Dofasco Inc.

Dofasco Inc.

Post Office Box 2460
Hamilton, Ontario L8N 3J5
Canada
(416) 544-3761
Fax: (416) 548-4265

Public Company
Incorporated: 1912 as Dominion Steel Castings Company, Ltd.
Employees: 19,200
Sales: C$3.25 billion (US$2.80 billion)
Stock Exchange: Toronto

Dofasco Inc. is Canada’s largest steelmaker, accounting for 42% of the country’s total raw steel production. Dofasco and its subsidiaries manufacture hot and cold rolled steel; carbon and low-alloy steel castings; galvanized steel; prepainted steel; tinplate; chromium coated and electrical steels in coils, cut lengths, and strip; seamless and welded pipe; structural shapes; and rails. The company also runs a limestone quarry, and is Canada’s largest railroad car manufacturer.

Clifton W. Sherman, built the foundry that served as the cornerstone for Dofasco in Hamilton, Ontario, in 1912. Then known as the Dominion Steel Castings Company, the foundry initially made steel castings for Canada’s expanding railway system. The original plant covered five acres. In 1913 Dominion merged with Hamilton Malleable Iron Company, and took a new name, Dominion Steel Foundry Company (Dominion).

In 1914 Frank A. Sherman, brother of the founder, joined the firm. Production for war goods began to roll. As World War I progressed, orders for stirrups, bridles, and clevises were replaced with orders for munitions, marine forgings, and steel plate, reflecting changes in the nature of warfare. In 1917 a plate mill was purchased, and a new forging plant began churning out shell forgings. The company’s name changed again that year, to Dominion Foundries and Steel, Limited, even then known as Dofasco. When the war drew to a close in 1918, Dofasco had 11 open hearth furnaces producing about 750 tons of steel per day. The plant had sprawled to 26 acres, and about 2,280 workers were on the payroll, nearly ten times the number just four years prior.

The 1920s were a difficult decade for the Canadian steelmaker. Following the end of the war, demand for steel dropped off drastically. To make matters worse, low tariffs allowed U.S. steel producers to control a sizable chunk of the Canadian steel market. Dofasco operated Canada’s only heavy plate mill capable of producing 6- to 42-inch universal steel plate. It was completed in 1921, but tough foreign competition kept the mill working below capacity for most of the decade. The foundry, however, picked up the slack for the mill during the 1920s, and the company’s expertise in steel castings improved accordingly. By 1928, the market for Canadian steel plate improved, and in 1929 a second shift was operating at the universal plate mill.

In 1930 Dofasco’s foundry poured a 95,000 pound casting for a hydroelectric development in Quebec. It was the largest such casting ever produced in Canada. During the Great Depression demand for steel was up and down. Canada’s rail system continued to expand, and provided sporadic orders for Dofasco. Sometimes the foundry was overbooked; at others it was virtually idle.

The second half of the decade saw many improvements at Dofasco. In 1935 a 20-inch cold reducing mill was brought on line, and the company began producing the first Canadian tin plate. Dofascolite, the name under which the company’s tin plate was marketed, was a tremendously successful product. In 1937, a 42-inch cold mill was built, enabling the company to produce 100 tons of cold-rolled steel per day.

By the late 1930s the menace of war once again loomed on the horizon. Dominion Foundries and Steel geared up to meet Canada’s war demands. Between 1935 and 1940, the company spent $5.8 million on new facilities. Three-quarters of all steel and one-third of all tin produced in Canada came from Dofasco. In 1941 the company became Canada’s only domestic producer of armor plate, supplying the Canadian armed forces until the end of World War II.

After the war the company continued to produce at record levels. In August 1951, Dofasco ignited its first blast furnace. Three years later, it became the first North American company to produce basic oxygen steel. This new process resulted in higher quality steel at reduced costs. Also in 1954, Dominion Foundries and Steel acquired the galvanized sheet division of Lysaght’s Canada, Limited.

In 1955, the company began operating a 56-inch cold mill with a continuous galvanizing line. In 1956 a second blast furnace began operations. Substantial replacement of facilities was made during the next five years. Between 1950 and 1959, Dofasco had invested $120 million in new plant facilities.

