance to talk directly with unionized steelworkers about their hopes and doubts for the future. They learned more about the collective bargaining process and about the USW relationship with ArcelorMittal. They got a chance to ask some good and tough questions.

As for the USW, we learned more about Dofasco workers' pride in their history. We learned many Dofasco workers are well aware that their good wages and benefits package can be traced in large part to our union's gains in bargaining at Stelco and elsewhere. And while some may not appreciate every bit of the union's history in Hamilton, many know that they have benefited from it.

ArcelorMittal Dofasco workers are a lot like USW members -- hard-working, hopeful for the future of Hamilton, needing to protect what they have gained at work and deserving of the right to bargain for improvements.

In the next few months, the USW heads into major bargaining with ArcelorMittal in the United States. At the same time, the union is defending the rights of ArcelorMittal workers across Canada and the United States as the company makes changes to its product mix, selling some operations, ending others and opening new ones.

In the end, the basic questions remain. Will the consolidation of the global steel sector continue? As the terrain of collective bargaining shifts, what will be the issues of contention and co-operation between the union and the major steel companies in the future?

Members of the USW insist that those questions demand a real place for workers' voices in the corporate decisions that affect them.

Some ArcelorMittal Dofasco workers believe that Dofasco's successful past will guarantee success into the future, or that a charmed mixture of good steel production, hard work and fervent hope are all that is needed to protect what they have.

Perhaps, but it must be said that members of the USW have the added democracy and security delivered by their collective agreements.

The campaign to engage with ArcelorMittal Dofasco continues in more traditional ways, although still without the usual grim opposition shown by some companies in the past. Our time on the shop floor has given us food for thought, and will help make the USW a better union.

No one can predict the future, but Steelworkers remain hopeful that ArcelorMittal Dofasco workers will choose to join with us in the future.

Workers, their families, the community and the Canadian steel industry would be better off for it.

We will be there for any ArcelorMittal Dofasco workers who want the opportunity.

Wayne Fraser is director, United Steelworkers District 6 (Ontario and Atlantic provinces).

 

Stelco pays for safety violations



The Hamilton Spectator

(Apr 3, 2008)

A judge dealt Stelco Inc. a hefty $500,000 in fines and surcharges yesterday for failing to heed workplace safety regulations.

The violations led to injuries to two workers, including the amputation of one man's leg and the loss of another man's thumbs.

Lawyer Robert Little entered three guilty pleas on behalf of Stelco under the Occupational Health and Safety Act. The charges involved failures to protect workers in two 2005 accidents and in a potentially dangerous situation in 2006.

Crown counsel Line Forestier said the fines reflected Stelco's less-than-stellar health and safety record, which included 18 prior convictions since 1978. The company was fined $250,000 in 2004 for failing to protect steelworker Jeffrey Turner, who was killed at Hilton Works in December 2001.

Little acknowledged that the $400,000 in fines (plus a 25 per cent victim surcharge) were driven by Stelco's past convictions, "Although they are spread out over many years and reflect the size of the company and its workforce."

Ontario Court Justice Norman Bennett imposed a $180,000 fine for the incident on Nov. 11, 2005, when a steelworker's leg was amputated below the knee. His leg was pinned between two pieces of equipment at the sinter plant on Wilcox Street.

Bennett imposed a $160,000 fine for an accident on June 17, 2005, when two industrial maintenance workers were attempting to change shear blades. One suffered broken toes and the other lost both thumbs when one blade cut through a sling and fell to the ground.

The final conviction involved a Feb. 2, 2006, incident in which two workers were exposed to a moving arm on the lower material gate on a blast furnace. A fence guard had been removed a week earlier.

bbrown@thespec.com

905-526-3494

 

Stelco fined $400,000


BY BARBARA BROWN A judge dealt Stelco Inc. a hefty $500,000 in fines and surcharges yesterday for failing to heed workplace safety regulations. The violations led to permanent injuries for two workers, including the amputation of one man’s leg and the loss of both thumbs on the hands of another man. Lawyer Robert Little entered three guilty pleas on behalf of Stelco under the Occupational Health and Safety Act. The charges involved failures to protect workers in two separate accidents in 2005 and in a potentially dangerous situation in 2006 involving a material gate on its E-blast furnace. Crown counsel Line Forestier said the fines imposed reflected Stelco’s less than stellar health and safety record, which included 18 prior convictions since 1978. The company was fined $250,000 in 2004 for failing to protect steelworker Jeffrey Turner, who was killed Dec. 6, 2001 after he became entangled in a rod bundle packager at Hilton Works. Forestier said workplace deaths net the stiffest penalties, but Stelco’s fines have increased with each conviction added to its record. Little acknowledged that the $400,000 in fines (plus a 25 per cent victim surcharge) imposed yesterday were driven by Stelco’s past convictions, “Although, they are spread out over many years and reflect the size of the company and its workforce,” he said. Ontario Court Justice Norman Bennett imposed a $180,000 fine for the incident on Nov. 11, 2005 when steelworker Bill Pingay’s leg was amputated below the knee. The accident happened at the sinter plant on Wilcox Street when his leg was pinned between two pieces of equipment while attempting to repair broken pallets on the sinter machine. Bennett imposed a further $160,000 fine for an accident on June 17, 2005 when two industrial maintenance workers were attempting to change shear blades, which work like a giant pair of scissors. One worker suffered broken toes and a bruised foot and the other lost both his thumbs when one shear blade cut through a sling and fell to the ground. The final charge involved the E-blast furnace, which is a huge, brick-lined vessel in which iron ore, coke and limestone are melted into molten steel. On Feb. 2, 2006, two workers were exposed to a moving arm on the lower material gate. It had the potential to trap or pinch a body part of the workers. A fence that was supposed to guard them had been removed a week earlier and was not put back. bbrown@thespec.com 905-526-3494

 

 

Dofasco workers polled on union

March 19, 2008

Naomi Powell
The Hamilton Spectator

A labour union has made its way through the doors of Dofasco.

