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Stelco to Close Rod Mill

07/22/2004 - Stelco Inc. announced that it will close its Rod Mill in September of this year. The company says the move is being made in an effort to focus on sustainable and profitable product lines.

Stelco Inc. announced that it will close its Rod Mill in September of this year. The company says the move is being made in an effort to focus on sustainable and profitable product lines.

Stelco’s Rod Mill was constructed in 1966 and occupies a stand-alone facility near the company's Hamilton Works. It produces coiled wire rod products of varying diameters.

Shipments reached a peak of more than 700,000 tons in 1980 but have declined since then. More recently, shipments have fallen from 354,000 tons in 2000 to an anticipated level of 160,000 tons in 2004 by the time the closure takes place in September.

The Mill produces an inadequate return on capital invested and has been unprofitable in recent years. Stelco will be able to reallocate the steel to products that should increase the company’s profitability in the short and long term.

The Rod Mill's equipment and the land on which the Mill is located — land that enjoys direct rail and harbor access — will be listed for sale.

A number of the 160 employees (140 hourly, 20 salaried) now working at the facility are eligible for retirement, and may elect to do so. Stelco management will work closely with the union and with the salaried employees on all workforce transition issues related to the closure.

Courtney Pratt, Stelco's President and CEO, said, "This action reflects a changing marketplace, declining levels of rod production and our plan to focus a restructured Stelco on sustainable and profitable product lines.

"We've said throughout our Court-supervised restructuring process that Stelco operates in more product lines than the business can support. This is an important step in the process of lowering our overall cost structure,
reducing the number of product lines and focusing on our core business. As such, it moves us one step closer to our goal of becoming a viable steel producer with the ability to raise new capital, invest in plant and equipment,
and focus on key markets in which it has competitive advantages.

"The rod marketplace has become extremely competitive with the entry of new, high tech and low cost mills. As a result of this competition and our own ageing facility, our rod production has declined significantly, a trend that is expected to continue. By exiting this line of business now we can focus a restructured Stelco on those products for which there is increasing demand and in which we have a competitive advantage."

Approximately 70% of the Rod Mill's production is shipped to two of the Company's subsidiaries, Stelwire Ltd. and Stelfil Ltée. Today's announcement will provide them with greater flexibility in the sourcing of raw materials. The search for alternate sources has been initiated and Stelco does not anticipate any disruption in supply to these subsidiaries.

Stelco Inc. is a large, diversified steel producer involved in major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. Consolidated net sales in 2003 were $2.7 billion.