It’s just the latest in a long line of reversals for Ontario’s steel industry.
Last week, Essar Steel Algoma in Sault Ste. Marie filed for creditor protection to preserve its operations while it deals with trouble on two fronts: a historically low price for steel and a dispute with its supplier of iron.
Essar’s announcement comes as U.S. Steel, with mills in Hamilton and Nanticoke (in Haldimand County, south of Hamilton on Lake Erie) tries to divest itself of the troubled plants and recover what it claims are billions of dollars in debt the plants racked up. The Hamilton mill is likely to be sold off. Three communities in Ontario, with three very different settings, but all facing the same question: where do they look for jobs as the steel industry continues to struggle? Not surprisingly, the answers depend on what part of the province you’re in.
Hamilton has had some success pursuing the “eds and meds” strategy pioneered by another steel town, Pittsburgh. That American city, which during World War II produced more steel than Germany and Japan combined, has reinvented itself to focus on health science and its universities.
Similarly, Hamilton has welcomed an influx of high-earners and international prestige with the growth of life science research at McMaster University and other local institutions.
While the comparison between Hamilton and Pittsburgh is common enough, it also obscures some of the key differences between the two cities, according to Mike Marini, marketing coordinator at Hamilton’s Economic Development Office.
For starters, Hamilton’s received a small fraction of the financial assistance that Pittsburgh has received over time.
“Pittsburgh had all three levels of government supporting them financially – federal, state, and municipal putting money into the city,” says Marini. That doesn’t include substantial investment from private finance, including some of the families who made their fortunes from Pittsburgh steel (such as the Carnegies).
Pittsburgh may have needed more help, given that its situation was far worse than Hamilton’s.
“They lost half of their population. There are no working mills left within Pittsburgh’s municipal borders,” says Marini. Hamilton still has two – and one (ArcelorMittal Dofasco) is regularly lauded for leading the industry. Nor has Hamilton’s population fled the city.
Nevertheless, the city has had to look for other options because the steel industry employs fewer people than it did before. As the food processing industry grows in the Greater Toronto Area, Hamilton has attracted major food processors like Canada Bread, Gay Lea Foods, and one of Tim Hortons’ main coffee roasting plants.
“It’s a transition that’s been about 30 years in the making,” says Marini. He cites the Conference Board of Canada, which now ranks Hamilton as one the most diverse economies among Canada’s cities.
That’s a good thing, because there’s also criticism of Pittsburgh’s “eds and meds” strategy, with research from University of Toronto’s Martin Prosperity Institute showing that pinning a city’s hopes on universities and hospitals has only limited benefit.
Yet creating a diverse economy to take the place of a struggling steel plant poses some particular problems: unlike the old warehouses that have been repurposed into the offices of new tech companies in Toronto, steel plants don’t offer an easy renovation and repurposing.
“With Hamilton what’s been interesting to watch is the city working both with and against the steel town moniker,” says Vasiliki Bednar of the Martin Prosperity Institute. “On the one hand they’ve used the branding of ‘this is the best place to raise a family,’ but you also see other grassroots campaigns, like ‘anything is possible in Hamilton.’”
The solutions that work for a city of roughly a half-million people aren’t the same as those pursued by smaller communities. In Sault Ste. Marie, which has a population around 75,000, Essar Steel Algoma’s troubles have a much wider impact, with the steelmaker more of an anchor in the local economy – for better and for worse.
According to Tom Dodds, CEO of Sault Ste. Marie’s economic development office, Essar’s ongoing financial difficulties haven’t just caused the city anxiety—they’ve hurt the large network of suppliers in the region that relied on business with the plant.
But he says Sault Ste. Marie has also diversified away from steel making, though not in the same ways that Hamilton has.
While Sault Ste. Marie’s manufacturing sector enjoys the province-wide boom in green energy projects, another area of growth for the city is the IT businesses serving the Ontario Lottery and Gaming Corp. Headquartered in Sault Ste. Marie, it has been ordered by the Liberal government at Queen’s Park to modernize its operations—including a substantial investment in data technology.
That said, Essar Steel and the port of Sault Ste. Marie remain central to the long-term economic plans for the city.
“The objective there, with the port, is both to export raw materials out, but also bringing products in and distributing products out to other markets,” says Dodds. He says the Essar steel mill will continue to be the mainstay of the port, but is also working to attract other businesses to the 1,000 acres of land adjacent to the docks.
Like Sault Ste. Marie, in Haldimand County – home of the Nanticoke U.S. Steel plant – the answer to what comes after steel is, in part, “more steel.” Lidy Romanuk, acting manager of Haldimand County’s economic development and tourism office, emphasizes that unlike its Hamilton counterpart, the Nanticoke plant is still hiring.
“It’s still an important employer, an important business in Haldimand County,” says Romanuk. “When I drove by there just a while ago they had signs up looking for new hires.”
But Haldimand County, with a population of around 45,000, isn’t immune to the global trend of fewer steel jobs, either. Similar to Hamilton, the county has found some success in attracting food processors.
“We’re an agricultural community, we’re highly rural, so we keep looking for opportunities to support our farmers,” says Romanuk.
However, the pastoral environment and the flat topography have also attracted a different kind of invasive species: cycling tourists.
“A lot of the value of the county is the charm of smaller communities. The cyclists really enjoy the beautiful shores and the nice flat landscapes,” she says.
One of the nagging issues in all three communities is dependency on policy shifts at Queen’s Park. Hamilton is banking on major transit investments from the province, both in the form of enhanced GO Train service to Toronto and a major light rail project the province finally committed to this year. Nanticoke has had to deal with the impact of the closure of its coal-fired electrical generating station, which employed 650 people at its height. And Sault Ste. Marie is vulnerable to changes regarding everything from forestry and mining to Ontario Lottery and Gaming—though the Liberals have repeatedly insisted they have no plans to move its headquarters out of the northern city.
“Like many parts of northern Ontario, we’re very affected by both federal and provincial decisions,” says Dodds. “We’re very mindful of that … but the flip side is that the growth of northern Ontario has been as a result of policy decisions to encourage mining and forestry.”