Starting tomorrow, the United Steelworkers of America will enter Dofasco’s Hamilton operations  to poll workers on the possibility of a union, union officials say.

After two weeks, if the USW believes there is enough support, it will choose five workers to negotiate a contract with the company.

If workers vote in favour of the contract, Dofasco will have a unionized workforce for the first time in its 100 year history.

The agreement was forged through a pre-existing neutrality agreement between the USW and Dofasco’s parent, ArcelorMittal.

It differs from a typical union certification process in which the Ontario Labour Relations Board requires unions to obtain signed membership cards from 40 per cent of workers. Usually, a certification vote follows and then a contract.

The USW began pushing to unionize Dofasco workers last year, distributing leaflets at the plant gates.

The campaign heated up in the fall when the firm fired about 25 workers, sparking a flurry of speculation about whether layoffs were next.

The USW issued a press release, saying workers had reported an undetermined number of layoffs and terminations at the plant.

Juergen Schachler, president and CEO of Arcelor Mittal Dofasco has since stated that no layoffs are coming. Anyworkforce reductions, he told the Spectator earlier this month, can be realized through attrition.

The agreement was forged through a pre-existing neutrality agreement between the USW and Dofasco’s parent, ArcelorMittal.

The USW began pushing to unionize Dofasco workers last year, distributing leaflets at the plant gates.

The campaign heated up in the fall when the firm fired about 25 workers, sparking a flurry of speculation about whether layoffs were next.

The USW issued a press release, saying workers had reported an undetermined number of layoffs and terminations at the plant.

Juergen Schachler, president and CEO of Arcelor Mittal Dofasco has since stated that no layoffs are coming. Any workforce reductions, he told the Spectator earlier this month, can be realized through attrition.

Click here to read the letter from Juergen Schachler to Dofasco employees.

Check thespec.com for updates throughout the day.
 

Dofasco sues for iron ore mine


The Hamilton Spectator

(Mar 14, 2008)

ArcelorMittal Dofasco is suing its partners in the Wabush iron ore venture, claiming they were "motivated by their own profit" when they backed out of a deal to sell their stakes in the mine.

The steel giant has asked an Ontario court to force U.S. Steel Canada, formerly Stelco, and Ohio's Cleveland Cliffs to honour a deal to sell their combined 71.4 per cent share in the mine in Newfoundland and Labrador. The companies offered little explanation when they abruptly withdrew from sale negotiations last week.

But as iron ore prices soar, ArcelorMittal Dofasco suggested the move was driven by a desire to secure cheaper supplies.

"Motivated for their own profit, Cliffs and U.S. Steel delayed closing and ultimately repudiated the agreement, in order to continue to acquire iron ore from the Wabush Joint Venture at a cost below market value," the company said in court documents filed Monday.

ArcelorMittal Dofasco is seeking a court order to force the sale and $300 million in damages. It is asking for $1.2 billion in damages if the sale cannot be completed. Its claims have not been proved in court.

A sale would grant full control of the mine to ArcelorMittal Dofasco, already owner of 28.6 per cent.

Steelmakers have been scrambling to secure iron ore -- a key ingredient in steelmaking -- in the wake of skyrocketing prices. China's Baosteel recently agreed to a 65 per cent increase in the price of iron ore sold by Brazil's Companhia Vale do Rio Doce SA, the world's biggest supplier. Analysts expect that deal to set the pattern for pricing from the other iron ore firms.

The hike in prices "might not have been anticipated" when the initial Wabush deal was struck, said John Tumazos, a New Jersey-based metals analyst.

"Clearly that mine is worth more now that prices have gone up."

U.S. Steel declined to comment on the suit. Cleveland Cliffs did not return calls.

The Wabush saga began last summer when Dofasco exercised a first right of refusal to buy its partners' holdings in the mine. The move scuttled a prior agreement by Stelco and Cliffs to sell their holdings to Toronto's Consolidated Thompson for $63.4 million US, plus three million shares. Consolidated also agreed to assume $94.6 million in liabilities.

Dofasco exercised its right of refusal in August, matching Consolidated's offer. The partners then agreed to a cash payment in lieu of the warrants, forging a "binding agreement" at the end of August, ArcelorMittal Dofasco says.

"Cliffs and U.S. Steel delayed and attempted to renegotiate terms of the agreement to their advantage," the court documents state.

In a statement yesterday, Dofasco CEO Juergen Schachler said, "Our decision to pursue legal action is done in an effort to expedite the closure of the sale, and provide some much needed certainty for the employees at Wabush as well as the community and government stakeholders."

The Wabush iron ore project produced 4.6 million tons of iron ore pellets in 2007. It includes Scully Iron Ore Mine near Wabush, N.L., a pellet plant and port facilities at Pointe Noire, Que., and integrated rail facilities.

npowell@thespec.com

905-526-4620

 

ArcelorMittal sues to force buyout of its co-owners' stake in Canada's Wabush Mines

March 13, 2008

BRUSSELS, Belgium - ArcelorMittal SA, the world's largest steel maker, said Thursday it is taking legal action against the other owners of Canada's Wabush Mines, saying they have reneged on a deal to let it buy them out.

