Stelco, Incorporated (The Steel Company of Canada)

Click here for a closer look at the five orginal companies that amalgamated to form The Steel Company of Canada Location: Wilcox Street, Hamilton, Ontario

The Steel Company of Canada (or Stelco) was formed on June 8, 1910, by the incorporation of five existing companies:

  1. The Canada Screw Company, Limited (est. 1866)
  2. The Montreal Rolling Mills Company (1868)
  3. The Dominion Wire Manufacturing Company, Limited (1883)
  4. The Hamilton Steel and Iron Company, Limited (1900)
  5. Canada Bolt and Nut Company, Limited (1910)

The Merger

In the early nineteenth century, capital for industries was usually acquired from the family and friends of the owners. It was simply not practical for companies to seek outside investors. Likewise, ordinary people would invest their money in government bonds, rather than risk it with a new company.

W. Max Aitken (the president of the Royal Securities Corporation at the time, and later to become the famous British journalist Lord Beaverbrook) was an ambitious young man whose goal at the time was to bring together primary and secondary producers of steel. The primary producers of material - that is, those companies that made unfinished steel - were competing with U.S. suppliers for sales. The secondary mills - where the steel is finished into its final shape - had previously imported their primary materials from the U.S. They had faced uncertainty with quality and supply from their U.S. suppliers. The government of the Dominion of Canada was encouraging Canadian companies to seek Canadian sources of iron. The next logical step would be for the primary and secondary companies to seek each other out.

In April, 1910, Aitken and representatives of the five above companies met to discuss the merger. The group eventually reached an agreement, arranged a board of directors, and acquired a capital of $25 million from outside investors. The goal of the union was to reduce administrative expenses and to create an economy in the purchase of supplies and material.

(Interesting note: The company was originally to be called "Canada Steel Corporation, Limited" but the name was already taken.)

At this time, the company consisted of seven plants (or "works"): Hamilton, Montreal, Toronto, Brantford, Belleville, Gananoque, and London.

The first president of the corporation was Charles S. Wilcox, formerly of The Hamilton Steel and Iron Company. The Board of Directors consisted of representatives from the parent companies and of other major Canadian companies; for example, the Royal Bank, the Canadian Pacific Railway, and the Bank of Hamilton. A picture of some Steel Company of Canada employees in 1911 (click for a closer look)

The First Few Years

While Stelco's chief competition, Dominion Steel, produced almost two-thirds of the primary materials (iron and unfinished steel) in the country, Stelco was emerging as a dominant force in finishing. One of the company's goals was to increase its capacity in the primary production of steel. It also planned to make a name for itself in specialized production; that is, having operations which are dedicated to a certain step of the steel-making process, rather than switching gears each step of the way. To this end, the company would have to acquire the most efficient and most modern equipment and techniques.

Despite competition from Canadian and American steel companies, as well as a depression in the U.S. steel and iron economy, Stelco posted a net profit of over $800,000 in its first full year (1911). (See table for comparisons by decade.)The making of a bloom (click for a closer look)

The company's directors were optimistic, and invested in new machines, mills, and furnaces for their various plants. Two of the modernizations in 1913 included the world's second electrically powered blooming mill, and North America's first electrically powered combination rod and bar mill (previously, the energy had been supplied by steam).

Unfortunately, the expansion was not enough to protect the company from a shrinking Canadian market due to a recessive economy.

When World War I broke out in 1914, the operations of Stelco were redirected to war concerns. The company threw its energies into the production of shells. Profits soared in 1915 and continued to increase over the next two years. At this point, the company's directors could be relieved that they had expanded the company's capacities just before the war. The output of steel ingots (unfinished steel moulds) doubled from pre-war levels, and over 3,000 new employees were hired. The war, although devastating in itself, was a boon to the Steel Company of Canada.

In 1918, the company constructed a more modern by-product coke oven. Instead of simply burning off by-products into the city's atmosphere, the coke oven would capture the by-products. The chemicals from the by-products could be sold (as in the case of tar), or used as a source of fuel in the plant (as in the case of gas).

