Steel

COLONEL ROYCE:

According to an old Hebrew legend, when the temple in Jerusalem was completed, Solomon invited to a feast all the artificers who had been engaged in its construction. As the throne was unveiled, the guests were outraged to see that the seat of honour on the king's right, as yet unawarded, had been usurped by the ironworker. Whereupon the people in one voice cried out against him and the guards rushed forward to cut him down.

The king silenced their protests and turning to the stonecutter, said:

"Who made the tools with which you carve?"

"The ironworker," was the reply.

To the artificers of gold and silver, Solomon said: "Who made your instruments?"

"The ironworker," they answered.

To the carpenter, Solomon said, "Who forged the tools with which you hewed the cedars of Lebanon?"

"The ironworker" was again the answer.

Then Solomon turned to the ironworker: "Thou art all men's father in art. Go, wash the sweat of the forge from thy brow and sit at my right hand."

This afternoon sitting at my right hand is a modern day ironworker. Born in Ballymahon, Ireland, in 1900, Mr. Scully has since been an Irish policeman, a chartered accountant and a management consultant. During the war he occupied many important positions in Government including President of the Crown corporation, Victory Aircraft, and concluded his tour in Ottawa as Deputy Minister of National Revenue, Taxation Division.

For these many public services, Mr. Scully was made a Companion of the Most Distinguished Order of St. Michael and St. George in 1946 and, in 1947, the President of the United States awarded him the United States Medal of Freedom with Bronze Palm.

In 1951, with this varied experience, he joined the leader of the steel industry in Canada, The Steel Company of Canada Limited, as Controller. He successively became VicePresident, General Manager, Director, and in April 1957 became President of Stelco.

Gold is for the mistress--silver for the maid
Copper for the craftsman, cunning at his trade,
"Good!" said the Baron, sitting in his hall,
"But Steel-Cold Steel-is Master of them All."

It is therefore my pleasure to introduce to you the Master of Canadian Masters, Vincent William Thomas Scully, C.M.G., F.C.P., President of The Steel Company of Canada.

MR. SCULLY:

It is a privilege to be invited to speak to the members of the Empire Club. Even though there is no longer an Empire, the sun continues to shine on all those patches of this earth we used to recognize by that colour that nowadays connotes something quite different from what it stood for when your Club was founded some 62 years ago. Coming from a country which was at war with the Empire for seven or eight hundred years, I'm not sure how I should regard myself--as an immigrant, a New Canadian, or merely an exile.

At least I come before you as a representative of an industry that has played a significant role in the development of Canada, an industry that has grown and prospered under what we still call the "free enterprise system", even though it is much less free than many of us feel it ought to be. As you must know, steel, like a great many of our Canadian industries and except for some small units, was largely the creation of foreign capital--i.e., capital from outside Canada. By one process or another this situation gradually changed, and today a very substantial part of the industry is owned in Canada--in the case of Stelco, over 90%. This, I suppose, is in fact part of the process that dissolved the Empire, created the Commonwealth, and set the stage for whatever the future may have in store for us. While I should like to speculate on the prospects, it would be inappropriate for me to do so at this time.

There are four major integrated steel companies in Canada today having about 90% of present rated capacity of the industry. The balance consists of some eight companies which are not integrated in the sense that they do not process from ore to steel. Growth has been rapid since the war, exceeded among major steel nations only by Japan and possibly Russia. Indeed, I think it is fair to say that our Canadian steel companies have performed remarkably well in plant expansion and modernization, raw material development and, most important of all, the finding and training of Canadians to man and manage these vast and complex enterprises.

Steel is, of course, the most precious of metals. Without it the world would have seen few of the great advances in science and technology that have characterized the 100 years that have elapsed since steel-making on a large scale began. Even those materials which sometimes challenge us could not be produced economically if steel were not available for the construction of the plants, equipment, transportation facilities, etc., that they must have.

Prior to the 1860's, steel was made only--in small quantities. It was an expensive metal, highly prized for centuries, neither made, sold nor used as it is today. The invention in the early 1860's of the Bessemer process in England and, shortly after, the development of the open hearth furnace, quickly brought about a revolution in the use of steel. These developments coincided more or less with the beginnings of the railways, steamships, and large-scale construction. Indeed, it is surely a matter of fact that, until cheap steel became available, none of these great expansionist programmes was possible. It was, no doubt, a happy coincidence that in that historic decade Canadian Confederation became a reality.

Today the world's annual capacity for steelmaking is about 525 million tons, and it is the ambition--not just of the smallest countries, but of quite small subdivisions of many countries--to have steelmaking capacity of their own; an ambition, I may say, not unknown in Canada.