The company said it would ask the Ontario Superior Court to order U.S. Steel Canada Inc. - formerly known as Stelco - and Ohio-based Cleveland-Cliffs Inc. to follow through on a September agreement to sell their holdings in the iron ore mine to ArcelorMittal.

Both said last week they were pulling out of talks with ArcelorMittal. Neither gave a reason but soaring prices for iron ore amid booming global demand for the raw ingredient used to make steel in recent months may have made them reconsider their plans to sell.

ArcelorMittal had offered them $67 million in cash and promised to take on certain liabilities to buy Stelco's 44.6 per cent stake and Cleveland Cliffs' 26.8 per cent.

This deal saw the two steel makers ditch an earlier agreement to sell out to Canadian miner Consolidated Thompson Iron Mines Ltd. ArcelorMittal, as a co-owner, had a prior right to buy them out on the same terms.

ArcelorMittal has 28.6 per cent of Wabush, acquired when it bought Canadian steel producer Dofasco Inc. in 2006. The company aims to control about three-quarters of its iron ore supply to shield itself from price rises.

The world's largest iron ore miner, Brazil's Vale, struck a deal last month with six Asian steel makers to raise iron ore prices by 65 per cent.

Miner BHP Billiton Ltd's bid for rival Rio Tinto PLC could also affect prices because it may lower competition by shrinking the number of major iron producers from three to two.

Wabush has mined, processed and shipped iron ore from Labrador and Quebec since 1965 and turned out 4.6 million tons of iron ore pellets in 2007.

ArcelorMittal Dofasco president Juergen Schachler said the company was taking legal action "in an effort to expedite the closure of the sale, and provide some much needed certainty for the employees at Wabush as well as the community and government stakeholders."


 

Businesses, cities bemoan Family Day


Hamilton Spectator wire services

KITCHENER, Ont. (Jan 9, 2008)

There are "wrinkles to iron out" as Ontarians prepare for the first Family Day statutory holiday on Feb. 18, Premier Dalton McGuinty conceded yesterday.

Snags so far include court cases slated for the holiday and municipalities and businesses complaining about millions of dollars in extra costs or lost productivity.

The holiday was proclaimed into law Dec. 19 after McGuinty promised it as Ontario's ninth annual statutory holiday during last fall's election campaign.

Many municipalities are expecting a pinch -- particularly if there's a snowstorm and staff must be paid overtime to keep streets clear. Hamilton, for example, is budgeting $750,000 for the day plus $200,000 in case of snow.

McGuinty, in Kitchener yesterday for an industrial announcement, defended the holiday, saying Ontario voters "spoke very clearly" in favour of it.

Meanwhile, union officials say they'll fight any attempt to refuse the holiday to some workers who already get the provincial minimum of nine statutory holidays or more.

Some unionized workers are being asked to give up an existing floating holiday in order to take Family Day -- which will fall on the third Monday of February.

 

Family Day to cost Ontario municipal taxpayers millions of dollars

January 08, 2008


The Canadian Press, 2008

TORONTO - The Liberal government's plan to give Ontario workers a new holiday next month will cost municipal taxpayers millions of dollars, and Premier Dalton McGuinty admitted Tuesday there are still "wrinkles" to be ironed out regarding Family Day.

There are also fears the new statutory holiday will mean increased costs to clear roads if it snows on Feb. 18 because towns and cities would have to pay a premium to anyone called in to work due to a storm or other emergency such as a broken water main.

The northern city of Timmins estimates it will cost local taxpayers $60,000 to give its 600 municipal workers the new holiday - a tab the local council would like to see the province pick up.

The City of Toronto expects a nearly $5-million bill to give municipal and transit workers the day off, but Toronto won't give the holiday to its police and firefighters, who already get 13 paid holidays in their contracts.

Ontario's Employment Standards Act calls for nine paid statutory holidays a year, including Family Day, so many workers are being told they won't qualify for the new holiday - which falls on the third Monday of February each year - until it is negotiated in future contracts.

There are concerns that many unionized workers will not get Family Day unless their existing contracts specifically allow for an additional holiday, which CUPE Ontario president Sid Ryan warned Tuesday will lead to labour unrest.

"This will drive strikes," Ryan said. "This will drive bad blood at bargaining tables all across the province for years to come. When a public holiday is granted to one group of workers, the rest who don't have it are going to fight to get it."

Some unionized workers are being asked to give up an existing floating holiday in order to take Family Day - a move Ryan said CUPE and other unions will fight hard to block.

"Everyone was under the impression that this was going to be an additional public holiday," Ryan said. "At no time did McGuinty ever indicate when he was out there looking for votes that if you've already got the minimum (nine holidays) that this doesn't apply to you."

McGuinty wouldn't address the issue of having the province pick up some of the municipalities' costs of Family Day, and insisted his promise to introduce the new holiday was approved by Ontario voters last fall.

"I'm convinced if I was to ask business and public organizations when is the best time for us to bring this in, they would say never," McGuinty said after touring an aerospace company in Kitchener, Ont.

"We had a bit of a consultation on this issue during the course of the past provincial election, and Ontarians spoke very clearly."

Progressive Conservative Leader John Tory called the new holiday "nothing more than another ploy cooked up by the McGuinty Liberals without any thought or planning to win votes."

