Sean Donnelly, President of ArcelorMittal Dofasco Addresses the Chamber of Commerce

Sean Donnelly, President of ArcelorMittal Dofasco gave a presentation on the current state of ArcelorMittal Dofasco to a well attended and enthusiastic audience at the Express Restaurant.

Call it a tale of two steel companies — the best of times for one and the worst for another.

On one side is ArcelorMittal Dofasco, profitable, stable and looking to hire 300 people a year to keep its booming Hamilton mills producing.

On the other is United States Steel Corporation of Pittsburgh, with $75 million in losses for the first quarter of 2015 and its Canadian branch in creditor protection.

The contrasts between the companies were displayed Wednesday. U.S. Steel president Mario Longhi cited unfair foreign competitors for forcing thousands of layoffs and leaving his mills running at barely more than 72 per cent of their capacity. On the same day, AMD president Sean Donnelly told the Stoney Creek Chamber of Commerce his company is running at up to 97 per cent of capacity and is having trouble filling the jobs it has to offer.

Donnelly said AMD is facing “a huge wave of retirements in the next few years” as baby boomers cash out of the workforce. Even though those retirees won’t be replaced one-for-one, he’s still having trouble finding enough skilled trades workers and others.

“We’ve been flying a little bit under the radar with this,” he said. “Anyone else looking to hire 300 people a year would be given a parade in downtown Hamilton.”

Donnelly said one reason for the trouble finding workers is a lingering perception that jobs in a steel mill are dirty and dangerous.

“Steel isn’t a dirty industry anymore,” he said. “Today our people are working in pulpits, behind computer screens and monitoring automated process.”

Hiring people isn’t the only problem AMD faces. The auto industry, which accounts for 40 per cent of the company’s business, constantly demands grades of steel that are lighter but just as strong as they struggle to make vehicles more fuel efficient.

The search for those materials keeps 85 people busy in the company’s Hamilton research and development labs.

“Aluminum is a huge threat to us,” Donnelly said. “There is a lot of intensity in the research area to combat alternative materials.”

In defending his poor financial performance, Longhi said the American steel industry is being battered by metal dumped in the United States at less than its cost of production.

“Illegal dumping in this market is ongoing and it has to end,” he said. “We need legislative relief that is sustainable.”

Figures published by the U.S. Department of Commerce back up Longhi’s complaint. To the end of February the department reported steel imports to the U.S. rose 25 per cent from the same period a year earlier.

The Canadian situation isn’t much better. Donnelly told his audience “imports remain a huge issue in North America.” The Canadian Steel Producer’s Association backs that claim, noting Canada’s demand for steel is roughly 16.6 million tonnes a year and imports of 9.9 million tonnes give foreign producers about 60 per cent of that market.

U.S. Steel is in the midst of a multi-year cost-cutting program dubbed The Carnegie Way. Dave Burritt, the company’s chief financial officer, told analysts that program will result in savings of $340 million in 2015.

“These are not targets, they are the results of programs that have been implemented,” he said. “They will deliver above-market returns to our stockholders.”

As for the company’s struggling Canadian branch, in creditor protection since September, its financial results are no longer included in the figures reported by the American firm. For Longhi, that means the Canadian situation is simply one for the American firm to watch.

“They are going through their motions to get their issues resolved,” he said. “We will keep an eye on it and see how it goes.”

The parent firm’s stake in the Canadian restructuring is more than a cause for careful watching — the American company claims it is owed more than $2.2 billion by the Canadian branch.

Hamilton Spectator
Steve Arnold