Dofasco
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Dofasco is a steel company based in Hamilton, Ontario, Canada, which is also home to longtime Canadian rival Stelco. Dofasco is currently a stand alone subsidiary of Arcelor Mittal, the world's largest steel producer. Previously ordered by the U.S. Department of Justice to divest itself of the Canadian company, Arcelor Mittal has now been allowed to retain Dofasco provided it sells several of its American assets instead.[1]
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[edit] History
Clifton and Frank Sherman founded Dominion Foundries and Steel in 1912, creating a giant that would bring prosperity and identity to the city of Hamilton, Ontario. [2] Dofasco was incorporated as Dominion Steel Castings Company Limited in 1912, becoming Dominion Foundries and Steel Company in 1917.[3] Its longtime nickname "Dofasco" was adopted as its legal name in 1980.[3]
Dofasco owned and operated a number of subsidiaries, including National Steel Car, a Hamilton-based railway freight car manufacturer, from 1962 to 1994, and Algoma Steel, from 1988 to 1991, until union and financial difficulties ultimately forced Dofasco to divest the company. During the recession of the early 1990s, Dofasco made its first permanent layoffs since the Great Depression of the 1930s.
Dofasco has been profitable for 11 straight years, while cross-town rival Stelco has spent time in bankruptcy protection.[1]
Dofasco has won awards for being the "most sustainable manufacturing company" in North America.[4]
[edit] Acquisition
In January 2006, Luxembourg-based Arcelor, then the world's 2nd largest steel producer by volume, outbid rival German steel producer, ThyssenKrupp AG, to purchase Dofasco. Analysts cited the strengths of Dofasco, including its non-unionized workforce, strong automotive customer base, its unique thin high-strength steel product, and ownership of a Canadian ore mine.[2]
After Arcelor initially presented a hostile bid of $56 per share, ThyssenKrupp and Dofasco signalled their intentions to enter into a friendly merger. Under that plan, Dofasco would have retained its employee profit-sharing plan and placed in charge of all of ThyssenKrupp's North American operations.[3] Arcelor raised its offer significantly, causing ThyssenKrupp to pull out as further bidding would have downgraded the its credit rating. Dofasco paid ThyssenKrupp a breakup fee of $215 million. Dofasco's board recommended the latest Arcelor offer of $71 per share in cash, worth an estimated $5.5 billion. [4]
Arcelor was itself subsequently taken over by the world's largest steel producer, Mittal. However, in an effort to prevent Dofasco from falling into ThyssenKrupp's hands, Arcelor management locked Dofasco into an independent trust based in the Netherlands. Mittal had reportedly promised to sell Dofasco to ThyssenKrupp, but the Dutch trust has thus far refused the transaction. Dofasco will be retained by the combined Arcelor Mittal, and eventually integrated into their international operations, as the parent plans to divest American assets instead to meet US Antitrust regulations.[5]
[edit] Labour Relations
Unlike rival Stelco, Dofasco is non-unionized, due to its profit-sharing plan with employees. As a result, Dofasco has avoided many of the strikes and work-stoppages which have plagued its cross-town rival. However, there has been some complaints that the employee benefits are too generous. At one point, investors complained that the profits should have been distributed to shareholders as a special dividend rather than giving workers larger bonuses; this was a factor in the underperforming stock price despite strong results.[5]
While several unsuccessful attempts have been made to organize by the United Steelworkers of America, union negotiations at Stelco have influenced wages and benefits at Dofasco.
In 2007, Dofasco was named one of Canada's Top 100 Employers, as published in Maclean's magazine, the only steelmaker to receive this honour.[6]
Since 1937, Dofasco is well known for its annual tradition of holding a large Christmas party, typically featuring 30,000 guests and a 30 foot tree. From 1993 onwards, the party has been held at Copps Coliseum.[6]
[edit] "Our product is steel. Our strength is people."
Since 1970, the company has used the same corporate slogan — "Our product is steel. Our strength is people." — to create what Marketing Magazine has called " one of the most clearly defined corporate images in the country." The slogan was created by Hamilton-based Kelly Advertising, who have been the company's ad agency since 1927. [7]
[edit] Notes
- ^ Hamilton Spectator News Wire. "Dofasco deadline looms", Hamilton Spectator, 2006-12-14. Retrieved on 2006-12-26. (English)
- ^ Hamilton Spectator: "The Greatest Hamiltonian". (II). Retrieved on 2007-02-11.
- ^ a b History of Industry in Hamilton, Ontario. Retrieved on 2007-01-29.
- ^ Dow Jones Sustainability Group Index via Dofasco (2000-03-12). "Dofasco Among World's Most Sustainable Companies". Press release. Retrieved on 2006-12-26.
- ^ AP. "ThyssenKrupp goes to court over Dofasco", Globe and Mail, 2006-12-26. Retrieved on 2006-12-26. (English)
- ^ Reasons for Selection, 2007 Canada's Top 100 Employers.
- ^ "The 1970's Landmark Canadian Advertisements", Marketing Magazine, 1998-09-28. Retrieved on 2008-02-21.