During the past twenty-five years, initially spurred by the demands of war, steel technology has made extraordinary advances, and our Canadian companies have not lagged behind in creating or adopting better methods, new products, and up-to-date equipment. Since 1946 we have raised steelmaking capacity from 2.3 million tons to 9.8 million tons, an increase of over 400%, and even now the major Canadian steel companies are embarked on still another series of expansion programmes which will lift steelmaking capacity, broaden and improve product lines, and bring about (we devoutly hope) higher efficiencies and lower production costs.

Generally speaking, we have been steadily approaching a position of overall self-sufficiency in iron and steel. In fact, in three of the last four years, our exports of both metals exceeded our imports, and in 1963 our exports of steel alone exceeded our imports, quite a change since the end of the war when we had capacity to provide only about 65 % of our consumption. Of still greater importance is the fact that our mill prices for most basic mill products are at or below those of the United States industry which includes a number of companies, each of which can produce more steel than the total production of all the Canadian companies put together.

That this country has derived enormous benefits from the courage and foresight of the steel industry is beyond question. Wherever our people go in Europe, Asia, America, Australia, the accomplishments of Canadian steelmakers are recognized and admired. Our plants are visited by steelmen from all over the world who come to examine our facilities, our methods and our organization. We are glad to have these visitors from beyond our borders and we enjoy reciprocal treatment when we seek help or information from them. This is in pleasant contrast to the regard some of our Canadian critics have for us. Furthermore, we usually have in our training programmes men from some of the so-called developing countries who seek practical experience to fit them to operate the mills being built in their own countries.

The steel industry, too, has been greatly helped by being able to attract skills from Europe and the U.S.A. Last May I was invited to speak at a meeting of the American Iron and Steel Institute in New York. Here are two excerpts from my remarks: -

"In steel, we in the Canadian industry are much beholden to you for many of our modest accomplishments; this we freely concede. Indeed, it is doubtful if our companies could ever have progressed as they have were it not for the help, guidance and people-especially people-we got from here. Clergue, Davis, Hilton, Hobson, Holbrook, Sherman, Wilcox, are a few of the names of great significance in Canada's steel industry -a distinguished few whose intelligent direction of our companies would have been outstanding anywhere."

"The remarkable thing about all this is that no U.S. steel company acquired ownership or control in the Canadian industry. This is remarkable because steel is probably the only major industry in Canada in which this has not happened. It may be, of course, that you had little faith in our prospects or that you were so preoccupied with your own affairs that you had no time for the puny babies being organized and developed by men you inspired and trained. We are grateful that this was so because our industry is not now one of these being subjected to the pressures of the somewhat hysterical advocates of getting ownership of our major industries out of American hands and into the hands of Canadians."

Our progress was also facilitated over the years by the generally intelligent attitudes of our governments to business. While it would be improper for me to say anything that might be construed as political at this particular time, it is only fair to say that few, if any, countries have provided a more favourable climate for industry than has ours. While it is true that in some countries certain industries may get better treatment in one way or another, I know of none where, in the overall, industry is better off than it is here in Canada.

This does not mean, of course, that we in steel are always happy and content in our relations with our many governments-far from it. Indeed, one wonders if some of the policies designed to attract popular support have been conceived by those who are essentially opposed to the freedoms they ostensibly advocate.

What I might tell you specifically of what steel has accomplished has already been said many times and I don't propose to enlarge on it now. To get some appreciation of what steel means to you--every one of you---it is only necessary to look about you; in your home--heat, refrigeration, food preparation, beer and soft drinks in disposable cans, even your wife's bobby pins; at your job--at your cottage--at your golf course; in fact, wherever you may be you literally live, work and play because we have found ways to make steel serve your every need. Within sight of this building itself are some of the finest examples of what I mean-the subway, the city hall, the new complex reaching for the sky on King Street, and-all about this great metropolitan area-steel, visible and invisible, making possible the simplest as well as the most spectacular accomplishments of a dynamic people.

Back in 1955 the Gordon Commission, in its examination of Canada's economic prospects, reported that by 1980 steelmaking capacity would have grown to 16 million tons, with output at about 14 million tons. In the ten years that have gone by since the Report was published, the rate of growth has exceeded the forecast rate. This was accomplished by the entry of new producers, but largely in the existing companies by the addition of new iron--and steelmaking furnaces and revolutionary changes in raw material beneficiation. From what we now can foresee, taking into account the frailty of human vision, our industry's growth should continue at a rate certainly not appreciably less than that attained since the Gordon forecast was published a decade ago.

In our business capital investment is very high, especially in a period when technological discoveries have been almost commonplace. Modern blast furnaces, oxygen vessels, rolling mills, ore beneficiating plants, and the structures to house them cost enormous sums of money. You will have seen in recent months that one steel company in the U.S.A. plans to spend $1,800,000,000 in the next three years to expand and improve its plants. Our spending in Canada must be, relatively, on this scale if we are to maintain our position in the domestic market, and at the same time hold on to the modest gains we have made in the foreign markets. Canada has not had a monopoly in steel plant expansion and modernization. Indeed, I doubt if any other industry has become more competitive. Despite this we have been able to generate a healthy export business and at the same time cope with foreign competition at home.

