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Algoma Steel, again a potential buyer is a seller

I remember some years ago calling an old friend of mine, Brock Smith, on some world beating matter like arranging a ski trip to the Sault.

I remember some years ago calling an old friend of mine, Brock Smith, on some world beating matter like arranging a ski trip to the Sault. Brock, at the time, was Deputy Minister of the Ministry of Northern Affairs or whatever it was called back then and it took a week or so for him to get back to me which was unusual.

He apologized for his tardiness and indicated he was working round the clock on trying to save Algoma Steel. It was no sure thing. As I recall the biggest issue was not just union wages, but environmental legacy for future lenders and investors. This company has been up and down like a toilet seat in the last century and has been salvaged out of bankruptcy at least four times, twice in the last decade or so.

I haven’t seen Brock in many years, but I can assure you he would be stunned to hear a family steel business from Mumbai, India (Essar Global) had just offered to buy the place for 1.85 billion dollars. I don’t know if he would be delighted or angry. The provincial government spent a lot of time and money saving this asset for the people and workers of Sault Ste. Marie. A lot of work to enrich someone else’s pockets, although arguably better than enriching one of the hedge funds that pushed management into selling the company in the first place. Too bad the province didn’t have a clause in the deal to get a percentage of the up side.

The cup half-full view would be knowing the assets were saved, the jobs secured, and that Denis Turcotte, one of the best CEO’s in the country has built this company into a fine organization, coveted by others who are prepared to pay big money.

The cup half empty perspective sees this as just another domino in the stunning sell off of Canadian companies that either show great promise and are coveted (i.e. Algoma Steel, Four Season’s, Dofasco) or failure (Inco, Falconbridge, Bell) to be bought up, fixed or merged.

As a Canadian, I am mortified about this pathetic legacy. As a strong advocate for Northern Ontario I’m not sure it matters anymore. The truth of the matter is that Toronto is sometimes as far away as Mumbai when it comes to heads-up management and there is every indication some of these takeovers may bring better management. Stephen Harper may be right. Canadians can’t compete.

The Canadian management of our forestry and mining assets has been mediocre at best and incompetent at worst.

The failure of Inco to buy Falconbridge at an early stage from Noranda when it was for sale at bargain basement prices, will go down in history as perhaps one of the most stunning management failures in Canadian corporate history, followed closely by its inability to buy Falconbridge, when it was expensive a few years later. Fortunately the Inco leaders who could neither buy nor sell the company on its own terms are fired, their legacy; an empty office space on King Street West, Toronto.

The second lesson of this disintegration is that the province is far more skilled and interested politically in trying to save failing enterprises, than having the good sense to insist benefits accrue to the province in good times.

If we have the energy to save a major doomed steel company in the Sault, so why don’t we have the common sense to anticipate the rationalization of markets around the world and encourage our Ontario companies to merge into a Canadian steel giant, instead of being sold off to smarter players elsewhere.

But let’s be fair. We have to look in the mirror. In this country, when it comes to big business, we have a cautious gutless business class in the main. There are exceptions, (Peter Munk, Frank Stronach and Gerry Schwartz come to mind). When you ask the question why this is happening, it is because we don’t have the talent or the courage or drive to be world players.

Our expertise in this country is distributing money, not creating it.

And so, as always, for Northern Ontario it comes down to preparing for a new master. There will be no help from the province. The Liberals and Tories have no stomach for these matters and Howard Hampton who is huffing and puffing had his chance in power and made no lasting impact when he was there.

We are on our own. It’s probably cheaper to fly to these places than Toronto anyway.

Michael Atkins
President
Laurentian Media Group




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