Diversification needed in steel industry: EDC

Any economic development initiative created in Sault Ste. Marie should include some form of plan that includes the steel industry, but the others cannot be forgotten.

Tom Dodds, CEO of the Sault Ste. Marie Economic Development Corp. said the steelmaker is still the most important employer in Sault Ste. Marie and the most important local Gross Domestic Product producer (GDP).

Dodds believes the future of the steelmaker lies in developing its products with a focus on advance manufacturing and value-added products that can help offset the cyclical nature of the steel industry.

Coupled with the development of the Port of Algoma and the push to reduce carbon footprints, Essar Steel Algoma is in the right place to diversify within its own industry.

As well, the steelmaker – or any other resource industry – can’t be ignored or forgotten because other statistics don’t bode well for Sault Ste. Marie. There are no statistical indicators that show Sault Ste. Marie is growing. In fact, Statistics Canada data shows the city has an aging demographics and more people are leaving the workforce.

Essar Steel Algoma, the second largest steel producer in Canada, has the capacity to produce 4 million tons of steel per year.

But the markets that the integrated steelmaker sells its product to are not within close proximity of the steel plant itself and a local or regional service centre would help the diversification for the plant itself, Dodds said.

“Right now it’s difficult to buy steel and take it back to a business somewhere else,” Dodds said. “We need a service centre where Essar can make steel of a small size and have that product used by a secondary manufacturer to process here.”

That different steel product may be as a result of developing smaller or specialized runs, Dodds said, or it could be by developing a partnership with another mill.

“The problem right now is that (Essar’s product) is always commodity based and (Essar) is cranking out the same thing all the time,” he said.

Dodds said an investment by upper levels of government into the Canadian steel industry is also necessary. He believes the merit of developing a ‘Buy Canadian’ policy would help sustain the industry.

Meanwhile, Dodds said the EDC is also working with individuals who have either been laid off or completely lost their jobs. Some are examining options to start small businesses and looking for assistance in finding start-up money.

Companies negatively affected by the steelmaker’s economic position are also looking further ahead to diversity their business to lessen their reliance on Essar Steel.

“The key for many of them is to overcome the border issues but it’s not an impossible exercise to deal with businesses there,” Dodds said. “And right now it’s a competitive market with the Canadian dollar in the U.S.”

Dodds said the EDC is also a participant in many other activities also underway including creating the conditions and environment for private sector business growth, and aligning local labour market demand with labour market supply, among other things.