Stelco Inc. (ticker: STE.to, exchange: Toronto Stock
Exchange) News Release - 4/29/2004
Please Click Here to visit
the Stelco website for a PDF version of the Economic Impact Report
Datametrics Presentation.
Failure could cost 24,500 jobs, $1.9 billion employment
income, $1.1 billion in taxes Successful outcome and resulting capital
investment would create jobs, income, and government revenue Company notes that
a restructuring will only work if all work together
HAMILTON, ON, Apr 29, 2004 (Canada NewsWire via COMTEX) --
If Stelco Inc. (TSX:STE) fails to achieve a successful restructuring, the
results could include the loss of thousands of jobs in Ontario and beyond,
employment income in many regions, and tax revenue at all levels of government
in Canada. A successful outcome, on the other hand, could pave the way for
capital projects that would create additional jobs, employment income, and tax
revenue for government programs and services.
These are the findings of Estimating the Economic Impacts of
Potential Major Changes at Stelco Inc., a study commissioned by the Company in
the fall of 2003 and completed in March 2004. It was prepared by Dr. Stephen
Tanny, the principal of Datametrics Consulting Inc. and a professor of
mathematics at the University of Toronto. Dr. Tanny was assisted in the
preparation of his report by the firm of Ernst & Young.
According to the study, the closure of the Company's
operations in Hamilton (including Stelwire Ltd.) and Haldimand County could
cost 24,537 jobs (7,069 direct and 17,468 indirect) in those communities,
elsewhere in Ontario, and across Canada. It would threaten $1.8885 billion
($520.8 million direct and $1.3 billion indirect) in salaries, wages, and other
employment income. And it would reduce tax revenue by $1.083 billion at the
municipal ($57.5 million), provincial ($510 million), and federal ($515.5
million) levels of government.
Courtney Pratt, Stelco's President and Chief Executive
Officer, said, "This study shows how Stelco's importance extends far
beyond the communities in which it operates. It also demonstrates the
widespread and devastating consequences that will result if the Company does
not achieve a successful restructuring."
On the other hand, the study concludes that a successful
restructuring, and the resulting planned expenditure of $603 million on capital
projects at the Hamilton and Lake Erie facilities, will create 8,574 person
years of employment, generate $667.6 million in total employment income, and
provide $477.4 million in tax revenue for government programs and services over
a three-year period.
Pratt added, "These findings show the importance and
the benefits of a successful restructuring. We know the investments we need to
make in order to improve our facilities, reduce the cost of production, and
become a competitive steel producer. The study shows that the positive impact
of these capital projects will be felt in many ways by many people in many
parts of the country."
Discussing the process going forward, Pratt noted,
"That's why we hope that all interested groups will participate in the
meaningful discussions that must begin soon. The process must proceed if we are
to achieve the best available outcome for everyone who depends on Stelco in one
way or another. Every group will have a role to play in the process and a say
in the outcome.
"No solution will be forced or imposed on anyone. The
solution will emerge from everyone working together, or it will not emerge at
all. The study released today indicates what can be gained - or lost -
depending on the approach that various groups decide to take. We hope they will
realize that their participation is the best way to preserve well-paying jobs
for our employees, security for our retirees, plus economic and other benefits
for the community."
The
economic impact study can be found on the Company's Web site at www.stelco.ca.
[gthede
bolding]
The study utilized Stelco data for 2002 and models from
Statistics Canada and the University of Toronto. It examined the economic
impact of three hypothetical outcomes: closure of the Hamilton facility and
that portion of the Lake Erie operations that depend on its activity; closure
of the entire integrated steel operations; and a successful restructuring.
The study found that any of these outcomes would have a significant ripple effect not only in Hamilton and Haldimand County (home of the Lake Erie operations), but extending to the provincial and national levels as well. This impact would be felt in terms of employment (direct and indirect), employment income through direct and related economic activity, and taxes at each of the municipal (i.e., local property and business tax), provincial (i.e., personal income, corporate, retail sales and other taxes and levies) and federal (i.e., personal income, payroll and large corporation taxes, Employment Insurance premiums, GST, etc.) levels as a result of changing levels in employment and income under the three possible outcomes.
Stelco Inc. is a large and diversified Canadian steel
producer. It is involved in all major segments of the steel industry through
its integrated steel business, mini-mills, and manufactured products
businesses. Stelco has a presence in six Canadian provinces and in two states
of the United States. Consolidated net sales in 2002 were $2.8 billion.
This news release may contain forward-looking information with
respect to the Corporation's business operations, financial performance and
conditions. Actual results may differ from expected results for a variety of
reasons including factors discussed in the Corporation's Management's
Discussion and Analysis section of the Corporation's 2002 Annual Report.
To learn more about Stelco and its businesses, please refer
to our
Web site at www.stelco.ca.
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VIEW ADDITIONAL COMPANY-SPECIFIC INFORMATION:
http://www.newswire.ca/en/releases/orgDisplay.cgi?okey=23131
For further information:
Tim Huxley, Vice President - Corporate Affairs
(905) 528-2511, Extension 4070
Please Click HERE for a PDF version of the Economic Impact Report
Datametrics Presentation.