In 1919, the company purchased shares in Mathers Colliery, a U.S. coal mine, thereby completing the vertical integration of operations from pit to finishing; in other words, Stelco now had a hand in every part of the steel-making process, from the coal mines to the finished product.

The company's cautious strategy in selling to the Canadian market rather than trying to expand its clientele worldwide, combined with the opportunity to sell off the munitions plant, saw it through the market crash of 1921. The 1920s also heralded the automobile age. New metallurgical techniques were developed for the rigid specifications of the auto industry and of other consumer goods. Labour-saving devices and strategies meant that higher levels of output could be achieved while using less men.Aerial view of Hamilton (Hilton) Works (click for a closer look)

The location of the Steel Company was proving to be very beneficial. Situated on the shores of Lake Ontario, the company was able to receive cargo by boat and shipments via major railways. It was also close to major electric equipment manufacturing industries, and the coal mines of Michigan and Pennsylvania. Hamilton was in the heart of the area where the most steel was consumed in both Canada and the United States.

During the 1920s, Stelco became the largest single producer of steel ingots in Canada, and retained its title as the dominant source of finished materials. Stelco was making an important contribution to the industrial growth of Hamilton.

Unfortunately, although Stelco was the largest Canadian producer of steel in Canada, it was not the biggest supplier to the Canadian market. That honour went to the U.S. and other foreign industries. However, early in the 1930s, the Canadian government increased the duty on steel imports from the U.S., giving Stelco (and Dofasco) the opportunity to grab more of the Canadian market. Stelco was certainly prepared to take this opportunity, since it had, in 1929 and '30, undertaken a massive expansion of its facilities, increasing its iron and steel capacity by 50%.

The Depression, World War II, and the Strikes

The Great Depression began on October 24, 1929. Stelco, because of its recent expansions and the strength of its finishing works, was less badly hit than other companies. By the late 1930s, 62% of all steel used in Canada was domestic, due to the higher steel tariffs imposed on imported products, and to the declining value of the Canadian dollar compared to British and European currency. The only country which still had a hold on the Canadian market was the United States, but only because the products that were imported were products that Canadian companies did not make. Owing to the low Canadian dollar, Stelco was not only able to increase its share of the Canadian market, but also of the export market. The company was doing so well that in the years between 1936 and '39, they spent almost $8 million replacing various open hearths and blooming mills.

In 1935, the 25th anniversary of Stelco's foundation, the company established a "Quarter-Century" club to honour those employees who had served the company for 25 years. The company continues the tradition to this day.

In 1938, Charles Wilcox, the very first president of the Steel Company of Canada, passed away.

In 1939, World War II was declared, and industries were once again redirected to the war effort. Instead of simply making shells, however, Stelco threw its efforts into supplying steel for the building of ships and army transports. Despite this redirection of materials, Stelco managed, with characteristic caution and foresight, not to increase its price for steel, since it did not want to lose customers once the war ended.Women working at Stelco in 1940 (click for a closer look)

However, a major problem during World War II was the lack of skilled labourers. In 1943, 1,500 of the company's approximately 7,000 employees (over 20%) were fighting, and replacements were difficult to find. The company hired and trained women to fill the gaps left by the soldiers.

Stelco did not profit as much from this war as it had from the last, but it survived and continued, planning for yet another major expansion of its facilities by 1946. Those plans were delayed, however, by a 1946 strike initiated by the United Steelworkers of America (U.S.W.A.). The U.S.W.A. Local 1005 had been recognized by Stelco since 1945, when two-thirds of the employees had voted to choose the union as their bargaining agent - even though only a small proportion of them actually paid their union dues.

The tensions of the Depression and the war led to impatience, and the union made demands for higher wages, shorter work weeks, and more vacation time, among other things. The company had feared that the 30% wage increases that the union was demanding would drive up steel prices. The management did not back down, so the union went on strike. The illegal strike was called on July 15, 1946, and lasted for 81 days, until October 2. The union won a wage increase of 13½ cents, less than the 19½ that they had originally demanded. However, the union gained 2,000 new dues-paying members.

