Why Mexicans Don't Drink Molson. Andrea Mandel-Campbell

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СКАЧАТЬ year.²⁹ This unprecedented ramp-up coincides with the mega-mergers of several steel industry leaders. The Netherlands-registered Mittal Steel, headed up by Indian-born billionaire Lakshmi Mittal, emerged from obscurity to become the industry kingmaker, acquiring U.S. steel assets before making a stunning us$38 billion hostile bid for its number two rival, Europe’s Arcelor SA. The merged powerhouse, Arcelor Mittal, is far and away the world’s largest, representing 10 per cent of global steel production. As part of the deal, Mittal was to offload Dofasco, which was in the midst of being acquired by Arcelor, to a rival contender for the Hamilton company, ThyssenKrupp AG. At the time of writing, however, the sale was being blocked by Arcelor shareholders and Dofasco’s fate remained unclear.

      It’s a stunning reversal of fortune for the two Canadian industrial icons that enjoyed a privileged position supplying steel to the United States, the world’s largest automotive market. The two were arguably well positioned to be players instead of pawns in the global steel shakeout, yet both failed to capitalize on their advantage. While Dofasco carved out a lucrative niche as a value-added steel producer, it, along with its more commodity-oriented cousin, Stelco, never dared venture far from home. Other than Dofasco’s minor incursions into the United States and Mexico, the two were decidedly domestic, each rolling out five million tonnes of steel annually, a drop in the bucket compared with Mittal’s 115 million tonnes, furnished by furnaces from Indonesia to Kazakhstan.

      “If you were going to name a Canadian national champion, the steel industry would definitely be one. It is one of the few industries in which Canadian producers, taken together, were actually stronger than American producers,” says Peter Warrian, a senior research fellow at the University of Toronto’s Munk Centre and an expert on the Canadian steel industry. “But they didn’t conceive of anything beyond the North American market. It was a failure of imagination.”

      It’s not as though Canadians didn’t have the chance to expand abroad. In the 1980s, Stelco turned down a sweetheart deal to buy a bankrupt Chinese steel company, Maanshan, for next to nothing. “They thought it was too far away and they would have had to manage it,” said a person familiar with the deal. Maanshan has since been restructured and is the world’s twenty-sixth-largest steel producer, with a production capacity nearly double that of Stelco. “They could have bought Maanshan, revived their technology division and been one of the world leaders in steel production if they’d kept going,” said the source. “We had the world’s best steel industry from the point of view of technology and quality. Why is it a bunch of guys from Korea or India ended up being the world leaders?”

      Brazilian manufacturers, who have yet to get their domestic automotive industry off the ground, definitely recognized Canada’s competitive advantages. Considered among the world’s most antiquated steel industries less than two decades ago, Brazilian producers are now among the most modern, led by the likes of Gerdau sa. That company’s first foray outside of Brazil was into Canada, where it acquired a steel mill in Cambridge, Ontario, which was followed by another in Selkirk, Manitoba, in the late 1980s. Now with operations in seven countries, Gerdau has gone from being the world’s 54th-largest steel company in 1997 to 14th in 2006, surpassing 51st-placed Stelco. In Canada, its Gerdau AmeriSteel subsidiary ranks as the country’s 75th-largest company. Stelco is 131st.³⁰

      The decision to stay home, however, is costing more than just a few rungs in the corporate rankings. The failure to retool Hamilton’s fading industrial and manufacturing muscle is reflected in the lifeless shop windows along Barton Street. A metaphor not only for the dwindling fortunes of Steel Town but for much of Canada, the strip is a relic of times past, an almost miraculous effort to stave off decades of changing tastes and trends.

      Sadly, the once-modish facades are not monuments to former glory days. Boarded up and decrepit, they have become the most visible signposts of the entrenched poverty and gritty hopelessness that is gripping what was one of the country’s most vibrant cities.

      Wayne Marston’s eyes well up with tears as he recalls the scores of immigrant families holed up in tiny apartments on the city’s dilapidated northern fringe. The president of Hamilton’s Labour Council, Marston describes how the overcrowded living conditions force children to sleep in discarded refrigerator boxes. Unlike the newcomers who came before them, these immigrants don’t have well-paying factory jobs. They are forced into low-wage jobs cleaning offices, driving taxis or working in fast-food restaurants.

      Unable to make ends meet, these newcomers have swelled the ranks of the working poor and pushed the city’s social services to the brink. The use of food banks in Hamilton has skyrocketed, and homelessness has more than doubled. Hamilton’s inner-city core is among the poorest in the country. In some areas, like Barton Street, two thirds of the residents live below the poverty line. As teenage pregnancy, high-school dropout rates and illiteracy reach critical levels, the city is staring down the intractable barrel of generational poverty.

      “We have been bleeding jobs continuously, and replacement jobs have not been the rewarding ones,” says Marston. “Fifteen years ago people thought the food banks were a temporary institution. Now it’s not just the unemployed who use them, but the working poor— they can’t make it.”

      From the looks of things, the situation isn’t going to improve soon. A quick perusal of the city’s top fifteen employers shows that the overwhelming majority of jobs — three quarters of them — are in the public sector, either in hospitals or schools or in the municipal, provincial or federal governments. Outside the two steel companies, there is scant evidence of any real wealth creation. According to Paul Johnson, director of the city’s recently created poverty task force, some of the biggest job growth has been among welfare support services and, of course, Tim Hortons, which now has more than four hundred employees in the city.

      “We are just buying time,” says Johnson. “What happens to Hamilton when another recession hits? We’re treading water, and yet we’re in the best economic times we can remember. The only thing we know for sure is, it will come to an end.”

       CHINA CHANGES THE WORLD

      Bolton is not far from Hamilton, maybe fifty kilometres north, one more watermark in the sprawl of featureless highways and cookie-cutter housing developments that ooze from Toronto like an oil spill that can’t be contained. Once an expanse of farmers’ fields, this suburban enclave is home to Husky Injection Molding Systems, the biggest game in town and a rare gem among the sparsely populated ranks of homegrown manufacturers.

      Tucked in behind a thick wall of vegetation, Husky’s leafy compound couldn’t be more different from the heaving industrial miasma of Hamilton. To encourage environmentalism as well as efficiency, the company provides a fleet of yellow bicycles to commute between each of its well-manicured manufacturing complexes. Instead of entering a stuffy boardroom, visitors are led into the “Imagineering Room,” a bright, sky-lit space, adorned with woodsy paintings and country-style furniture meant to encourage creative thinking.

      The architect of this carefully constructed sanctuary is Robert Schad, a German-born entrepreneur who came to Canada in 1951 to escape war-ravaged Europe. A toolmaker by trade, Schad turned his garage tinkering into a world-beating company. Husky is the leading manufacturer of high-end equipment used to make plastic mouldings for everything from pop bottles to auto parts. With sales of more than $1 billion, Husky has offices in almost thirty countries and factories in Canada, Luxembourg and Shanghai.

      But while Schad built his empire on an unflagging credo of “automate or die,” a recent trip to China convinced him that that credo is not nearly merciless enough. “China changes the whole world. The drive for speed, the quick decision-making, it’s really a very ruthless business approach,” he said during an interview in the Imagineering Room before retiring as Husky’s chief executive officer in 2005. “If you don’t compete in China, you will not compete globally. It’s a benchmark now of global competition.”

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