The Association of Municipalities of Ontario said Family Day will add to the financial problems already faced by local governments across the province.

"Municipalities in general continue to be challenged and frustrated with the fiscal situation in which they find themselves," AMO president Doug Reycraft said.

Reycraft is a councillor in Middlesex County, near London, which voted not to give its workers Family Day this year because they already get 11 paid holidays.

"We anticipate they will likely attempt to bargain for it through the collective bargaining process," he said.

Others who won't qualify for the holiday include federal employees and workers in federally regulated areas such as airlines, banks and radio and television stations, although CBC employees in Ontario have been told they will be paid for Family Day.

There are also concerns that the speed with which Family Day was declared a holiday - it was announced by McGuinty the morning after the Liberals' re-election Oct. 10 - left little time to adjust such things as court schedules.

McGuinty said he isn't worried about people who have been issued traffic tickets telling them to appear in court Feb. 18 - when the courts will be closed - and he dismissed opposition claims that those charged with traffic offences could be off the hook if their original court dates are not rescheduled.

"We're going to have to find a way to iron out some of the wrinkles that develop as we bring in place the very first Family Day," McGuinty said. "Undoubtedly there were wrinkles of this nature when they first put in place the original eight statutory holidays."

Attorney General Chris Bentley said he is confident all criminal charges originally set for Feb. 18 court dates have been rescheduled, and that local governments have had time to reschedule traffic cases in their jurisdictions.

"As soon as it was apparent in October that there was going to be a Family Day, the Ministry of the Attorney General set about to reschedule all of the cases within our control," Bentley said.

"We also provided information to municipalities which are in charge of what we usually refer to as parking and traffic tickets so they would take the same steps."

Everyone may not get Family Day holiday



Already tired of being back at work? Don't worry, you only have 47 days to go until the next holiday. Workers in Ontario will get an early break next month thanks to the new Family Day statutory holiday introduced by the provincial Liberals last October.

But not everyone is counting down the days to Feb. 18. Especially those who work in unionized environments, where issues like vacation days and statutory holidays are written into the collective agreement.

Members of the Toronto police service were recently told that they would not be entitled to the new holiday in a routine order issued to the police force last week. Staff was told to treat the day as a "regular work day."

The Toronto Police Services Board said that because their collective agreement gives more days off than the minimum required by the Employment Standards Act, they are not under obligation to add Family Day to their list of holidays.

"Our employees already get 11 days off including the now nine statutory days, including Family Day," said Alok Mukherjee, chair of the Toronto Police Services Board.

Family Day became law quickly last fall and as a result has led to both confusion and controversy about who is entitled to the holiday and how much it will cost businesses and the city.

City of Toronto officials voted in December to give city employees the holiday off. But they say that it will cost taxpayers $2.3 million to give city workers the holiday, not counting lost productivity. It's also expected to cost TTC $2.5 million and would have cost the Toronto police service $2.2 million.

Although statutory holidays are legally binding and most businesses are obliged to shut their doors on that day, there are exceptions to the rule, said Bruce Skeaff, a spokesman for the Ministry of Labour.

"If you are working in an unionized environment and you're being given 13 days off during the year, then you are getting greater benefit," said Skeaff. "Then under that collective agreement, you don't have to, by law, add on Family Day," he said.

Some larger businesses are working to see if flex days offered to their employees can be used, said Glen Stone, spokesman for the Toronto Board of Trade. But Skeaff says they cannot be applied in this situation.

Others who don't fall under the provincial Employment Standards Act and will be at work on Feb. 18 include federal employees and those working in businesses that are regulated by the federal government such as banks, shipping companies, radio and television stations and airlines.

New steel era forges ahead



The Hamilton Spectator

(Nov 2, 2007)

To paraphrase William Shakespeare, a rose is a rose. Call it a dandelion and it will still smell like a rose.

The same goes for a steel company. No matter what name it carries, it will still be a steel company, it will still provide employment and produce steel. We hope it will do so for a very long time.

Certainly it is a historic moment when the name of one of our steel companies is changed. Unquestionably, there is deep sadness at the passing of a legendary name that has, for almost a century, helped define this community not only for those who live here but also for the world beyond. But in the fullness of time, will it really matter that, in 2007, Stelco became U.S. Steel Canada?

In so many ways, it is a wonder there was even a Stelco left to be renamed. Labour-management dysfunction had long been a corporate personality trait; Stelco also seemed to have a streak of corporate stubbornness that made the company sluggish and unwieldy as it tried -- largely unsuccessfully -- to respond to changes in the types of steel products in demand. It was barely three years ago that the company entered bankruptcy protection. Even after emerging from that protection, continuing losses made the company's survival an open question. Let's face it, corporate branding has not been positive for a long time.

Our other big steel company has for years stood in contrast to insular Stelco. Historically, Dofasco has had a more open corporate character and a more progressive worker-management relationship. It has been more nimble in adjusting to market demands. And while the realities of globalization have recently led it to cut its summer student program and offer buyouts to permanent staff, Dofasco is a company that has been involved in the community, donating money, time and personnel to local projects and causes. As a result, there's a sense that if the new owners changed Dofasco's name, it would pack a greater emotional wallop.

U.S. Steel paid $1.1 billion US for Stelco, taking on $800 million US in debt and $1.4 billion in pension and health-care liabilities. U.S. Steel plans a $100-million investment in the Hamilton and Lake Erie operations. U.S. Steel has no immediate plans to increase the workforce, but neither does it have immediate plans to make cuts. It could have turned out much worse for 3,600 Stelco workers who still have their jobs, and for the city's industrial tax base.