As most of you should appreciate, the money to finance capital expenditures can only be attracted to those enterprises which have demonstrated an ability to earn a satisfactory return on investment, whose prospects are good and whose managements are alert, competent and courageous. That the steel industry has met these tests goes without saying.

Some of the important assumptions we have made in arriving at our estimates of future growth and capital needs are that we shall be allowed to operate our businesses under a free enterprise system, that government attitudes and policies will place the encouragement of thrift and individual effort and initiative highest among their objectives, and that the trend towards better employer-employee relations will continue.

Industry in Canada has established itself as probably the most mature and responsible element in the economy--imaginative, progressive, patriotic, philanthropic, and in every sense keenly aware of its obligations to its owners, workers, customers and the nation. In the forefront is steel, playing a leading role in the advancement of Canada's economic interests and constantly alert to opportunities to enlarge its usefulness. We do not object to legitimate criticism, even when we don't like it, but we feel we have every right to resent and object to the sort of stuff that emanates from that element in our society that would destroy private initiative and reduce all of us to that point where everyone lives off everyone else--to the marvellous final security of being on the bottom, or where every tree has been pruned back to shrub level.

I believe that our society has been suffering from a surfeit of headlines, an insidious intrusion into our privacy, an unceasing war of nerves to persuade us that if we don't listen or watch or buy or whatever it is, we shall surely perish--or at least smell! Sooner or later I hope we shall emerge from this era in which the windbag seems to have so much influence. I sincerely hope so, and that in the meantime we shall not be legislated into a state of subjection, made to conform to what some tin gods believe would be good for us.

Canadians, owners of this vast country, have accomplished great feats-in peace and in war--and we should reject with contempt the views of those among us who are so fond of belittling what has been done, of fastening on the slightest deviation to condemn the whole, of pointing with pride to what is being done elsewhere.

Recently I had an opportunity to hear a progress report on the work of the group which is organizing and really creating Expo '67--Canada's first world fair. Like many of you, I had some reservations about this project even when our Company was considering joining with three other steel companies to take part as an exhibitor. I was amazed at what has been achieved already and proud too that a group of Canadians without any experience whatever in such matters is well on its way to presenting what will certainly be one of the greatest, if not the greatest, world fairs ever conceived.

Because of the emphasis that has been laid on the cultural and aesthetic facets of the Exhibition, the business community could quite readily overlook or lose sight of its commercial implications. Actually, Expo '67 represents one of the greatest commercial opportunities that has ever been presented to the Canadian business community, and, as in the case of all his opportunities, the onus is on the businessman to make use of it. There can be no longer any doubt whatever as to the success of this venture.

We shall have in Canada, not just in Montreal, an invasion of people from all over the world filled with curiosity and eager to discover what we Canadians are like and how we have gone about becoming one of the great trading nations of the world. Centred at Expo '67 will be facilities to bring mutual interests together, to promote cordial relations, and to ensure a climate in which businessman can meet businessman to the advantage of both. There are many ways in which even the smallest business can have a part in this unique project, and active participation should be considered a high priority in all business planning for our country's centennial year.

A hundred years, by most standards of measurement, is not a very long period of time. That our beginnings go back much farther undoubtedly influenced the coming into being of Canada as a nation, but even more than that has been the constant flow of people from many nations who have come here to find what was denied to them in their native lands--principally, I believe, opportunity.

The diverse elements which compose our society have all contributed generously to our maturing, the last-come as well as the first. That we have secured our identity, living as we do in the shadow of our very great neighbour, must be due principally to our intense sense of independence, that sense that makes us willing partners in all worthwhile enterprises but poor subjects for impressment.

In our material growing, we have need to keep constantly before us some vision of what we believe to be our destiny, a clear concept of the kind of nation we want to build for ourselves and for the generations of Canadians who will follow us. The good fortune that has blessed our efforts in the past may not always favour us--especially if we allow ourselves to drift into a regional competitiveness, disregarding the great economic strength, provincial as well as national, that unity has given us.

Our people, our natural resources, our rapidly expanding educational facilities, and by no means least, the security we enjoy (whether we like it or not) by sharing this North American continent with a friendly, powerful and generous neighbour--these are assets beyond price. So long as we preserve and foster them, Canada's prospects will be limitless.

But they will only be realized by free men and women whose faith is strong enough to sustain them even when the odds against success are great. In steel, we have such faith, and it shall be our high purpose to continue to play a significant role in the fulfillment of Canada's aspirations.

Thanks of the meeting were expressed by Mr. Charles C. Hoffman.