Comment 115984

By Selway (registered) | Posted January 11, 2016 at 00:21:25

Very interesting piece, though it would have benefited by the addition of a diagram of the steel making and finishing processes in order to clarify some points. The article has Warren Smith saying that

“US Steel is trying to move the finishing production lines out of Hamilton Works-those parts responsible for producing high-value steel components important to the auto industry, among others.”

It is not clear whether the company is moving just the orders, or the actual equipment. That it is the first seems to be indicated later when David Livingstone is reported as saying that US Steel has been shipping coils rolled at Lake Erie Works to the States for finishing.

Prior to the construction of Lake Erie works, the Hamilton mills were a fully integrated producer, making steel billets which were then formed into slabs; the slabs were hot-rolled into coils, and the coils were then finished by further rolling in the cold mill – or latterly in a newer finishing mill called the Z-line. With no blast-furnace up, the Hamilton plant is not making steel at the moment. Nor could it make coils because the hot rolling mills are no longer there. Until recently coke, which is made by heating coal to drive off various gasses and serves to fuel the smelting of the iron in the furnaces, was being produced as this is a saleable commodity. As I understand it, all the steel-making and hot-rolling capacity is at Lake Erie.

If US Steel were in fact to start stripping finishing equipment from the Hamilton plant, then it would give us something to do besides spectate at the legal process. However, once the order book is gone, the equipment is obviously not of any purpose unless new customers can be found. Similarly with the worker buyout possibility, as Ryder points out. You would have to have worker control of the auto plants to assure your market. Probably a good idea, since otherwise those plants are eventually leaving the country too...

Ryder's remark that U.S. Steel did not foresee the 2008 recession when buying the Stelco operations in 2007 is ingenuous, to put it mildly. There is always another “correction”, that is of the essence of the system. Does anyone believe that while contemplating their purchase, the Pittsburgh people did not ask themselves, What if steel drops? and answer: Well, at least we'll have one less competitor, and taking out the Canadian work force will cause us even fewer problems than dumping our own guys.

The secret agreement question is intriguing, but really, unless it contained something that could be construed as a tacit understanding that the Canadian operations would cease, what difference would it make what’s in it? There's about no chance that the deal will ever be published, because it would set a handicapping precedent. What I find bizarre though is that something done within the auspices of the foreign investment review mandate ie getting a good deal for Canada, could ever be secret. It makes no sense and renders the legislation pointless since any ideologically committed free trader could just ignore its intent if the deal will never be public.

The American tenure in Canadian mills has been mostly crap, crap and more crap, but I know of one decent thing which they did, and that is build a 25 million dollar treatment plant at the Hamilton works for the water which is used in the process of cleaning coke oven gas, otherwise unusable. They were forced to do it by new regulatory limits on effluents, which would have had them paying big fines or shutting down the coke ovens; and at least one of the byproducts, phenol, has a market as a precursor to many plastics, but it did get done. (Though we never did see that often rumoured co-gen plant that would have used the gas that's flared to produce electricity.) The point is that steel-making gets cleaner all the time – if the company is able to make the investment.

In any case, Livingstone's assessment that there is a failure of imagination and courage is only half right. It's the shortage of imagined alternatives that's the real problem across the board. One thing for sure, falling wages plus rising property prices equals market failure for more and more of us. The notion, prevalent here in town and also at Queen's Park, that real estate development can replace production asks us to accept that yes you can square the circle, and yes the world is really flat and yes there is a Santa Claus. Nope.

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