INDUSTRIAL HAMILTON: A TRAIL TO THE FUTURE
Dofasco Incorporated (Dominion Foundries and Steel Company)

Location: 1330 Burlington Street East, Hamilton, Ontario

Founded in 1912, Dofasco Incorporated (then known as the Dominion Steel Casting Company) has a history of innovation and a reputation for a family atmosphere. Clifton W. Sherman, who previously resided in Buffalo and came to Canada in his 40's, founded Dofasco. Although Clifton had never run a company before, his prior experience as a foundry manager, along with the fact that he was the son of a Pittsburgh blast furnace superintendent, gave him a good understanding of the steel industry, as well as a familiarity with a leadership role. Clifton had Dofasco built on an old fishing spot on the harbour which, due to cheap and easily accessible supplies such as: scrap, limestone, iron ore, coal, and hydro-electric power, proved to be an exceptional location for Hamilton's second steel company.

At first with only one 20-ton open hearth furnace for the manufacture of steel, Dofasco had a modest output of 29,000 tons of steel annually. Initially, this output consisted solely of specialized castings for the railway industry as well as the mining industries of northern Ontario and Quebec. With the commencement of World War I in 1914, there was a demand for war supplies that Dofasco was only too happy to fill. By 1918, Dofasco had built 10 new open hearth furnaces, dedicated mostly to munitions production. Though the war played a key role in Dofasco's expansion, its conclusion took away Dofasco's primary market. Since there was little demand for the castings and forgings that Dofasco made, the decision was made to build a universal steel plate mill. Approximately $2 million was spent on building the mill, which remained idle during the post-war depression. Dofasco was saved in 1921 when they got a patent for casting railway undercarriages approved. This new product helped to finance the completion of the universal plate mill that began production in 1921. It was the first universal plate mill in Canada and Dofasco became the first Canadian company to produce 100% Canadian flat-rolled steel plate which marked their beginning as a pioneer in the Canadian steelmaking industry. 1928 saw Dofasco build Canada's first hot-rolling mill, which broadened its products to include steel plates, billets, and blooms. After a decision to manufacture tinplate in 1935, Dofasco discovered a way to produce hot strip (an essential ingredient for tinplate) using its universal plate mill. Besides being the first Canadian steelmaker to produce hot strip coils, with the conversion of an idle finishing plant into a cold rolling mill Dofasco became Canada's first (and only) producer of tinplate. New installations were constantly added so that by 1939 the 11 20-ton open hearth furnaces were replaced by four 62-ton open hearth furnaces and one 30-ton electric furnace (the first of its kind in Canada).

In 1938, Dofasco introduced profit sharing for their employees. Employees with at least three years service were permitted to participate in profit sharing, a program that allowed them to benefit from the company's earnings through annual payouts. Seen as an aid to productivity, profit sharing also improved morale by breaking the divisions between blue and white collar workers, involving them all directly in the fate of Dofasco. This was just one of the components of the "Dofasco Way", a unique employee relations program which would grow to include: a recreation club, a company pipe band, a male choir, a suggestion plan (where employees would receive money based on the value of their suggestion), an annual picnic, an open door policy (where an employee could take a grievance with a supervisor to their superior without fear of repercussions), and at one time the world's largest corporate Christmas party (44,000 attended in 1999). Even though it was (and is) without a union, Dofasco has never had a strike thanks in part to the "Dofasco Way", along with Clifton W. Sherman's policy of dealing with employees on the basis of the "Golden Rule" (treating others as you would have them treat you).