Dofasco’s postwar growth continued into the next decade. In 1960 a second galvanizing line was installed. Steel production potential was up to one million tons per year. Dofasco next branched out through acquisition. In 1961 a joint venture to run the Wabush Iron Company was initiated. In 1962 National Steel Car Corporation, a leading manufacturer of railroad cars, was purchased. Another purchase was the Temagami property, destined to become the Sherman mine. The Sherman mine delivered its first iron ore pellets to the Hamilton plant in 1968. In 1970 the company expanded its iron ore capacity when it bought the Adams mine in northern Ontario.

Capital investments continued throughout the 1960s. When industrial impact on the environment became a growing concern in the late 1960s, Dominion Foundries and Steel reacted. In 1968 the company installed pollution-control equipment in order to improve the quality of water returned to Lake Ontario from the plant.

Steady demand for steel kept the facilities at Dofasco humming through the late 1960s and early 1970s. In March 1973 Dofasco bought the BeachviLime Ltd. quarry, insuring a steady supply of lime. A month later, a pipe manufacturer, Prudential Steel, was acquired.

In the mid-1970s massive construction was underway to double steel output within 20 years. A second five-stand cold mill was built in 1974. While the world economy was in recession, Dofasco spent several million dollars on environmental controls and renovated its foundry. By 1976 sales rebounded from the recessionary trough, reaching record levels in some areas.

In 1978 the company launched what was at that time its largest single construction project, a second melt shop. It also purchased Guelph Dolime that year, a lime quarry to be operated as a part of the BeachviLime unit. As the 1970s drew to a close, Dofasco announced its plans to built a fourth galvanizing line and a second hot strip mill.

In October 1980 Dominion Foundries and Steel, Limited, officially changed its name to Dofasco Inc. A severe recession struck Canada in the second half of 1980, causing a plant shutdown for part of July. The steel industry was hard hit, but Dofasco continued with new plant construction on schedule. As the recession deepened, however, Dofasco had to take cost-cutting measures. Demand for steel was low. In November 1982 the company laid off 2,100 employees. Net income in 1982 dropped to $63.8 million from $169.3 million the previous year.

In 1983 production levels improved, and laid-off employees were called back. Demand for higher-quality steel prompted Dofasco’s conversion in 1984 of its number-one galvanizing line to production of a new corrosion-resistant steel, Galvalume. In 1985 a $750 million cast slab expansion, Dofasco’s most expensive project ever, was begun. The new facilities enabled Dofasco to produce new and higher-quality steel products.

Several major acquisitions helped Dofasco’s sales jump from $1.9 billion in 1985 to $3.9 billion in 1989. In December 1986 Dofasco acquired the Whittar Steel Strip Company of Detroit. Whittar specializes in strip products used in the automotive industry. In August 1988 Dofasco purchased the Al-goma Steel Corporation of Sault Sainte Marie, Ontario. Algoma, a fully integrated steel manufacturer, was written off in 1991.

Demand for durable consumer goods was weak during the early 1990s, and as a result Dofasco’s major customers—the automotive, appliance, and construction industries—cut orders. To combat overcapacity problems, Dofasco’s new construction turned toward joint ventures. In 1990 the company announced plans to build a hot-dip coated steel plant with NKK Corporation of Japan and National Steel Corporation of the United States. The venture is the first steel industry joint venture involving companies from three countries. The plant was to be completed in 1993, and each company was to share in the profits of the specialized product, without each having to built a plant of its own, keeping the overall supply within acceptable limits.

Dofasco’s success has been due in large part to the company’s ability to react quickly to changes in the steel market. Specialized products, particularly non-corrosive steels, were and are in demand, and Dofasco has stayed on top of new technology. As a demand for lighter alloys increases, the company will surely respond.

Principal Subsidiaries

The Algoma Steel Corporation, Limited; BeachviLime Limited; National Steel Car Limited; Prudential Steel Limited; Whittar Steel Strip (U.S.A.); Quebec Cartier Mining Co. (50%); Wabush Mines (16.4%); Baycoat Limited (50%); Sorevco Inc. (50%); DNN Galvanizing (50%); Ventra Group Inc. (8.5%).

Further Reading

Dofasco 75: 1912-1987, Hamilton, Ontario, Dofasco Inc., 1987.

—Thomas M. Tucker