U.S. Steel has some major work to do in rebranding the Hamilton operation, to remove any vestiges of stigma that come from the almost-failure of Stelco. Certainly that will take time and commitment on the part of the company and its workers, but it's necessary for the long-term viability and prosperity of the company. A name change is not a bad place to start making over the steelmaker's image.

Stelco's association with the people of Hamilton has not always been a happy one, but the company has been a consistent and cherished element in the self-image of this city. The birth of U.S. Steel Canada is certainly the end of an era. But that's not automatically a bad thing.

 

It's the end of an era as Stelco name disappears



The Hamilton Spectator

(Nov 1, 2007)

Goodbye, Stelco. Hello, U.S. Steel Canada.

On its first day as Stelco's new owner, U.S. Steel replaced the corporate name that's been inextricably linked with Hamilton for decades.

By yesterday afternoon, Stelco's website and the glass front door of its Hamilton head office were already emblazoned with its new handle: U.S. Steel Canada.

The switch came as Pittsburgh-based U.S. Steel closed its $1.1-billion purchase of Stelco and swiftly installed a new Hamilton management team, led by industry veteran Douglas R. Matthews.

"United States Steel Canada, United States Steel Serbia, United States Steel Slovakia (that's) the way we name subsidiary companies within United States Steel," Matthews said in an interview. "Of course we wanted to respect the history and heritage of Stelco, the Steel Company of Canada. We thought it would be nice to merge the two names."

For Terrie DeMelo, who watched a worker scrape the Stelco logo off the glass door of its headquarters yesterday, the change is bittersweet.

"How can you talk about Hamilton and not mention Stelco?" asked the Hamilton native and former employee of the steelmaker.

"In the long run (the sale) is probably a good thing for the company. But the thing about it being a Canadian company just feels like it's gone."

The Steel Company of Canada was formed on June 8, 1910, through the incorporation of five individual screw, steel, bolt and wire manufacturers. It officially changed its name to Stelco in 1980, partly to satisfy new French-language requirements. The name Stelco, it was found, worked well in both French and English.

The Stelco moniker soon became synonymous with Canadian steelmaking.

By the time industrial giant U.S. Steel came calling this year however, Stelco and its workforce had been dragged through years of financial problems and a difficult restructuring. Against that background, some workers found it hard to shed a tear for the retired name.

"I don't care," said Tony Liota, an industrial mechanic in Stelco's cold mill. "I'm probably better off with these guys as a worker than I was with Stelco because of the size of the organization. I'm now part of a worldwide company versus one little company that was trying to make a go of it."

Matthews said most remaining Stelco signage will be replaced with the U.S. Steel Canada logo.

npowell@thespec.com

 

New man of steel

U.S. Steel Canada CEO has already taken over in Hamilton


The Hamilton Spectator

(Nov 1, 2007)

U.S. Steel has appointed a top executive from its Serbian operations to lead Stelco -- now called U.S. Steel Canada.

Douglas R. Matthews replaces Rodney Mott, the man who led Stelco out of bankruptcy protection and through its eventual sale to Pittsburgh's U.S. Steel. Matthews, 42, was already installed in the former Stelco's head office when that sale was finalized yesterday.

"I'm eager to be here, my family's looking forward to coming here and we're looking forward to the challenges and ongoing success of these facilities," he said.

Matthews, who was vice-president and general director of U.S. Steel Serbia, said he did not expect either the spike in the Canadian dollar or U.S. Steel's most recent earnings report to affect its new Canadian operations.

U.S. Steel's third-quarter profit fell about 35 per cent with results hurt by lower prices and shipments and costs related to raw materials and the Stelco purchase, the company said Tuesday.

"We believe the outlook for the North American steel industry is good with slower but steady growth and our Canadian and U.S. operations will benefit from the synergies between the facilities," Matthews said.

A Pennsylvania native, Matthews began his career with U.S. Steel in 1988. He has worked in various management positions at the steel giant's Indiana, Ohio and Pittsburgh operations.

The father of two hopes to be joined in the next month by his wife and children, who are still located in the Serbian capital of Belgrade.

Matthews says he has no plans to cut the former Stelco's workforce, which was dramatically reduced to about 3,600 workers over the last year through buyouts and attrition.

His plans are to run the company at current levels, producing 4.5 to 5 million tons per year. The company's Hamilton operations will produce steel slabs to be finished at U.S. Steel's Great Lakes operation in Detroit and its Granite City operation in Southern Illinois.

The company is currently evaluating whether to move those slabs by rail or by barge out of Hamilton Harbour.

U.S. Steel has said it will invest about $100 million in plant operations. Matthews said no decisions have been made about how to spend that money.

Matthews is joined by William Harrison, appointed vice-president and chief financial officer. Scott Buckiso will manage the Lake Erie Works plant and Bryan Vaughn has been named plant manager at Hamilton Works.

"The leadership team that will oversee U.S. Steel Canada is composed of individuals with strong, diverse backgrounds acquired during years of service at U.S. Steel facilities in the United States and Central Europe," U.S. Steel CEO John Surma said in a release.

npowell@thespec.com

905-526-4620

U.S. Steel completes acquisition of Hamilton steelmaker Stelco



PITTSBURGH - U.S. Steel Corp. (NYSE:X) has completed its acquisition of Stelco Inc. (TSX:STE), turning Canada's largest steelmaker into U.S. Steel Canada Inc.