Thanks to its numerous expansions, Dofasco was well prepared at the outset of World War II. In fact, Dofasco supplied all of the armour plate used by the Canadian army. To keep up with increasing production demands, Dofasco added additional buildings and extensions covering most of its main 35-acre location. Among the new buildings were two 60-ton electric furnaces, a 36-inch cold reducing mill, and Canada's first continuous annealing furnace. Due to increasing shortages in scrap, in 1951 Dofasco built a blast furnace and coke oven (at a cost of $16 million) turning it into Canada's fourth fully integrated steelmaker. Further developments were just around the corner however; in 1953 Dofasco acquired the Canadian rights from the Brassert Oxygen Technique A.G. of Zurich for a new process of steelmaking using oxygen. Dofasco was the first North American company to build a basic oxygen furnace based on this process in 1954 and this method for making steel remains a common standard to this day. 1955 saw another first for Dofasco with the addition of Canada's first continuous galvanizing line. In 1956 Dofasco added a second blast furnace at a cost of $9 million, increasing their iron output by 100%. With the installation of a cobalt camera (at its time the most powerful in the world) in 1958, Dofasco was able to conduct radiographic inspection of steel castings for hidden flaws. Thanks to a deal signed with Cyanamid Limited in 1956, three years later Dofasco was exporting by-products from its steelmaking process. Hydrogen, which comes from Dofasco's coke oven gas and blast furnaces, as well as nitrogen which comes from its oxygen making plant were used by Cyanamid to create urea and anhydrous ammonia at their nearby plant. Urea, which is used as a solid fertilizer, was previously imported by Canada but could now be exported as a result of Dofasco's deal with Cyanamid. Also in 1959, Dofasco built three new 4-high hot mill stands allowing for continuous hot rolled production as well as an increase in the width of hot mill products to 60 inches, a new size for Canadian steel. Additional expansions took place and in 1966, Dofasco spent $82 million (more than any previous year) on: converting the hot mill to a seven-stand mill, adding 53 coke ovens, and building a third galvanizing line as well as a five-stand 56-inch cold mill. In 1962 Dofasco acquired controlling interest in the National Steel Car Corporation, one of Dofasco's main customers since its inception. This acquisition helped to expand Dofasco's production of freight equipment.

Dofasco has always invested time and money in researching new technologies and in 1960 they developed a new open coil annealing process which improved speed and allowed for the creation of special types of previously imported steel. To help reduce the need for coke in iron making, in 1961 Dofasco experimented with a new process in Canada: the use of fuel oil as a partial replacement for coke. Due to this new process, the company set a North American record for the minimum use of coke in blast furnace operations two years later. In an attempt to help reduce waste and increase efficiency during steelmaking, Dofasco researched the possibility of creating ore briquettes from flue dust collected from blast furnaces in 1963. To further increase efficiency and quality, Dofasco's research department added a pilot oxygen furnace and a scanning electron probe microscope (the first to be used by a steel mill in North America) in 1968. Following their research into the use of oil in iron making, in 1973 Dofasco became the first company outside of Germany to adopt a new oil homogenization technique to help further reduce the amount of coke need by their blast furnaces.

In an effort to become self-sufficient, in 1961 Dofasco purchased a 10% partnership interest in Wabush Iron Ore Mines, their first step in ownership of a major raw material. In 1968 Dofasco expanded its raw material ownership further when production started at the Sherman Mine, its new mining complex in Temagami. Finally, in 1971 Dofasco purchased the assets of the Adam's Iron Ore Mine in Kirkland Lake. This last step made Dofasco virtually self-sufficient in iron ore from Canadian sources.

Even though Dofasco had continuously expanded their facilities over the more than 60 years they had been in operation, the late 1970's mark the beginning of a new trend for the company. In spite of increasing sales, Dofasco faced reduced profits and in 1978 employees staged a slowdown due to new pay rates. This did not delay Dofasco's growth however. The very same year Dofasco built a new basic oxygen steelmaking shop costing a total of $140 million. With the onset of the recession in 1980 however, even these new facilities could not prevent the newly named Dofasco Incorporated from shutting down for a week. In 1982 Dofasco met with increasing costs which resulted in the layoff of over 2,000 employees. Even though this damaged Dofasco's reputation it seemed to be necessary at the time and Dofasco remained the only integrated steel company in North America to make any money that year.

