The Stel Salaried Pensioners Organization wishes to thank The Hamilton Spectator for permission to post the following article

The Stel Salaried Pensioners Organization wishes to thank The Hamilton Spectator for permission to post the following article by Andrew Dreschel, published in the August 29, 2007 edition

Steel business makes strange bedfellows

Andrew Dreschel
The Hamilton Spectator

(Aug 29, 2007)

U.S. Steel's takeover of Stelco puts me in mind of a painting that once slipped through my fingers at the Dundas Valley School of Art's annual silent auction.

It was a watercolour, if memory serves. In the foreground, a sweep of long grass at the water's edge. In the background, blast furnaces and stacks smudging the blue sky with smoke.

I can't recall the local artist's name. But it had Hamilton written all over it.

I thought it was mine for the taking until a guy elbowed his way up to the bid sheet in the dying seconds of the auction and topped my pencilled bid while expertly running out the clock.

Now you own it, now you don't.

I suppose that's how Severstal, the Russian steel colossus, felt the other day when it learned U.S. Steel had topped its bid for Stelco.

I guess that's how Germany's ThyssenKrupp felt last year when it lost the bidding war for Dofasco.

Truth be told, I'm not sure if the stacks in the painting represented Stelco or Dofasco. It didn't really matter though. The companies were like twins in this town, the Tweedledee and Tweedledum of Canadian owned-steel giants.

Back then, I simply thought the painting was emblematic of Hamilton's two faces -- the terrible beauty of its steel mills, the serene beauty of its natural environment.

But now that both Dofasco and Stelco have fallen into foreign hands, it strikes me the painting would have been a fine memento of an age that is passing before our eyes.

Don't get me wrong. I can no more work up any nationalist outrage over the Stelco takeover than I could for the Dofasco acquisition. Or, for that matter, the sale in recent years of iconic Canadian breweries like Molson and Labatt to foreign multinationals.

At this moment in history, globalization is the way of the world. It's the corporate equivalent of collectivism. It's capitalism's buccaneering response to the Global Village.

All things considered, Stelco, which hit the auction block after emerging from bankruptcy protection last year, has had a soft landing.

Job retention, local stability, potential reinvestment, and other economic spinoffs are far more important to the employees and the wider community than what national anthem the owners sing. U.S. Steel holds out the hope that Hamilton Steel -- formerly Hilton Works -- will be contributing to the economy of this hard-up city for many years to come

But in this climate, steel production makes as many strange bedfellows as politics. It's far from certain the wheel of global consolidation has stopped spinning for Stelco any more than it did for Dofasco.

You'll recall that just days after Luxembourg-based Arcelor outbid ThyssenKrupp for Dofasco, Arcelor itself became the target of a hostile takeover by Netherlands-based Mittal Steel, throwing Dofasco's future into doubt.

In the end, Dofasco stayed firmly within ArcelorMittal's merged orbit. But there's ample reason to wonder whether Stelco might once again find itself in play on the global chess board.

Consider: Last winter, Severstal was rumoured to be interested in a merger or formal alliance with U.S. Steel.

Consider: Rumours were flying in the spring that U.S. Steel was being eyed for a takeover by ThyssenKrupp.

Consider: Last month, in a joint interview with Associated Press, Lakshima Mittal, CEO of ArcelorMittal, and John Surma, CEO of U.S. Steel, predicted even more consolidation in the steel industry.

Surma ducked the question of whether U.S. Steel is involved in merger talks when he met with The Spectator's editorial board Monday.

"There's always rumours in our sector these days and trying to keep track of them would be a full-time job. So we don't keep track of them and don't comment on them," said Surma.

Pressed whether they are in negotiations, Surma still refused to bite.

"We wouldn't comment on whether we are or we aren't," he said. "Our policy is we do what we say and we say what we do."

That may be so, but if body language means anything, some kind of movement may be going on behind the drawn curtains. These days, now you own it, now you don't applies as much to the steel business as it does to a silent art auction.

Andrew Dreschel's commentary appears Monday, Wednesday and Friday. adreschel@thespec.com 905-526-3495