Comment 48842

By mrjanitor (registered) | Posted October 05, 2010 at 16:15:27

Capitalist,

Product choice: Stelco made some very poor decisions on what products to drop and what products to focus on. The most famous example is their old tin line. They felt there was no future in tin so they sold the line to Dofasco. The tin market rebounded shortly after the sale and Dofasco has been making a fortune from tin. There was a push as I have seen in many industries to drop low volume high profit products and focus solely on high volume products however with thin profit margins. Another example would be a cold rolling line that they upgraded for about $200,000,000 using components designed for aluminum, not steel. 2 years later that line was sold to an Indian aluminum company for $20,000,000, 10 cents on the dollar. There also used to be a lot of money in selling what is called by-products, mostly from the coke making process. Stelco decided even though it was profitable it was not a core business and stopped marketing by-products. I have been told of many other similar choices such as roll width, coatings etc. that were poor decisions that cost Stelco business. Dofasco management always have an eye to future market conditions, Stelco always seemed to be thinking about what made sense 2 years past.

Investment in new technology and processes: Dofasco has been brilliant in choosing which products to focus on but also what to invest in. They have developed their own world class maintenance system that was so good they were actually trying to sell it to other industries. Maintenance increases equipment life but also increase uptime for production lines, a key way to increase profit.

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