In 1959, Hawaiian Western Steel was one of the first tenants of the new Campbell Industrial Park. The plant was built and owned by a Canadian steel company, Western Canada Steel, Ltd.
The technology used then was the same as that used on the plant’s last day of operation. Steel scrap was placed in enormous, 25-ton cast-iron buckets. Electric current directed through the buckets caused the steel to become hotter and hotter, to the point it eventually melted. The molten steel was poured into cast iron ingot molds. The ingots were cooled, then reheated and, while hot, formed into reinforcing rods, wire, and other steel products.
In 1964, a controlling interest in Western Canada Steel was sold to Consolidated Mining and Smelting Company of Canada — which later renamed itself Cominco. Cominco is one of the largest mining and smelting conglomerates in the world.
In 1986, Canadian Pacific Enterprises, Cominco’s own corporate parent (and Hawaiian Western Steel’s corporate great-grand-parent) sought to find a buyer for Western Canada Steel. Efforts to unload the company increased in 1987, after Cominco had been sold to the Teck Corp. of Canada. An article in the January 20, 1987 edition of The Wall Street Journal reported that Teck’s president told shareholders that the company was planning a substantial reduction in the $700 million (Canadian) debt owed by Cominco.
Part of that large debt had come as a result of Cominco’s construction of a new smelter at Trail, British Columbia. Pollution from the old smelter (where Hawaiian Western Steel had for a time shipped its baghouse dust for reprocessing) had been so high as to cause lead poisoning in children living in the small town in the eastern part of the province. By 1991, the West Coast Environmental Law Association, based in Vancouver, was calling for an investigation into the problem. According to a lawyer with the association at the time, Calvin Sandborn, “The evidence is that irreversible damage is being done to children in Trail. There is statistical probability that those kids are impaired intellectually because of the lead levels in their blood.” (Unfortunately, the new smelter never worked. Cominco continues to operate the old smelter.)
Taking Over Debt
By mid-1988, Cominco had struck a deal with Ipsco, a Canadian company based in Regina, Saskatchewan, whose primary business was the manufacture of large-diameter industrial pipes (the kind used, for example, in oil pipelines). Ipsco bought Western Canada Steel (and its debt of more than $30 million) in November of that year for $14.7 million. Western Canada’s plant in Vancouver had been permanently closed by Cominco shortly before the sale. Its subsidiary’s operations at Campbell Industrial Park in Hawai`i were marginal. Basically, because energy costs in Hawai`i were so high (compared with energy costs elsewhere), steel rebar from sources in North America could be purchased in Hawai`i at prices competitive with those of Hawaiian Western Steel. Besides that, the Hawaiian Western Steel plant had suffered from years of corporate neglect. No major investment in the plant appears to have been made since the mid-1970s, when the baghouse filter system was installed at a cost of about half a million dollars.
The Ipsco takeover raised the hopes of steel workers in Vancouver that the plant there would be reopened. The new owners began negotiations with the Canadian Association of Industrial, Mechanical and Allied Workers over what the union believed were terms for the reopening.
The talks bore no fruit. The plant remained closed. Yet, following allegations of unfair practices, the Industrial Relations Council of British Columbia held hearings into the circumstances surrounding the Ipsco takeover.
Strained Courtesy
According to an account of the talks in American Metal Market of February 13, 1989, those hearings disclosed that Western Canada Steel’s president, a Cominco officer, had instructed the plant manager “to incite violence on the picket line a month before Ipsco’s takeover.” This, it was felt, would “enable the company to secure an injunction that would remove pickets and allow free movement for liquidation of inventories and other assets.” Also, the plant manager said, “by permanently closing the mill three days after it locked out employees, Western Canada sought to avoid paying its employees $1.4 million [Canadian] in severance pay.” The 350 workers at the plant were locked out in July 1988. The mill was closed permanently in September of that year.
When Ipsco took over, it was resolved “not to re-open the plant,” according to its vice president for personnel, Robert Rzonca (who later became manager of Hawaiian Western Steel). The company began talks with the union, Rzonca said, “out of courtesy to the union … and because there seemed to be no harm in exploring new options.” Ipsco’s president, Roger Phillips, gave the union until January 2, 1989 to come up with “satisfactory contract language” or he would dismantle the mill, according to the report in American Metal Market, a trade daily. A union official told the provincial council that the concessions that Phillips was demanding were so extreme that, quoting from American Metal Market, “if accepted, Ipsco could have avoided hiring back any or all of his union’s members.”
“I have never in all my life seen clauses like that, of that magnitude,” the union officer was reported to have told the council.
A Write-Off
Rzonca moved to Hawai`i in 1989. The Honolulu Advertiser reported in November 1991 that on Rzonca’s arrival, “he found a host of problems, including equipment that dated from the 1950s and a workforce that hadn’t received a pay raise in 10 years.” The company posted losses for eight years running, with a $1.5 million loss for 1990 alone, Rzonca told The Advertiser (despite receipts reported elsewhere of some $14 million). Incredibly, Rzonca was reported to have said “he believes the company can both comply with the environmental laws and turn a profit” — a statement that is at variance with an internal company memo he appears to have authored in 1989. According to that memo, cited in a report to Congress, the plant’s manager told Ipsco that “the operation could not be turned into a money-maker and the mill should be shut down.”
In letters to its creditors and other public statements, the company attributed its financial problems to actions of the federal Environmental Protection Agency and the state Department of Health. However, it would appear that long before the EPA raid in March 1991, Ipsco, Hawaiian Western Steel’s majority owner, had no intention of building the plant back up. According to The Wall Street Journal of December 3, 1991, “Ipsco said the filing shouldn’t have a material impact on its finances because it wrote off its entire investment in Hawaiian Western Steel in previous reporting periods.”
Volume 3, Number 7 January 1993
Leave a Reply