Sydney Steel—Before and Now

MR. MACDONALD:

When the moment arrived to revitalize the Sydney steel industry and, more recently, to tackle the peculiar problems of Deuterium of Canada Limited, the search began for a man of unstinting vigour, wide corporate experience, dogged determination and unusual vision. If that man also proved to be a Nova Scotian, then he would truly be an ideal figure. Such a person was discovered to exist, and his name is Robert Burns Cameron. His name alone would ensure instant affection by the people of Nova Scotia, but when all his contributions are recorded, he will likely become legendary, not only in his province but also throughout Canada.

To appreciate the dimensions of his responsibility and his place in the life of the people of his province, let us cast our thoughts back to the so-called "Black Friday" in Cape Breton, October 13, 1967. If a large firm closes operations in Toronto, that is a serious blow to the particular workers and to the local economy. However, when Dominion Steel and Coal Corporation decided to close down operations in Sydney, the livelihood of a total community was threatened and, in turn, the welfare of a whole province.

Now, Sydney Steel is reported to be alive and well and living in Cape Breton. The physician and therapist, Robert Burns Cameron, is with us today. Appointed Chairman and Chief Executive Officer upon the formation of Sydney Steel Corporation in December 1967, he was able to report nearly $3 million profit in 1968, his first year of operations. Mr. Cameron, a native of New Glasgow, had been the head of a number of industrial and construction firms in Nova Scotia. In 1961, he assumed responsibility for the operation of Maritime Steel and Foundries Limited, a firm once headed by his father, as well as retaining the Presidency of Durham Leaseholds Limited and the Chairmanship of Cameron Contracting Limited.

His work with Sydney Steel made such an impression on Premier Smith that, in October 1968, he was asked to provide treatment for the symptoms of another corporate headache: Deuterium of Canada Limited. By January of this year, he was so deeply enmeshed in those critical areas of the provincial economy, that it was natural for him to add a third string to his public bow; and so, he undertook the chairmanship of the Cape Breton Development Corporation.

Obviously, Mr. Cameron is accustomed to confronting difficult situations head-on. As a young graduate of the Royal Military College in 1939, he joined the Royal Canadian Engineers, serving in England, Italy and Western Europe. He rose to the rank of Major and was awarded the D.S.O. Upon discharge from the Army in 1945, he attended Nova Scotia Technical College prior to forming Cameron Contracting Limited.

As a Maritimer, it is only natural for him to look to the sea and to exploit Sydney Steel's location on the east coast by seeking markets abroad. As a result, he has won customers in Mexico, Chile, South Korea as well as the United States. His expansion plans call for an investment of $94 million over the next few years, contingent on the commercial competitiveness of the mill. He is obviously determined to confound his namesake who lamented: "the best laid plans o' mice and men gang aft a'gley!"

His devotion to Nova Scotia and to the public good is evident in his service to the Nova Scotia Voluntary Economic Planning Board, his membership on the Board of Governors of Dalhousie University, and his membership on the Board of Management of Presbyterian College in Montreal. Finally, I cannot resist one personal reference. In addition to this extraordinary range of corporate and public responsibilities, he is also the father of seven children.

Gentlemen, I am pleased to present a man of such boundless energy that Sydney Steel can be assured of a cast-iron future Robert Burns Cameron.

MR. CAMERON:

Mr. Chairman, thank you for the honour of being invited to speak before this distinguished gathering here today.

The Honourable G. I. Smith, in his speech to you on January 23, 1969, made reference to the Sydney Steel Corporation regarding the situation as of October, 1967, and the position and outlook of the company at the time of his speech. I would like to add to the information given at that time and what has been happening up to the present, with a few words on the future.

Hawker Siddeley/Dosco announced in October, 1967 the formal shutdown of the Sydney plant. This date was Friday, the 13th--then referred to for some time as "Black Friday" in Cape Breton. In retrospect, perhaps it was not a "Black Friday"--as an aside, I have often wondered whether or not the Public Relations Department were on holiday when the date of Friday, the 13th was chosen for the announcement.

I remember that one of my first thoughts was that one or other of the Canadian steel companies should accept some responsibility in this crisis, whether by acquisition or by the loan of senior company officials to effect evaluation of the real problems facing the distressed company. I believed then, and still do, that the other companies had a responsibility to look after a member of their own industry a sort of family obligation. We are a small family, but an important one.

When the industry has a problem, all the companies pull together for their mutual benefit, and run to government for help--for example, to protect themselves against dumping. It seems reasonable and proper to me that when the shoe is on the other foot--when a member of the industry gets into trouble and jeopardizes the lives of many thousands of people--then it is only fair that the industry accept a share of the responsibility for helping to correct the situation.

