The Stel Salaried
Pensioners Organization wishes to thank The Hamilton Spectator for permission
to post the following article by Reporter Steve Arnold, published in the March
14, 2006 edition
By Steve Arnold
The Hamilton Spectator
(Mar 14, 2006)
Stelco's new president says fixing productivity problems at
Hilton Works will be his first priority.
Turnaround expert Rodney Mott earned $42 million US last
year after breathing new life into American steelmaker ISG. The 30-year
industry veteran will take over Stelco when it leaves bankruptcy protection at
the end of the month and yesterday made it plain that performance must improve.
"Obviously everyone is going to focus on profits and
that's really the only way you get through to having security for the employees
and the shareholders," he said.
"There is a sense ... that there's got to be more
emphasis on productivity (at Hamilton's Hilton Works). That can either be by
increasing the output or by adjusting the workforce."
Exactly how that's to be done, he said, will have to wait
for a detailed department-by- department study of the plant and its operations.
Despite productivity weaknesses, Mott said the plant and the
rest of the company has a reputation for quality work and good facilities that
should make it possible to hit his target.
"Stelco has been competitive, but I think the rest of
the industry has changed some, has increased productivity, has worked hard
around their marketing plans," he said.
"I think there are ways to bring Stelco right up to
where the rest of the industry is and be re-established as a good, profitable
company."
Mott said he's aware of the troubled relationship between
Stelco and Local 1005 of the United Steel Workers which represents Hilton Works
employees and added he's ready and willing to work with union leaders in making
needed changes.
"My relationship with the steelworkers everywhere has
been to share the information with them but also to understand where they think
the opportunities are to improve operations. Usually you get that co-operation
and you can make a big difference," he said.
"I expect the union leadership to step up and be
business partners with us and recognize they're the people who have the
long-term gain out of this and that they should have a lot more say in how we
operate the business."
Local 1005 vice-president Jake Lombardo refused to comment
on the appointment saying simply, "I don't know enough about the
guy."
Other union leaders were cautiously optimistic.
"He's got a good background in steel and that's better
than having someone who doesn't know the industry," said Bill Ferguson,
president of the Lake Erie local. "It's a positive thing that he's from
steel."
Wayne Fraser, director of the union's Ontario-Atlantic
district, agreed.
"It's important we have someone at the helm who
understands the business," he said. "He seems to have the right
attitude coming in so I think we can work together."
Mott became president of Ohio-based International Steel
Group (ISG) in 2002, helping billionaire investor Warren Buffet build America's
largest steel company by gathering up smaller firms in bankruptcy.
He left in April last year when ISG was itself swallowed by
Mittal Steel, the European giant on its way to becoming the world's largest
steelmaker. For the last six weeks, Mott has been serving as a consultant to
Tricap Management Ltd., the largest of the investment funds refinancing Stelco.
"Rodney has a significant breadth and depth of
experience in the steel industry," said Cyrus Madon, managing partner of
Tricap. "We think he has a unique skill set for turning unprofitable
operations into profitable ones."
Madon added there's no firm deadline for that return.
"It usually takes two or three years to achieve a full
turnaround," he said. "We are patient investors and we will support
the company."
When he left ISG, Mott was ranked by Forbes Magazine as the
17th highest paid executive in America with a package of more than $42 million
US. That included $650,000 in salary, $1.9 million in bonus and $40.1 million
in stock increases.
Tricap spokesman Katherine Vyse said Mott's Stelco paycheque
will consist of salary, bonus and "equity incentive that is commensurate
with his position and seniority, and is competitive in the industry."
Details will be disclosed later in regulatory filings.
Peter Warrian, of the University of Toronto business school,
called the appointment "a bon Mott" that bodes well for the future of
Stelco. A particular strength Mott brings to the jobs, he said, is his ability
to build good relationships with unionized workers.
"The union's relationship with ISG was always very
positive through a very difficult transition phase and Mott was at the centre
of all that," he said.
Stelco filed for bankruptcy protection on Jan. 29, 2004,
citing the mounting losses and the crippling cost of funding its pension plan
deficit.
With money from Tricap, two other investment funds and the
federal and provincial governments, its finances have been restructured without
concessions from workers or retirees. Debtholders will get about 66 cents on
the dollar while current shareholders get nothing.
sarnold@thespec.com
905-526-3496