Beginning in 1983 Dofasco experienced a turnaround and was able to recall 1,840 employees and build their No. 2 hot strip mill for $425 million (which was their largest single investment). Continuing this spending spree, Dofasco spent $450 million in 1986 on upgrading its plant and $300 million in 1987 on a new continuous slab caster. After having depended mainly on the automotive market to get itself out of the recession, Dofasco expanded its customer base in 1988 to include both residential and non-residential construction markets. Things were looking good for Dofasco and in 1988 they made the now infamous decision to buy Algoma Steel Corporation for $560 million. By combining with the third largest steelmaker in Canada, Dofasco was able to replace Stelco as the largest steelmaker in Canada. More acquisitions were on the horizon and in 1989 Dofasco obtained the Quebec Cartier Mine after closing its Sherman Mine and its Adam's Mine (since the Quebec Cartier Mine could provide the same amount of iron ore as the other two combined). Also during that year, Dofasco began construction on a $485 million integrated cold mill complex. Perhaps due to recent investments by rival steel manufacturer Ivaco president Paul Ivanier, in 1990 Dofasco introduced a shareholder's rights plan that would make takeover of the company almost impossible. After having realized the advantages of a joint venture, Dofasco and Tokyo-based NKK Corporation began construction on a $240 million galvanizing line in 1990.

With the strike of two Dofasco subsidiaries (Algoma Steel and National Steel Car), 1990 signaled the beginning of a substantial reduction in assets for Dofasco. After having written off their $700 million investment in Algoma Steel in 1991, Dofasco completely disowned their unsuccessful subsidiary in 1992. Other cutbacks that year include the shut down of their original foundry and the sale of their limestone producing subsidiary BeachviLime Limited These sales allowed Dofasco to turn a profit in 1993 for the first time in two years. Continuing with this trend Dofasco sold both National Steel Car and Prudential Steel in 1994. The reductions made by Dofasco were not limited to their properties however. For the second time during its history Dofasco made the decision to diminish its workforce and during 1991-92, they offered early retirement to 2,400 employees. Due to these early retirement offers as well as layoffs, the number of Dofasco employees was reduced to 7,000 by 1994.

Selling off subsidiaries and reducing the number of workers was only one part of Dofasco's restructuring plan. In 1993 Dofasco sold its No. 1 hot strip mill as part of its decision to phase-out ingot making (since the newer continuous slab casting process was more efficient). Also in 1993, Dofasco (in partnership with Co-Steel) built a $400 million mini mill in Warsaw, Kentucky to keep pace with the rise of the more efficient minimills. With a reputation for always supporting Canada, Dofasco faced criticism from the public and the media for deciding to locate its minimill in the U.S. As a replacement for its now-empty No. 2 melt shop (previously dedicated to ingot production), Dofasco built a $200 million facility in 1996 which included an electric arc furnace and a slab caster. Further expansions in the following years included: DoSol Galva (in partnership with Sollac) a $180 million galvanizing line which uses a special hot-dip galvanizing process for the manufacture of exposed auto parts, and a $14 million tube mill for producing tubular steel for hydroforming applications.

Dofasco is always looking to take advantage of new technology. In 1999, Dofasco formed a joint venture with Ivara Corporation (a Burlington software company) to produce a diagnostic and preventative maintenance package based on the software Dofasco used. Starting in 2000, Dofasco is working with e-Steel Corporation to develop a markup language specific to the buyers and sellers of the steel industry. A recent patent for a steel laminate called Zyplex (developed by Dofasco's internal research group) will allow the company to develop steel with an increased strength and reduced weight for use in truck trailers and other automotive applications. The purchase of Powerlasers Limited, a manufacturer of laser welded automotive blanks and related parts will further expand Dofasco's market.

During the 88 years that Dofasco has operated it has weathered numerous hardships yet it has always emerged as a productive company. The company's focus on technology and value has earned it several marks of distinction recently. These include: being chosen by the Dow Jones Sustainability Group Index as the No. 1 global steel company for 1999, as well as being the most profitable steel company in North America that same year. Ever since its foundation Dofasco has been known for its innovation and this attribute will no doubt ensure its success in the future.

Statistics:

References:

• Steel Industry and Trade Scrapbook. Volume 1. Special Collections, HPL.
  
• Dominion Foundries and Steel Limited Scrapbook. Volumes 1-12. Special Collections, HPL.
  
• Dominion Foundries and Steel Limited Annual Reports. Special Collections, HPL.
  
• Media Information Kit. http://www.dofasco.ca/NEWS/mediakit.html

Links:

• Dofasco Incorporated: http://www.dofasco.ca
• National Steel Car Limited: http://steelcar.com
• Algoma Steel Corporation Limited history: http://www.algoma.com/history1.html
• Ivara Corporation: http://www.ivara.com
• e-Steel: http://www.e-steel.com