On the basis of their record and ability to run the plant on an economic basis, I believe Dosco did the right thing in getting out.

The recovery of the plant to date has many times been referred to as a miracle which has allegedly taken place in Cape Breton. I must tell you that it was not a miracle--at least not in the sense most of us understand the word. If you visit us in Cape Breton--and which invitation is extended most heartily--what you will see is a steel plant that earned a new lease on life, and I say "earned" advisedly.

It is now thriving as it has never thrived before. Although two and a half years of increasing production, with commensurate financial success, does not prove successful existence ad infinitum, I believe our chances of continuing our progress are excellent.

What has been done through co-operative determination I emphasize co-operative--is perhaps as united an effort as anywhere in this country in peacetime.

It may be overly dramatic to say that in an age whose hallmark seems to be division and dissension, and even disruption and destruction, perhaps the kind of human effort that went into saving our steel plant could be considered something out of the ordinary today.

Among the reasons given by Hawker Siddeley for withdrawing from the Sydney Steel operations were, I quote:

"A number of factors have led to the current position of the steel mill which dates back to 1900. Its location was originally selected to take advantage of nearby supplies of relatively low-cost iron ore and coal and a deep water location. The cost advantages disappeared over the years and the increase in world steel supply has virtually eliminated opportunities for Sydney products to be sold advantageously in overseas markets."

The original reasons for the selection of the site of the Sydney Steel works are still good reasons. The deep water location is unchanged and can be developed to take advantage of the cheapest water transportation means. Again, owing to the deep water location, low-cost iron ore in pellet form of the highest grade is available at competitive world market prices, both from Canada and other sources. Advances in the technology of coke production will continue to make the abundant coal of Cape Breton available, and modernized mining methods will keep its cost competitive. Again I quote:

"I would summarize the situation in this way," Mr. Emmert said. "The steel mill at Sydney has become outdated by technological developments in steel making. If the money was available to completely modernize the mill, its geographical location relative to markets and the resulting freight charges on its products would still prevent Sydney from being truly competitive with other steel producers."

The present mill, still with its original equipment but with improved technology and better management, has already achieved a 25% greater output than the best ever by its previous owners. The rehabilitation of the steel plant and its simultaneous modernization to make use of all the modern techniques available will capitalize upon the inherent advantages of the local position and permit Sydney to compete with the best in terms of quality and price.

But where are the markets? Their positions vis-a-vis Sydney are unchanged, but are the markets the same if the product is different? For our rails, the Canadian market presents no problems. For the export market, our location on the Atlantic is ideal. For our semi-finished steel, whilst the larger proportion is presently absorbed in Canada, we are convinced from our surveys of the international market including the United States of America--that we can comfortably sell to export what Canada does not require.

We believe that our modernization plan will provide us with cost and quality advantages which will make our product unique and able to find a market in any area.

The steel plant has been the cornerstone of Cape Breton's economy since the turn of the century, and, as such, of course, has always been a large factor in the overall economy of Nova Scotia.

I think you all know what took place immediately following the announcement. It was well publicized right across the country. Still, I wonder whether anyone not living there could fully appreciate what a tremendous blow this was to Cape Breton and to all of Nova Scotia. It was like an economic earthquake, threatening us with social and economic disaster.

The provincial government stepped in immediately and completely, the federal government shortly after. Sydney Steel Corporation was created as a Nova Scotia crown corporation, and the fight for survival was on.

Sysco's takeover of the plant came after prolonged and difficult negotiations which resulted in hard terms for us, as we thought then and still do. In the following months, during which we were working feverishly to pick up the pieces and put them together in some rational way, there was more hard bargaining with Hawker Siddeley on a final settlement.

During the first year of operations, Local 1064, United Steelworkers of America, and other unions, agreed to extend the old contract without increases, as part of the steelworkers' contribution to the rescue operation. At the same time, they gave good co-operation, although we do not always see eye to eye; and I must say, without the unstinting efforts of the steelworkers my story today would not have a happy ending. The same degree of credit must go also to the engineering and management staff, and I would like to make special mention of our good fortune in obtaining the services of our president, Mr. D. W. R. Haysom. I cannot emphasize too much that what was accomplished in Sydney was a human accomplishment. Like all companies, Sydney Steel Corporation is much more than a collection of buildings and equipment, representing so much capital investment. What is represented there is the human investment of courage and talent and determination. I take my hat off to the thousands of men and women at the plant who provided the ingredient that money cannot buy.

Now, let us consider what has been accomplished at the plant in terms of production, productivity and profitability.

