The
Stel Salaried Pensioners Organization wishes to thank The Hamilton Spectator
for permission to post the following article by Naomi Powell, published in the
August 27, 2007 edition
Hamilton Steel may get $100m upgrade
The Hamilton Spectator
(Aug 27, 2007)
U.S. Steel will consider a $100 million
investment in Stelco's outdated Hamilton Steel facilities.
In an exclusive interview with The Spectator
last night, U.S. Steel CEO John P. Surma said his company had already held
preliminary discussions about how to improve Hamilton Steel's coke, cold mill
and pickling operations.
"Our objective is to run (Stelco's
operations), run them well, and run them for a long period of time," he
said.
Surma emphasized the opportunities in
integrating Stelco's Hamilton slab operations with the rest of U.S. Steel.
He plans to finish slab made in Stelco's
Hamilton facilities at U.S. Steel plants in Detroit, Mich. and Granite City,
Ill.
"The slab supply coming out of Hamilton
now, which is 900,000 to one million tons of slabs, is very important to us
because we can now finish them at our existing Midwest facilities," he
said. "It fits in very, very nicely to our existing systems."
Other highlights of the deal include:
* A voluntary contribution of $31 million US
to Stelco's underfunded pension plans.
* An endowed chair at McMaster University to
facilitate the development of new steelmaking technology.
Surma estimates the synergies between the
two companies will save $100 million US before tax.
"Our company has tripled in size since
the year 2000," Surma said. "We've added operations in several
countries. We do this carefully, so the things we acquire fit nicely in with
the rest of business."
Based in Pittsburgh, U.S. Steel is the
largest integrated steelmaker headquartered in the United States.
Since 2004, the $10-billion firm has been
led by Surma, a Pennsylvania native whose pastimes include golf and hockey.
U.S. Steel is an industry giant, capable of
producing 26.8 million tons of steel each year at plants in Pennsylvania,
Indiana, Detroit, Illinois and Alabama. It also has foreign operations in
Slovakia and Serbia.
The firm has been on the prowl for assets
lately. It recently paid $2.1 billion for Lone Star Technologies, a
Dallas-based provider of oil field pipe products.
U.S. Steel has eyed Stelco in the past,
taking a hard look at the steelmaker while it was still in bankruptcy
protection in 2004.
Since then, consolidation has ripped through
the steel sector, with Canada's Dofasco, Ipsco and Algoma Steel all snapped up
by foreign players. Global steelmakers have been buying up smaller rivals in
order to expand their global footprint and gain more power at the bargaining
table with customers and raw materials suppliers.
The rush of takeovers has limited the number
of independent steelmakers available to major players looking to expand or
establish operations in North America. Stelco and AK Steel of Middletown, Ohio,
are among the last items on the shelf.
The granddaddy of established steelmakers,
U.S. Steel was founded in 1901 when J.P. Morgan and Elbert H. Gary combined
Andrew Carnegie's steel company with their holdings in the Gary's Federal Steel
Company and several smaller companies. With a capitalization of $1.4 billion,
it was the largest business enterprise ever launched at the time. In it first
year of operation, U.S. Steel controlled 67 per cent of the domestic market,
according to the company's website.
In recent years U.S. Steel has come under
pressure from upstart steel mini-mill operations, steelmakers that use electric
furnaces to melt scrap steel rather than make it from scratch. The mini-mills
have presented fierce competition, particularly in the steel bar and beam
markets.
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