Hamilton: The Steel City.
That moniker has defined the city’s identity, culture and economy for more than a century, but the pace of change in the industry in recent years has left some wondering what its role will be in Hamilton’s future economy.
Just look at the numbers: In the early to mid 1980s Stelco and Dofasco employed a combined total of more than 39,200 workers in Hamilton. (Stelco 26,262 in 1981 and Dofasco about 13,000 around 1985.) Today the combined total is about 6,400. (ArcelorMittal Dofasco about 5,200 and U.S. Steel Canada’s Hamilton and Lake Erie plants about 1,200.)
The decline has been blamed on many forces: changes in the auto industry that have drastically reduced the amount steel in cars; the decline and disappearance of industries such as appliance manufacturing and the rise of free trade agreements that stripped the Canadian industry of any protection from foreign competition. Add to those the impact of global trade conditions, especially the impact of the massive Chinese industry unhampered by the burden of legacy, environmental and worker health costs faced by Canadian firms.
The dawn of 2013 presents two widely different companies.
At U.S. Steel Canada’s Hamilton Works, the last remaining blast furnace has been silent for more than two years now. It was idled Oct. 4, 2010 with the company citing lack of demand for steel. Within days, however, it brought two American blast furnaces back into production.
Without the iron produced in that vessel the Hamilton plant is not making steel, it is only processing metal made in other locations. The Hamilton plant’s coke oven battery, a galvanizing line and finishing operations, including a cold mill and the Z-line, which produces coated steel for exposed auto parts, are operating. The galvanizing line was restarted in 2012 after three years.
The company continues to say the Hamilton steel making operation won’t be brought back into play until there is a marked increased in steel demand and prices, even though the company’s American plants continue to run near capacity.
Despite that depressing track record, U.S. Steel Canada spokesman Trevor Harris said the company still sees a future for the Hamilton operations.
“U.S. Steel Canada’s operations in both Hamilton and Nanticoke are vital to our future,” he said in an email exchange. “The investment of millions of dollars in our facilities and our communities will continue in 2013 with an eye on maintaining our position as a dominant Canadian supplier in a competitive global market.”
Across the street, at ArcelorMittal Dofasco, the situation is slightly brighter, despite a challenging economic environment.
The company has been investing in its Hamilton plant — work is going ahead on a $120-million galvanizing line to produce a range of advanced high-strength steels for the auto sector. It is expected to go into production in the fourth quarter.
Tony Valeri, AMD’s vice-president for communications, said the plant is running at 100 per cent of capacity where the North American industry runs at about 75 per cent currently, and is looking toward a solid future.
“We believe that steel will remain a strong and vibrant part of Hamilton’s economy,” he said. “Steel is a material that continues to be in demand and I would challenge anyone to say steel won’t be a significant part of Hamilton’s economy.”
Jobs in steel may not be as plentiful as they once were, he added.
“Hamilton’s economy will continue to evolve with a strong steel manufacturing component,” he said. “We’re not standing still here. We’ve made the tough choices and now we’re looking at a steel company that is here to stay.”
Neil Everson, director of the city’s economic development department, also sees a future for steel in Hamilton.
“We have a lot of infrastructure for the industry here so I don’t think steel will disappear entirely,” he said. “We have a critical mass for steel here.”
Everson looks to a day when rising energy and transportation costs convince companies to bring steel work back to North America from other countries.
“Companies are going to see a lot more benefits from operating from a North American base so that will mean a lot of that work is repatriated,” he said.
Clouding the future, he said, is the fact none of the decisions about Hamilton’s steel industry are made in Hamilton any more — U.S. Steel is headquartered in Pittsburgh and ArcelorMittal has its home base in Luxembourg.
With steel companies thinking on a continental or even global scale, it’s not impossible Hamilton’s steel jobs could be enticed away.
One scenario, Everson said, concerns the American trend toward so-called “right-to-work” laws that make it more difficult for workers to unionize and for unions that already operate to continue.
Despite political rhetoric about worker freedom and democracy, he said, the real impact of such laws is to reduce wages, giving those jurisdictions a competitive advantage. That’s in addition to the long-standing American tradition of bonusing — using tax cuts and outright grants to draw firms.
It was just such a program that cost Hamilton 500 jobs recently when Siemens was enticed to the U.S. by $157 million in incentives.
“Right now Michigan is virtually giving away land and buildings,” Everson said. “That’s the one that keeps me up at night.”
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