Military Humvees at a staging yard in Baghdad in 2011. The U.S. Defence Department presented Algoma with an award in 2004 for producing armoured plates that protected the vehicles’ doors and underbodies.Khalid Mohammed
While U.S. President Donald Trump appears to regard steel from Canada as a threat to the national security of the United States, the people who work at Algoma in Sault Ste. Marie, Ont., can offer a strong counterargument.
That's because in Algoma's plate mill, a one-quarter scale replica of an armoured gunner's shield is a reminder that a grateful U.S. Defence Department presented the steel maker with an award in 2004 for speeding up production of an armoured plate that protected the doors and underbodies of Humvees used in Iraq.
The plate helped reduce the numbers of U.S. soldiers being killed and wounded by improvised explosive devices.
"It was a huge moment for that mill back then that we actually had this special recognition from the Pentagon," said Armando Plastino, a former chief executive officer of Algoma, who was vice-president of operations at the time.
Mr. Plastino said he remembers vividly the comments made by military brass as they presented the award at the mill in Sault Ste. Marie. "The supply of that plate was 'saving the lives of our boys,'" he recalls the Pentagon officials as saying. "'You're saving the lives of our boys.' They kept repeating that."
That contribution – and the importance of trade with Canada to the U.S. economy as a whole – appears to have been forgotten as Mr. Trump singles out the decline of the U.S. steel industry as a threat to national security and gets set to slap tariffs of 25 per cent on steel imports and 10 per cent on aluminum, citing an obscure provision of the 1962 Trade Expansion Act.
"It is pretty ironic," Mr. Plastino said.
It's not as though Algoma and other steel makers in Canada have been basking in boom times while their U.S. counterparts suffered.
Algoma, officially Essar Steel Algoma Inc., is well into its third year of financial restructuring under the Companies' Creditors Arrangement Act. Stelco, now Stelco Holdings Inc., emerged last summer from almost a two-year run in CCAA protection – its second this century.
The same wave of cheap imported steel that has damaged U.S. steel makers played a role in pushing the two companies into creditor protection in Canada.
The trip through the CCAA process is also a repeat performance for Algoma, which has been on a roller coaster ride since 2004, the year the U.S. military said thanks.
The company, which operates the closest major steel mill to the U.S. border, had the best financial performance in its history that year with profit of $344-million and considered bidding for Stelco during the Hamilton-based company's first CCAA journey.
Algoma abandoned that idea and was eventually snapped up by India-based Essar for $1.85-billion in 2007 during the global steel-industry consolidation that swept aside Canadian ownership of all four of Canada's largest steel makers.
Essar talked about boosting capacity in Sault Ste. Marie to four million tonnes annually from about 2.5 million, but falling steel prices and a battle with the U.S. company that supplies Algoma with iron ore led to its CCAA filing in November, 2015.
At it stands now, Algoma's lenders want to buy the company and are in negotiations with the United Steelworkers union about a new contract that would remove the last roadblock to their purchase of the steel maker.
Monetary issues are on the bargaining table now, said Mike Da Prat, president of USW local 2251, which represents workers in the mills.
Recent court filings show that Algoma generated revenue of $1.2-billion in the six months ended Sept. 30 and $218-million in earnings before interest, taxes, depreciation and amortization.
In court filings made in 2015, Algoma said 48 per cent of its sales were to the U.S. market. That would leave about half its sales exposed to the 25-per-cent tariff if Canada can't convince the U.S. government to exempt Canadian steel.
Stelco appears less vulnerable. Chief executive officer Alan Kestenbaum said on the company's financial-results conference call last month that about 10 per cent of Stelco's shipments are to U.S. markets.
Still, a 25-per-cent tariff could blunt its efforts to try to increase its share of steel sold to auto makers in North America.
Apart from a possible exemption, union leaders and industry executives argue that Canada also needs to match U.S. actions on imported steel or risk being the conduit by which other countries continue to dump cheap steel into the United States.
"Trump is going to say: 'If you're not closing your borders, we're closing ours to you,'" Mr. Da Prat said.