We can use our predecessor's performance as one yardstick by which to measure our own. Dosco's all-time production record was established in 1964 when the plant turned out 842,000 ingot tons of steel. In 1967, this had shrunk to less than 618,000 tons. In our first year of operation, we produced 870,000 ingot tons; in 1969, we broke the million-ton mark--our total production was 1,010,000 ingot tons. Our work force is about the same size as was Dosco's during its last year in Sydney, so we not only surpassed their all-time production record in both years, but we have obviously improved productivity very substantially. Dosco estimated its annual loss on the plant at about six million dollars; in 1968, Sydney Steel Corporation had an operating profit of almost three million dollars. Our fiscal year has been changed to coincide with that of the province, so that our first financial report covers a 15-month period. Operating profits for the 12-month period ending March 31, 1970 will exceed ten million dollars.

I think this has to be regarded as a success story, and I am most pleased that it is a Nova Scotia success story. It can become rather annoying to find yourself always thought of as a resident of a "depressed area" or "under-developed region" or whatever the current label happens to be. We do have many problems, that's true, but we're not unimaginative or lacking in resourcefulness. Given a fighting chance, we can hold our own with our fellow-Canadians in any part of this country on a comparative basis; and we want to hold our own--we don't want charity; we want the opportunity to stand on our own feet, to provide for our own people and to make a contribution to Canada.

We do need some support to do this--the kind of support that Sydney Steel Corporation was given, and which I think it has exploited sensibly and to the advantage of the whole country.

I think this would be an appropriate time to acknowledge that support. Notwithstanding that the other Canadian steel companies did not share my philosophy about industry responsibility, to which I referred earlier, they did respond in other aspects to all of our requests for assistance and advice. I want to mention particularly Mr. Scully and Mr. Griffith of Stelco; Mr. Sherman of Dofasco; and Mr. Holbrook of Algoma. They gave our people the red-carpet treatment on many occasions, and invariably went a second mile to help us.

The federal government has been sympathetic and helpful. I would especially like to mention the honourable ministers, deputy ministers, members of parliament from Nova Scotia, and departmental staffs to whom we have been referred. They assisted us no end -looking for ways to provide additional help, rather than seeking excuses to avoid becoming involved.

There is no question that the greatest responsibility rested with Premier G. I. Smith and his government. It has been said that he had no choice other than the decision to go ahead. I don't buy that. It's an over-simplification. He did decide on the course. He did take the responsibility. And without accepting that responsibility there would be no Sydney Steel today or tomorrow.

Now, what about the plant's future? We think it has a good one. We are about ready to embark on a $94 million expansion and modernization programme that will include basic oxygen furnaces, continuous casting equipment, and improved rail mill facilities. Sysco, I believe, will be able to finance almost all of its own capital and operating requirements from its own operating revenues and sources normally available to private enterprise. We may need certain provincial government guarantees.

I mentioned earlier that we are looking to the export market for the bulk of our sales; within three or four years, on the basis of our rehabilitation, we believe that we will be selling 70% of our production offshore. We will do this by becoming, I hope, one of the most efficient steel producers in Canada in our line and size. Our rock-bottom, I think, production costs will allow us to penetrate markets hitherto out of reach, especially in Europe. Annual production will naturally be increased substantially, but not to the point where we are drawn into some of the market disadvantages faced by high-volume producers.

In our situation, in a small province with limited resources, I believe it is more important to control costs than get carried away with the notion that a huge volume is the answer to everything. There is a niche in the Canadian industry for us, where we can prosper without glutting the market and without making ourselves overly vulnerable to market fluctuations, which, as you all know, can be catastrophic to a high-volume producer who hasn't the resources to ride out the downturns.

We are going to play our cards close to the vest. What we do we will try to do better than anyone else. That does not include trying to emulate your great Canadian steel companies in terms of size.

Let me say something about my personal reactions as a "free enterpriser" at finding myself head of a crown corporation. My attitude is quite simple. When private enterprise cannot, or will not, accept its responsibilities, then the government must step in. After all, private enterprise sees nothing wrong with seeking government help when it has problems. To my mind, the goal is simply this: to exploit the resources of the community or of the country, as the case may be, to the best possible advantage of the people. I think that private enterprise is generally the most efficient way of achieving that goal, but I am not opposed to public ownership where that promises greater benefits to our citizens.

I started out talking about miracles, and I would like to end on the same sort of note. When all is said and done, I believe that God does indeed help those who help themselves. I do believe that during the last two and a half exciting, and at times exhausting, years a lot of people in Nova Scotia were quietly observing the old dictum: work as though everything depended on yourself, and pray as though everything depended on God.

I thank you all for your courteous attention. I thank you on behalf of Nova Scotia for your part in supporting and assisting Sydney Steel Corporation. And I repeat my invitation to please come to visit us.

Mr. Cameron was thanked on behalf of The Empire Club by Mr. R. I. Hendy.