If you asked anybody who worked at US Steel’s Hilton Works the day they banked the blast furnaces back in 2010, if we would ever see slabs poured again at that site, they would have said probably not.
The announced permanent closure of the former Stelco steelmaking operation is understandably highly symbolic but hardly a surprise given world steel market conditions. Steel slab is a world wide commodity like oil or pork bellies or coffee. In August this year the world price for steel slab was sitting at $US470 per tonne—a three year low. There is scarcely a country in the third world that is not producing steel; much less North America which alone has approximately 25% more steel-making capacity than demand. For steelmakers in the western world, where thankfully, wages are still pretty good in this industry, the profit comes from the products that are made downstream from the slab. In this area the Canadian steel industry remains competitive—thanks to technology, research and innovation. People driving along Burlington Street in Hamilton look at the empty parking lots that used to be filled with steelworkers’ cars, and talk about a post-industrial economy.
This is only partly right. To get the full picture of the state of Hamilton’s steel economy one needs also to drive along Arvin Avenue in Stoney Creek and the surrounding area where many of the steel finishing operations are located. This sector is actually growing and creating jobs. It is these companies that take the primary steel and make it into products that can be used in manufacturing and construction. Many of them are making multi-million dollar investments in hi-tech equipment . These are long term investments—indicative of confidence in the future of an industry that has become research and technology intensive. It is true that we have significantly fewer manufacturing jobs than a generation ago, but manufacturing output is higher than ever because of technology. ArcelorMittal Dofasco expects to replace thousands of retiring workers over the next few years but the new hires will be those with the skills and education now demanded by the sector.
At a time when it seems like manufacturing is about to disappear, Neil Everson, the head of Hamilton’s Economic Development department says the industrial vacancy rate in Hamilton is sitting at a measly 1.3 percent. “We can use more brownfield and greenfield employment lands,” he states. Which raises the question of what is the opportunity to make use of the property that will be idled by US Steel– a large tract of industrial zoned land with rail and marine access? The Port of Hamilton is running out of available land, but it will take large resources to assemble a significant parcel of the former Stelco property. There is a hundred acre site east of the Hilton Works for sale currently publicly listed at $225,000 an acre. There is no guarantee that US Steel has any plans to sell the land around its steelmaking operation, but the closure announcement has triggered a flurry of activity. Hamilton City Council has reactivated its steel committee.
Pressure is being brought to bear on Federal government who initiated and then dropped litigation against the steelmaker over the terms that had been negotiated to allow the sale of the company in the first place. As part of that settlement US Steel promised to invest at least $50 million in its Hamilton and Lake Erie plants by December 2015. It also agreed to donate $3 Million to the community. Recently the company has applied for property tax relief citing the non-productive state of what had been busy employment land. All of these factors could provide a carrot or stick in possible negotiations. People familiar with the steel industry suggest that US steel, might not want to divest the property for fear that a competitor might take up the site, but it is believed covenants could be written in to a sale that would prevent such an outcome. Then there is the contamination on the property that could complicate any sale but as Everson notes, “ if the property is used for heavy industry and there is no evidence of contamination migrating from the site, the cleanup required will be less onerous.”