Hamilton-based Stelco was snapped up by the Pittsburgh-based company in a US$1.1-billion deal announced in August.

The takeover was formally approved by Stelco shareholders last week and received its remaining required approvals Monday.

"This acquisition expands the footprint of our North American flat-rolled operations, with facilities on both sides of the Great Lakes to better respond to customer needs, including the ability to process U.S. Steel Canada slabs at other U.S. Steel facilities," U.S. Steel CEO John Surma said Wednesday.

"We welcome the customers, employees and communities of Stelco to the U.S. Steel family."

U.S. Steel Canada will be led by president and general manager Douglas Matthews, while William Harrison has been named vice-president and chief financial officer. Scott Buckiso will manage the Lake Erie Works plant and Bryan Vaughn has been named plant manager at Hamilton Works.

Matthews was previously with U.S. Steel Serbia, an integrated steelmaking operation with annual raw steel production capability of 2.4 million net tons.

Harrison has spent the last four years serving as controller at Great Lakes Works near Detroit.

 

Court rules Stelco sale OK despite union plea


The Hamilton Spectator With files from The Associated Press

(Oct 31, 2007)

The buyout of Stelco is expected to close today, ending nearly a century of independence for the Hamilton steelmaker.

The Ontario Superior Court of Justice approved United States Steel Corp.'s $1.1 billion purchase of Stelco yesterday, clearing the final obstacle to the deal.

Regulators and shareholders have already approved the deal, which will make U.S. Steel the world's fifth largest steel producer.

Local 1005 of the United Steelworkers presented the only opposition to the sale during yesterday's hearing.

But the court rejected the union's argument that U.S. Steel should not be allowed to remove a pair of clauses from the pension funding agreement. Those clauses called for Stelco to contribute excess cash to the pension plans and forbid dividend payments until the pension plans are fully funded.

Lawyers for Stelco, U.S. Steel and the province of Ontario -- which brokered the changes to the pension -- countered that the deletion of the clauses was outweighed by U.S. Steel's $32.5 million contribution to the pension and its unconditional guarantee that pension funding obligations would be met.

In related news, U.S. Steel's third-quarter profit fell about 35 per cent with results hurt by lower prices, shipments and costs related to raw materials and the Stelco purchase, the company said yesterday.

The Pittsburgh-based steel maker said net income for the three months ended Sept. 30 fell to $269 million US, or $2.27 per share, from $417 million, or $3.42 per share, a year earlier.

The quarter included a $27-million pretax charge related to inventory acquired with Dallas-based welded pipemaker Lone Star Technologies Inc. and a tax provision with charges totalling $11 million. The charges cut earnings by $28 million, or 23 cents per share.

Shares of the company fell about $6.50, or nearly 6 per cent, to $106 a share in early trade yesterday.

U.S. Steel bought back 285,000 shares of its stock for $28 million in the quarter.

Sales grew about 6 per cent to $4.35 billion, from $4.11 billion during the same period last year.

US Steel CEO John Surma said in a statement that he expected a decline in results for the fourth quarter due to "normal seasonal effects and several scheduled blast furnace outages."

 

Judge to rule on fairness of Stelco purchase



The Hamilton Spectator

(Oct 30, 2007)

U.S. Steel's $1.1-billion purchase of Stelco will face its last significant hurdle in a Toronto courtroom today.

The deal, cleared by government regulators yesterday, could close as early as tomorrow if it receives the court's stamp of approval.

"It is absolutely the last big obstacle," said Stelco chairman Courtney Pratt. "The court has to decide if it's fair."

The sale was approved by shareholders last week.

United Steelworkers Local 1005 president Rolf Gerstenberger has already criticized the deal for releasing Stelco from a pair of clauses he says protect pensioners. Those clauses require Stelco to contribute excess cash to its pension plans and forbid dividend payments until the plans are fully funded.

Local 1005 wants U.S. Steel to adhere to the original pension agreement forged when Stelco emerged from bankruptcy protection last year -- an agreement that includes the dividend restriction and the so-called "cash sweep." If those clauses are removed however, Local 1005 wants U.S. Steel to post "collateral security" in the form of a letter of credit for an unspecified amount.

"The pension agreement was part of a court order and the dividend restrictions were part of that order," said Gerstenberger. "There has to be a high standard for changing that."

Gerstenberger and Local 1005 have outlined their concerns in court documents filed ahead of today's fairness hearing -- a requirement for any sale made through the arrangement provisions of the Canada Business Corporations Act. He worries that although U.S. Steel is strong enough to meet its obligations today, a downturn in the steel market could change that.

Pratt says the removal of the dividend restriction and cash sweep are outweighed by U.S. Steel's upfront pension contribution of $32.5 million, and a corporate guarantee from U.S. Steel to abide by the pension funding agreement. That agreement would see Stelco's pension plans fully funded by 2016.

Stelco was unlikely to hit the target triggering the cash contribution -- one that called for $75 million in free cash flow after capital spending, debt retirement and other obligations, Pratt added.

A commitment from U.S. Steel to fund the pension plans offers more security to Stelco pensioners than existed before, he said. "Would you want to bet on a stand-alone Stelco or U.S. Steel? It's a much, much bigger organization with operations in different parts of the world and it has a financial strength Stelco didn't have."

npowell@thespec.com

905-526-4620

U.S. Steel 3Q profit drops about 35 per cent on lower prices, shipments



PITTSBURGH - United States Steel Corp., which is paying US$1.1 billion for Canadian steelmaker Stelco Inc. (TSX:STE), said Tuesday its third-quarter profit fell about 35 per cent with results hurt by lower prices, shipments and costs related to raw materials and a recent acquisition.