The 1950s and '60s: Prosperity and Conflict

After World War II, predictions about the recovery of the economy were bleak. Economists feared another post-war depression as was seen after World War I. Their predictions were wrong. The baby boom, immigration, and the consumer boom ensured that industries would be kept busy manufacturing and selling consumer goods. The housing market expanded. Automobiles (large ones) were in high demand; so were highways and bridges, for which much steel was required. In fact, the demand was so high that in 1951 then-president Hugh G. Hilton sent letters to shareholders asking them to send Stelco any useless scrap metal to relieve the "critical shortage." (Hamilton Spectator, Nov. 1, 1951) The "mechanization of life" had a positive effect on industries, including the steel industry. Between 1950 and '60, the company's steel capacity tripled to three million tons. In 1952, Stelco manufactured "nearly all of the important steel products in common use." (Hamilton Spectator, Feb. 26, 1952)

Stelco proceeded with its proposed expansions once the strike was over, and much more was on the way. During this decade, Stelco spent $250 million on expansion and modernization - more than twice the total amount spent between 1910 and 1949. The company constructed continuous strip mills and electrolytic tinning lines, and a new blooming mill and sintering plant, in order to keep up with the high demand for steel. In 1952, the company installed a new blast furnace that was the largest in Canada, and that produced 1,400 tons of iron a day. Picketers at the 1958 Stelco strike (click for a closer look)

During the 1950s, research and new technology in the steelmaking industry was revolutionary. In 1959, a new metallurgical and chemical laboratory was built at Hamilton Works, where materials could be tested for quality. The lab also led innovations in research and development; for example, a process whereby the air in open-hearth furnaces is enriched with oxygen so that the fuel will burn faster, thereby reducing the amount of time needed to produce pig iron from iron ore.

However, not everyone was pleased by the company's prosperity. On August 12, 1958, workers at the Hamilton Works went on an 86-day strike, claiming that the company was not passing on the benefits of its success to its employees.

The 1950s also brought a change in perception. People were becoming conscious of the effect that their desire for consumption, and the industries that satisfied it, were having on the environment. Stelco financed a research study of the Lake Ontario environment, and in 1960 was the first steel company in Canada to use pollution filters in its new open hearth furnace. These filters (or "dust precipitators") clean the gas that is emitted from the furnaces so that it can be re-used to fuel the plant.

In the 1960s, Stelco continued its expansion and modernization. In 1961, the company was the first in the world to use an electronic mail route to link its mills, using the teletype system. The "computers" resembled small typewriters with a printer attached.

In 1963, Stelco managed to produce over three million tons of ingots in one year, a record for any Canadian steelmaker up to that time. Not satisfied, the board of directors and shareholders approved yet another round of construction at Hamilton Works, which by 1964 was re-named Hilton Works in honour of H.G. Hilton, chairman of the board of directors. The Stelco Research Centre in Burlington, Ontario (click for a closer look)

The Stelco Research Centre, an extension of the research and development department, opened in Burlington in 1967. At this centre, in 1968, researchers invented a process of converting iron directly into steel, circumventing the coke oven and blast furnace entirely. The SL/RN Process eliminated the pollution caused by the coke oven and blast furnaces, and reduced the time needed to create ingots. That same year, Stelco set a new record in steel production: four million tons in one year. It also moved moved its head office from Hamilton to Toronto, much to the anger of Hamilton residents and politicians.

Once again, though, tensions surfaced between the company and the union that represented its employees. The 1969 strike, which lasted from August 1 to October 19, contributed to a decrease in earnings. Nevertheless, the company approved more expansions, and $4 million worth of capital was set aside for improving air and water quality control in Hilton Works. Additionally, the logo was changed to the green script that is still used today.

