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Stelco Inc. hopes to eliminate another 1,200 jobs from its books in a new round of asset sales, part of a long-term strategy to give the beleaguered steelmaker a profitable future.
TORONTO
Stelco Inc. hopes to eliminate another 1,200 jobs from its books in a new round of asset sales, part of a long-term strategy to give the beleaguered steelmaker a profitable future.
Stelco, which is operating under court protection from bankruptcy, said it is looking to close or sell eight “obsolete facilities” or non-core businesses and slash the number of products it makes.
The company wants to concentrate on its Hamilton operations and its Lake Erie facilities in Nanticoke, Ont., and close or sell operations elsewhere in Ontario and in Quebec.
Roughly 1,200 workers at its wire and pipe operations, which Stelco confirmed last Thursday are up for sale, could continue their jobs under different employers, said CEO Courtney Pratt.
The businesses can be consistently profitable under different ownership, whereas currently, their products don’t get the attention given to Stelco’s main steelmaking divisions in Hamilton and Nanticoke, Ont., Pratt said.
“We’re not talking about shutting those businesses down. We’re talking about putting them in the hands of someone who will see them as strategic and will make the kinds of investment that they need,” Pratt said in an interview with The Canadian Press.
The United Steelworkers union recently lashed out at Stelco for specifying pensions and benefits as a problem.
The union has challenged whether Stelco is in fact insolvent and wants to fight the Companies’ Creditors Arrangement Act, which puts workers behind secured creditors in order of claims.
“The strategy again identifies the cost of pensions and benefits as part of the problem, thus targeting those most vulnerable in the wake of past mismanagement of the business and the pension plan,” said Wayne Fraser, the Steelworkers’ Ontario-Atlantic director.
Stelco’s strategy was presented to various stakeholder groups this week.
The strategy provided a snapshot of what Stelco could look like after a restructuring: leaner, with fewer product lines and renovated operations after a shedding of older facilities.
Pratt predicted the more focused business will attract capital required to finance capital spending programs that will take between 18 and 24 months to complete at costs of up to $465 million.
Operations in Hamilton and Lake Erie would be left largely intact, except for the closure of a strip mill and two “pickle” lines in Hamilton.
The total operations employed about 8,400 workers at the start of this year, though attrition could reduce that number by 500 positions in three years, mostly in Hamilton.
Those sites make hot- and cold-rolled steel sheet as well as steel bar chiefly for the automotive and construction markets, and the products tend to be “value added” for clients and therefore bigger money makers, Pratt said.
Stelco will phase out steel rods, wire and other items from its product mix.
“We’ve tried to be too many things to too many people. As a result, you end up not really doing a great job on anything,” Pratt said.
Stelco has already closed a 200-worker plate mill in Hamilton and a 175-worker pipe mill in Welland, Ont., last year. This summer, it confirmed plans to sell its rod mill, affecting another 160 workers.
The company also said it will look to sell its Stelwire operations in Hamilton and Burlington, Ont., which employed just under 400 workers at the start of this year according to court documents filed when Stelco entered bankruptcy protection.
It also said it is considering selling its Stelwire operation in Lachine, Que., which employs about 250 people, and its Stelpipe steel tube products maker in Welland, Ont., which employs about 500 people.
That’s a total of about 1,150 people in potential new jobs that would be transferred or cut from Stelco, not including workers in Hamilton eliminated by line shutdowns.
Stelwire in particular has shown signs of profitability recently, though Pratt wouldn’t divulge specifics ahead of the release of Stelco’s second-quarter results.
However, in Stelco’s long-term view, “it doesn’t really matter if it’s profitable,” he said of the steel wire business.
“Longer term, we’re just in too many businesses. And I’d rather sell a business when it is profitable than when it’s not.”
In order for Stelco’s future vision to become reality, it needs “significant” cost cuts, Pratt said.
Stelco maintains it had to seek creditor protection in January because it’s weighed down by rising energy and raw materials costs as well as pension and benefit expenses.
The Canadian Press
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