The Pittsburgh-based steel maker said net income for the three months ended Sept. 30 fell to US$269 million, or $2.27 per share, from $417 million, or $3.42 per share, a year earlier.

The results fell short of Wall Street expectations.

U.S. Steel's acquisition of Hamilton-based Stelco will make it the world's fifth-largest steel producer and strengthen its position as a supplier to the North American automotive industry.

The sale of Stelco follows earlier purchases by foreign companies of all the major Canadian steel producers - from Hamilton-based Dofasco and Algoma of Sault Ste. Marie, Ont., to Ipsco, with large operations in Regina.

At US Steel, the quarter included a $27-million pretax charge related to inventory acquired with welded pipe maker Lone Star Technologies Inc. and a tax provision with charges totaling $11 million. The charges cut earnings by $28 million, or 23 cents per share.

Shares of the company fell about $6.03, or 5.4 per cent, to US$106.47 a share in Tuesday trading on the New York Stock Exchange.

U.S. Steel bought back 285,000 shares of its stock for $28 million in the quarter.

Sales grew about six per cent to $4.35 billion, from $4.11 billion during the same period last year.

The results missed analyst expectations for profit of $2.63 per share on $4.38 billion in revenue, according to Thomson Financial. Those estimates typically exclude one-time items.

"We expect a decline in overall results for the fourth quarter mainly due to normal seasonal effects and several scheduled blast furnace outages," John Surma, U.S. Steel's chairman and chief executive, said in a statement.

North American flat-rolled steel inventories and imports are at relatively low levels, he said, and the weaker U.S. dollar should favor the company's customers over time.

European steel consumption remained healthy, but high imports - particularly from China - and high service center inventories are adding pressure to prices and orders, he said.

Applause for Stelco takeover


The Canadian Press

TORONTO (Oct 27, 2007)

After years of financial problems and restructuring, Hamilton-based Stelco Inc. moved closer to the end of its life as an independent Canadian company with little pomp other than a round of applause yesterday as shareholders formally approved a takeover by Pittsburgh-based U.S. Steel.

At the big steelmaker's last meeting, 88 per cent of shares were voted, with virtually all in favour of the $1.1-billion US deal.

The five-minute meeting in Toronto didn't include any questions. "U.S. Steel is the right company to come in and provide a lot of security for the people (at Stelco)," CEO Rodney Mott said after the meeting.

He said he wasn't aware of any "concrete" plans for Stelco once it's merged into U.S. Steel, but expected the new owners would focus on the $100 million US in possible synergy savings previously discussed.

"They'll probably want to take a bit more time to evaluate the facilities and really work on their strategic plan before they announce anything," he said. But, he added, he expects the new owner to continue running Stelco's two Ontario plants "to get the highest level of productivity they can."

"There's two main things that they like about Stelco -- obviously the Lake Erie plant is a very fine operation -- but they're also looking within U.S. Steel (because) they need additional steelmaking, and the additional steel-making is available out of Hamilton."

Stelco had sought potential bidders since emerging from bankruptcy restructuring nearly two years ago, cutting costs, reducing debt and improving its efficiency to make itself more attractive to potential bidders.

In its last earnings report as a Canadian-owned company Wednesday, Stelco reported a net profit of $38 million or $1.26 per share in the third quarter, reversing a loss of $25 million or 93 cents a share for the same period a year ago.

The gains were due in part to $5 million in savings from job cuts and other streamlining and foreign-exchange increases of $36 million.

CEO leaving Stelco after buyout closes

Rodney Mott, the steel industry veteran who steered Stelco Inc. as it searched for a buyer, will leave the company when its takeover by United States Steel Corp. closes by next week. "I'm looking forward to going home," Mr. Mott said after a five-minute shareholders' meeting in Toronto yesterday during which Stelco's owners agreed to a $1.1-billion, or $38.50-a-share, takeover offer from U.S. Steel. He has been commuting during his tenure from his home in South Carolina. Mr. Mott became chief executive officer the day Stelco came out from protection under the Companies' Creditors Arrangement Act and spent much of his time cutting costs and eliminating jobs at the company's Hamilton operations in order to make the company an attractive purchase. Earlier this week, Stelco reported its first quarterly profit since emerging from CCAA protection in April, 2006. Mr. Mott and 10 senior executives will share in a $61.6-million payout from the deal. The bulk of that amount comes from purchasing their share options, but there's also a $2.4-million bonus for arranging the sale of Stelco, which is three years short of reaching the century mark as a Canadian company. The final step in the Stelco sale will come next week with a hearing at the Ontario Superior Court that will rule on whether the takeover offer is fair to shareholders and other stakeholders. Once the deal is completed, there will be no Canadian ownership remaining in the steel industry.

Stelco shareholders vote strongly in favour of takeover by U.S. Steel
October 27, 2007

Shareholders of Hamilton-based Stelco have formally approved a takeover by U.S. Steel at the Canadian steel maker's last meeting as an independent company.

Eighty-eight per cent of shares were voted, with 99.99 per cent of those voted in favour of the $1.1 billion (U.S.) deal.

The five-minute meeting in Toronto didn't include any questions and ended in a round of applause.

