I havent taken a good look at Stelco operations since writing a major feature on the companys SNAFU-style restructuring a few years ago. But from what I know about the storied Hamilton steelmaker, I can understand why United States Steel Corp. has temporarily halted production at its Canadian plants.
The Harper government, on the other hand, doesnt accept the need to close steelmaking operations in Hamilton and Nanticoke. Or, at least, it doesnt want to look like it accepts the U.S. Steel decision that created more angry out-of-work voters in this country.
Industry Minister Tony Clement this week reminded the Pittsburgh company that it committed to a series of undertakings regarding, among others, capital expenditures, research and development and production when it bought Stelco in 2007.
While I recognize that these are challenging economic times, we expect the company to live up to its commitments,” the minister said in a statement that was released to the media to make sure everybody knows just how hard Harper government ministers try to look out for the little guy.
Union officials welcomed the governments hard line, the first enforcement action of its kind (if you consider a semi-harsh letter action) under the Investment Canada Act, which can be used to divest a foreign corporation of Canadian assets when production and job promises made at takeover time are broken.
The problem, of course, is that Pittsburgh-based U.S. Steel isnt in violation of any commitments because the rules state that foreign invaders do not have to follow through on promises made when buying up Canadian assets if they are prevented from doing so by “factors beyond the control of the investor.”
Hmm. What has changed since U.S. Steel agreed to buy Stelco during the tail end of commodities boom? Perhaps Clement should check the value of his stock portfolio or head over to the Finance Ministers office and ask why his own government is not living up to its promise to maintain a balanced federal budget. Then again, he has probably heard about the emergency fiscal stimulus package. If not, he could look up the budget speech that announced the need for about $85 billion worth of deficit spending to keep our economy moving, and to protect Canadians in this extraordinary time.
Unlike the Clement, U.S. Steel which just reported a US$439-million Q1 loss, down from a US$235-million gain in the same period last yearisnt playing political games. It has been forced to close plants on both sides of the border. And it should be left alone to try to live up to its shareholder commitments.
_____________________________________ DOUBLE TAKE: Aside from trying to promote myself while generating Web traffic that helps put bread and butter on my table, this blog aims to stir debate by taking a harder look at current news and events. I obviously enjoy voicing my own opinions, but I am a big boy and I welcome all comments that dont require R ratings. So let me have it via this blog or send me an email at firstname.lastname@example.org. I reserve the right to post email comments without disclosing the senders name. If you dont think I am a total twit, follow my DOUBLE TAKE posts via my NotSOCRATES Twitter site at http://twitter.com/NotSocrates. THOMAS WATSONis a Senior Writer and editorial board member at Canadian Business magazine. Since winning a community journalism award as a cub reporter with the Hamilton Spectator in the early 90s, he has covered business, finance, politics and technology for various news outlets. Prior to joining CB in 2001, he reported on the steel and automotive sectors for the Financial Post. Watson received his first magazine award nomination for exposing a stock manipulation plot aimed at Waterloo, Ont.-based Open Text in 2000, when he was head of investor relations for an international venture capital outfit in the City of London. Watson holds graduate degrees in journalism, international relations and public finance and undergraduate degrees in history and politics.