Business

Rough times behind for the dream-dealers

Roderick McQueen November 13 1978
Business

Rough times behind for the dream-dealers

Roderick McQueen November 13 1978

Rough times behind for the dream-dealers

Business

As foreman of a gang cutting up decades-old ships with acetylene torches for scrap in March, 1947, Peter Gordon was about to make his first impact on the executive suite. The vessel had been reduced to the waterline when someone mistakenly cut a main beam. It started to break up and sink to the bottom of Ontario’s Hamilton harbor, dragging his brief career with it. Within five minutes, the president and four vice-presidents were on the dock demanding he save the several thousand tons of valuable scrap burbling out of sight. “And that,” he laughs, “was how I came to the attention of management.” He directed lines be tied on, the craft was safely beached and his career became buoyant again.

For 57-year-old Gordon, now chairman and chief executive officer of the Steel Company of Canada Limited, timely solutions in tough times aren’t new. With third-quarter results last week pointing to record sales and near record earnings for 1978, a massive pipeline contract due in January, and first production workers on site at the new Lake Erie plant, Stelco appears poised for resurgence after riding out the 1974 industry-wide collapse. The Nanticoke, Ontario, $l-billion steel production complex that shares 6,600 acres with an industrial park and the preserved nesting grounds of Hungarian partridges, will severely test Stelco as Canada’s largest iron and steel producer.

“It has been called an engineer’s dream and an accountant’s nightmare,” says Gordon, who has presided over inflationary cost increases, delays and market shifts at a mill first announced in 1968 that’s still 18 months away from first steel. And the trouble isn’t over yet. “I don’t think people appreciate the difficulties of a start-up,” says analyst Charles Winograd of Winnipeg’s Richardson Securities of Canada. “They typically star Boris Karloff.” Gordon, however, spies something else. “I see the industry turning around,” but always wary of steel’s cyclical quirks, adds: “I don’t see a bonanza, but I do see the first chink in the cloud.” It has been a choking cloud that has known no borders. Producers in Japan, Europe and Mexico have been limping at 65-per-

cent capacity; Italy’s Finsider lost $500 million in 1977; the two French giants, Usinor and Sacilor, $400 million each; British Steel Corporation, over $800 million; the U.S. government has moved to protect weakened producers with pricing and anti-dumping mechanisms. Meanwhile, Stelco’s income has been down since 1974 but remains profitable and is operating at capacity now, even forced to buy competitors’ semi-finished steel to fill customer orders. Comments analyst Gregory Liddy, of Merrill Lynch, Royal Securities Ltd.: “It took a lot of guts to go ahead with the decision to build Nanticoke. Over time, it will be the smart move, unless you want to be like the U.S. industry and not build anything new for 50 years.” Space and plans exist to produce 5.4 million tons a year there, about double Stelco’s current output, with initial production set at 1.35 million tons. The 80 contractors and 1,100 construction workers building the first phase were joined last week by four machinists, the first of 1,350 employees. “It is,” says Gordon, “the realization of a dream.”

It’s a dream that could become a nightmare if markets don’t develop, including contracts to be awarded in January by Foothills Pipe Lines (Yukon) Ltd., for the 2,027 miles of pipe in the Canadian portion of the Alaska Highway gas pipeline. Stelco has bid against 11 firms but expects the lion’s share, most importantly the thin-wall 56-inch pipe to be produced at the now idle Welland, Ontario, Stelform plant.

Through it all the guiding hand of Peter Gordon can be felt from the mill floor to the boardroom. Recalls a former employee, now with another metals company: “He’s just as at home having a beer with a guy from the blast furnace as he is sitting down with Trudeau in Ottawa.” Unlike the U.S. steel firms who post lobbyists in Washington, often Gordon goes personally head-tohead in Ottawa winning respect there and with unions too. Ron Tipler, for seven years president of United Steelworkers of America, Local 1005, at Hamilton’s giant Hilton Works with the majority of the firm’s 23,000 employees, is now community relations supervisor at Nanticoke, selling the development. Current union President Walter Valchuk comments: “I won’t say he can walk on water, but I have strong respect for Peter Gordon.” It’s the kind of loyalty the man they call the “road runner” achieves as he comes at a half run through the mill, charging into the future with no small amount of hope. “To do anything that turns out well,” he admits, “there’s some luck involved.” And perhaps more. According to analyst Winograd: “You need a messiah to lead the company into profitability.”

Roderick McQueen