Stelco had sought potential bidders since emerging from bankruptcy restructuring nearly two years ago. The company had cut costs and debt and improved efficiency to become more attractive.

Pittsburgh-based U.S. Steel Corp. agreed in August to buy Stelco for $38.50 in cash per common share. Stelco expects the deal to close at the end of the month.

The Canadian Press

 

Stelco shareholders approve U.S. Steel buyout

Globe and Mail Update

Tioron — Shareholders of Stelco Inc. have approved the buyout by United States Steel Corp. of the last remaining Canadian-owned steel maker.

About 99 per cent of shareholders who voted cast ballots in favour of the deal, Stelco said after a brief five-minute meeting Friday in Toronto.

Approval of the $38.50-a-share bid was a foregone conclusion after the U.S. giant signed a lock-up agreement with holders of 76 per cent of Stelco's common shares. That group consists of Tricap Management Ltd., which is a unit of Brookfield Asset Management Inc., Appaloosa Management LP, a New York hedge fund, Sunrise Partners LP, a Toronto-based fund and Stelco chief executive officer Rodney Mott.

The $1.1-billion buyout is expected to close next week after it goes to the Ontario Superior Court of Justice for approval.

The sale marks the end of a century of Canadian ownership of the steel industry. Stelco's neighbour Dofasco Inc. was purchase in 2006 and two other steel makers, Algoma Steel Inc. and Ipsco Inc. were purchased by offshore companies earlier this year.

Stelco emerged from protection under the Companies' Creditors Arrangement Act last year and had lost money every quarter under the stewardship of Mr. Mott until the most recent quarter, when a foreign-exchange gain of $36-million contributed to a profit of $38-million.

Mr. Mott took over as CEO the day Stelco emerged from creditor protection and he spent much of his time cutting costs and eliminating jobs at the company's Hamilton operations.

Analysts expect U.S. Steel to cut further in Hamilton, with its real goal in the buyout to pick up the newer and more efficient Lake Erie Works in Nanticoke, Ont.

New Feature: Recommend this article to other Globe readers!

STELCO VOTES TO SELL

A Canadian dream that melted away

Some executives hoped a mega-merger would save the steel industry from foreign buyers

STEEL REPORTER

The beginning of the end of Canadian ownership of the steel industry can be traced back to 1991, when Fred Telmer, Stelco Inc.'s chief executive officer at the time, called his neighbours at Dofasco Inc. to see whether the two companies could do something together.

"There was no appetite on their part to discuss it," Mr. Telmer recalls. "I can't say that I blame them."

It wasn't a very formal approach, he says, but that's how two of the four buyouts of Canadian steel makers started - with executives examining ways to co-operate.

With the 20-20 vision of hindsight, Mr. Telmer's approach to Dofasco could have sparked a mega-merger in Canadian steel making and the creation of a Canadian champion that could have been a predator in the global consolidation reshaping the industry. Instead, all four domestic companies ended up as prey, with three of them being swallowed up this year in the span of about five months.

It's the most dramatic example of the recent selloff of large pieces of Corporate Canada and a stark contrast in economic prominence from the 1950s when the Royal Commission on Canada's Economic Prospects identified steel as a vital industry.

After Mr. Telmer was rebuffed, Dofasco and Stelco remained neighbours instead of spouses, while Algoma Steel Inc. struggled to stay afloat in Sault Ste. Marie, Ont., and Ipsco Inc. expanded in the U.S. market to become North America's largest maker of steel plate.

In a few months, all four of them will have disappeared as Canadian-owned companies. The final steps along that path start today with a vote by Stelco shareholders to approve a $38.50-a-share buyout by United States Steel Corp.

The logical place to forge a "Cansteel" was the grotesque landscape in the east end of Hamilton, where Dofasco and Stelco sit side-by-side at the corner of Industrial Drive and Ottawa Street, separated physically by only a drainage ditch, but culturally by an unbridgeable gap.

Stelco had steel making and a lousy strip mill, Mr. Telmer says. Dofasco, on the other hand, "had a first-class cold mill."

Dofasco, however, was just coming out of a near-death experience caused by its purchase of Algoma in 1988 and subsequent writeoff of its entire investment in the third-largest Canadian steel maker three years later.

Former Dofasco insiders say the Hamilton-based company forgot that its main purpose in buying Algoma was to supply it with steel to be shipped south and further processed at Dofasco mills. Instead of scaling back its new subsidiary, Dofasco never reduced costs or staff to the extent needed.

It was also hit with a four-month strike, which meant the non-union Dofasco wasn't about to consummate a marriage with a unionized rival, even if it was right next door.

The difference in cultures between the two Hamilton companies could not be overcome, Mr. Telmer says. In contrast to the paternalistic Dofasco, with its annual Christmas party for employees, Stelco had a decades-long history of poor worker-management relations.

Former Dofasco insiders say the dysfunctional relationship between Stelco and its union kept Dofasco from knocking on its neighbour's door when the perennial No. 2 became the stronger company.

So the Canadian steel makers went their separate ways.

Algoma fell into creditor protection, emerged, built a leading-edge mill that it financed on the U.S. junk debt market and had to be restructured under creditor protection again. When strong Chinese demand sent steel prices surging earlier this decade, Algoma was out of creditor protection and thrived.

Ipsco did its own thing out of Regina, built mini-mills in Iowa and Alabama and became one of the best-run steel makers on the continent.

Stelco meandered along as all things to all people in the 1990s, cranking out plate, pip