The 1970s and '80s: Challenges

Stelco was riding high on the economic successes of the previous two decades. In the 1970s, Stelco continued to invest in new equipment and anti-pollution concerns. It changed pickling lines from sulphuric acid to hydrochloric acid, to reduce the amount of pollution being dumped in Hamilton Bay. By this time, the company claimed, over 95% of dust created by blast furnaces at Hilton Works was being collected by dust precipitators.The Stelco Tower, downtown Hamilton (1978) (large, brown building) (click for a closer look)

In 1973, 1,000 office employees were moved from Hilton Works to offices in the new Stelco Building in Jackson Square, downtown Hamilton. The building itself was constructed using an alloy developed by Stelco. "Stelcoloy" is a weathering steel that changes colour over the years through oxidization (rust). The rust protects the metal from further damage.

Another record was set at Stelco in 1974: it was the first time that the company's sales revenue exceeded $1 billion. Likely contributing to this high amount was the fact that Stelco had sharply raised its steel prices by over 11% (normally, prices would rise about 5%), blaming the escalating costs of raw materials. The company was criticized by the New Democratic Party; leader David Lewis accused the three big Canadian steel companies (Stelco, Dofasco, and Algoma) of conspiring in order to increase profits. Even Prime Minister Trudeau wanted to block further increases for fear the national economy would suffer from inflation. He put together a federal commission to investigate whether profiteering was involved. The companies were not charged with profiteering, but the commission recommended that further price increases must be proven to be directly linked to cost increases. Despite the scare, Stelco increased its steel prices for the third time in nine months. Such incidents demonstrate the enormity of the influence that Stelco and its competitors had on the country.

Stelco was also being criticized for its "weak" pollution control. Although the company had spent $197 million since 1960 on environmental protection, they were accused of misusing the pollution-control devices in order to boost productivity. Stelco maintained the charges were false, and continued to research and spend money on various anti-pollution devices at Hilton Works, and the planned Nanticoke, Ontario, plant, Lake Erie Works.

In 1979, five women filed complaints with the Ontario Human Rights Commission challenging Stelco's hiring practices. They claimed that no women were among the 30,000 applicants hired in the last 15 years. Stelco representatives claimed that the women who had applied in the last 15 years had not been qualified. Nevertheless, in 1980, Stelco hired four of the five women who had put forward the complaints.

On April 22, 1980, the Steel Company of Canada officially changed its name to Stelco, Incorporated, though it had been using that name on its annual reports and buildings for some time. The name was changed in order to satisfy the new French language requirements, because it was easier to use in French and English.

Also in 1980, the first steel was poured from the new Lake Erie Works in Nanticoke after six years of construction, 15 years of planning, and $870 million. At the time, it was called "one of the most advanced and productive steel-manufacturing facilities in the world." (Hamilton Spectator, Sept. 16, 1980).

On August 1, 1981, the members of the United Steelworkers of America, Local 1005, called a strike. It lasted for 125 days, until December 3. The strike contributed to a 37% decrease in net income for the company over 1980 figures. The decrease could also be explained by the generally reduced market demand and economic downturn in the country. By 1982, a recession had taken hold of the world. It was a traumatic year for Stelco and its employees. During that year, over 7,000 workers out of 25,000 (over 25%) were laid off, and the company tried to cut costs further by offering others an early retirement package. International steel prices collapsed due to low demand. 1983 brought a slight improvement, but Stelco continued to reduce spending. Over the next year it radically changed its corporate structure by dividing the company into two steel-making plants (Hilton Works and Lake Erie Works), two "mini-mills" (Edmonton Steel Works and McMaster Works), and three strategic business units (Stelco Fastener and Forger Company, Stelco Wire Products Company, and Stelco Pipe and Tube Company). Nevertheless, Stelco posted a net loss (for the first time) of over $90 million in 1983. The company decided to get rid of operations that were not performing in a cost-efficient way (for example, the Canada Works plant), and to reduce the variety of products it manufactured.

In honour of its 75th anniversary in 1985, the company set up two programs as tribute to its employees and their families: the Stelco Scholarship Program for employees' children who have been accepted to university or college; and the Stelco Community Service Award Program for those employees who have made a difference in the cities in which they live. As the recession slowly disappeared, profits began to climb. The company continued to combine its operations, in order to protect itself from the next economic downturn. In November of 1987, the company reorganized yet again, this time forming two operating divisions (where Stelco, Incorporated remained the holding company):

Stelco Steel: Hilton Works, Lake Erie Works, Edmonton Steel Works, and McMaster Works
Stelco Enterprises: Stelwire, Stelpipe, Steffco, Canadian Drawn Steel, and all secondary ventures

In 1988, the company also created Steltech (Stelco Technical Services, Limited), a research, development, and marketing entity which would sell the company's technology and services to a global market.

