Steelmaker's woes slow economy.

• Author: Ross, Ian
• Position: Sault Ste. Marie - Algoma Steel Inc. - Brief Article

For the second time in a decade, Algoma Steel Inc., the Sault's largest employer is under court-appointed receivership.

As the company's top executives sweated out the details last month in finalizing a restructuring plan to keep the mills rolling, the city's business owners and community leaders were painting an optimistic picture on the debt-laden steelmaker's future, while collectively holding their breath.

"Everybody's employing extreme caution about doing anything as to investing, building or developing or expanding their business, just because of the time it's taken since April to come up with a solution," admits Gary Dumanshi, the Sault's chamber of commerce president. "But no doubt it's slowed down the economic development pace in this city."

Though national and local media have played up the doomsday scenario of what might happen should the restructuring deal fall through and the steelmaker fold, Dumanski has confidence in Algoma's long-term sustainability that something positive will emerge. But as to what a downsized plant will look like is anybody's guess, he says.

Dumanski says Algoma was more vulnerable during its last restructuring crisis of the early 1990s, but this time their ace-in-the-hole lies in their state-of-the-art Direct Strip Production Complex (DSPC) rolling mill.

"Let's face it, they've got one of the most modern continuous rolling mills in North America. They spent $750 million building it, and it's running at full capacity. They're selling all the steel they can make even in the current economy, and if it weren't for the debt load and doing some of the asset improvement they would like, it's a viable mill.

"They've got an asset there that is the envy of the steel industry, and that's what's keeping all the players positive, and is what will make it work."

Published reports last month suggested 800 jobs at Algoma may be eliminated from the plant's 3,900 workforce through early retirement as part of a cost-cutting package, or the restructuring could fail. Like bad medicine, it is doubtful anyone outside of the creditors will like the restructuring plan, but it may deliver some new opportunities.

"It may be a smaller Algoma (Steel), but the outsourcing requirements may be higher," says Bruce Strapp, president and CEO of the city's economic development corporation (EDC). "That's where you might see a multitude of new businesses being set up by steelworkers or other joint venture opportunities to support Algoma...