MAN OF STEEL BRINGS HIS MAGIC

for breaking employment promises after the financial crisis and finally shut the Hamilton blast furnace in 2013.

“Hamilton was an Academy Award performance on both sides of how you do bad labour relations,” said Peter Warrian, a senior fellow at the University of Toronto’s Munk School of Global Affairs who is a former USW research director. “They both heavily invested in rewarding the wrong behaviour.”

The Kestenbaum era looks like it’s off to a better start.

He has already secured a five-year agreement with the remaining 1,650 hourly workers, and he’s made symbolic changes, such as allowing the union to fly its flag at the plants and inviting workers to a bell-ringing ceremony at the Toronto Stock Exchange.

Forces beyond Kestenbaum’s control have also been moving in Stelco’s favour. Steel prices have been rising as China, the world’s biggest producer, takes steps to reduce output to cut pollution and close illegal and inefficient plants, while prices for key inputs iron ore and metallurgical coal have declined in the past year.

The near-term picture, though, looks less rosy.

The unpredictability of the North American Free Trade Agreement talks is a risk for Stelco and its ability to win U.S. contracts. If Stelco gets through that unscathed, the Trump administration may still follow through on threats to slap tariffs on steel imports, or otherwise ramp up Buy American provisions limiting the use of foreign steel.

The company is hinging a good part of its growth on winning contracts in the auto industry, which used to be an important part of its business before U.S. Steel migrated many of those contracts to its U.S. plants. This is where a collapse of NAFTA, which favours North American automakers, could really pose a “unique threat” to Stelco, Warrian said.

U.S. Steel doesn’t comment on its commercial relationships or labour relations of other companies, spokeswoman Meghan Cox said in an email.

Stelco will have to offer lower prices to compete with its former parent company and other major players, and that won’t be easy without scale, said James May, managing director of Toronto-based price forecaster Steel-Insight.

“They’re screwed in a downturn,” when smaller companies will have to discount their price in order to generate sales, May said.

Kestenbaum says his new company is ready for the worst. On the threat of reduced access to the U.S., he points out he’s also looking to boost sales to Mexico and Europe, taking advantage of the company’s location on the Great Lakes. And he says he’ll be more careful than previous owners in preserving a clean balance sheet.

“You don’t take on debt that can only be repaid in optimal market conditions,” he says.

Back on the Lake Erie dock, the CEO will soon begin ramping up exports from a port that was primarily built for imports, with a goal of eventually exporting 500,000 to one million tons of steel a year to customers around the world.

“We look at ourselves as a global player,” Kestenbaum says.