After 70 or so years of unbridled expansion, Stelco was becoming a more streamlined company. A basic oxygen furnace (BOF) (click for a closer look)

The 1990s to the Present: New Opportunities

Stelco suffered more financial losses in the 1990s. The steel market was depressed, and on July 31, 1990, the U.S.W.A. called another strike that lasted for 95 days. Stelco Steel and Stelco Enterprises were dissolved back into Stelco, Incorporated, a single operation. To keep costs in check by keeping the divisions together, the company brought the main headquarters back to Hamilton in 1991. Despite their efforts, Stelco lost $136 million that year, and the price of shares dropped from $26 to less than $6. Chairman Fred Telmer called 1991 "the most stressful time" in the company's 82-year history. (Hamilton Spectator, May 2, 1992.)

By November, shares fell to 98 cents each. As a demonstration of their confidence in their hometown industry, however, Hamiltonians flocked to the Midland Walwyn brokerage (who had waived its usual brokerage fee) to buy Stelco shares for themselves and their families. The spree did not make a significant difference in the company's financial situation; it was more of a symbolic show of appreciation for everything the company had done for the city.

Stelco and Mitsubishi Corporation of Tokyo teamed up in 1992 to build and operate a new type of galvanizing process called the "Z-line". The Z-line operations at Hamilton's Hilton Works were the first in North America. Steel that is subjected to the Z-line process is covered in a thin, smooth layer of zinc, which protects the steel from rusting. Such galvanized or galvanealed steel is used extensively in the automotive industry for products such as car door handles, or any other steel component that is exposed to the elements. The Z-line process is less expensive that the previously-used electro-galvanizing process, and the product is of a higher quality and better value.

By 1993, Stelco was beginning to recover from the disasters of the previous years. For the first time in three years, it was able to pay dividends to its preferred shareholders. In 1994, share prices had risen to over $9. Laid-off employees were slowly being recalled.

The company's problems with the Ministry of Environment and Energy, however, continued. An old battery of coke ovens at Hilton Works was said to be a major source of air pollution. Recommendations were made for the company to either fix the ovens or shut them down. In 1999, the province found the company guilty of causing a 1994 oil spill in Hamilton Harbour. Stelco was fined $200,000 for violating the Environmental Protection Act. The company continues to spend money on pollution-control initiatives.

Currently, Stelco employs about 11,000 men and women. It has two works (Hilton and Lake Erie), 15 wholly-owned subsidiaries, and 18 other ventures. Stelco is taking advantage of a new revolution: the Internet revolution. It plans to be fully integrated with e-commerce capabilities in the coming years. According to president Jim Alfano, the company is benefitting from a "boom market and productivity gains." (Q1 2000 Report) The new century may prove to be a new beginning for Stelco.

Comparison by Decade

Net Profits ($) No. of Employees Avg. Weekly Wage ($) Output (ingot tons)
1911* 831,000 5,255 12.13 93,000
1920 1,855,000 6,344 31.16 301,000
1930 1,741,000 5,175 29.90 360,000
1940 3,964,000 7,534 32.81 766,000
1950 13,984,000 11,585 58.09 1,247,000
1960 21,356,000 14,600 105.57 2,152,000
1970 55,976,000 21,497 173.46 4,801,000
1980 132,200,000 25,094 443.94 2,785,000
1990** (197,000,000) 14,348 n/a 6,278,000
1999 107,000,000 11,133 n/a 5,217,000
Source: Steel Company of Canada Annual Reports

* although the company was incorporated in 1910, 1911 is the first full year of operations
** a 106-day strike occurred in 1990, which contributed to the net loss

Glossary of steel-making terms used in this article




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