Apr 10 2007
Stelco Inc. announced today the transfer of all hot strip processing to its Lake Erie mill following that mill's successful capacity expansion completed during the fourth quarter of 2006. The performance of the mill, which has been undergoing an extensive $270 million modernization project, has continued to improve, with record production of over 280,000 tons being achieved for March 2007. The substantial completion of the modernization program has increased the annual capacity of the Lake Erie hot strip mill to 3.7 million tons from 3.0 million tons. Rodney Mott, Stelco's President and Chief Executive Officer, remarked "The employees at Lake Erie Steel are commended for their success in both completing this extensive project and ramping up production at an accelerated rate".
The expanded Lake Erie Steel capacity will allow Stelco to take the next step in its strategy to become a low cost producer by shutting down the 56" hot strip mill at its Hamilton Steel operations. The Hamilton hot strip mill, which has operated since the 1940's, has served the market well through the years but has become a high cost operation with limited support from the marketplace. The shifting of orders to the modernized Lake Erie hot strip mill is expected to improve Stelco's overall efficiency, improve product quality and lower operating costs.
The implementation of this initiative will reduce the work force at Hamilton Steel by more than 300 positions. This will occur through the reduction and displacement of employees working directly at the Hamilton hot strip mill, as well as the elimination of certain support services in maintenance, shops, and coil processing. The company is planning to achieve this reduction through a combination of retirements, layoffs and severance.
Mr. Mott stated "The Hamilton employees continue to work hard to improve productivity and reduce costs, but it is impossible to be competitive with obsolete equipment. The decision to reduce rolling operations at Hamilton and to optimize Lake Erie is our best choice for ensuring Stelco's long term success".