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Dofasco to invest $700 million at Hamilton Finishing Division to reduce costs and improve operations

Hamilton, ON -- Nov. 12, 2002 -- Dofasco Inc. is initiating a program to position the Finishing Division of its c...


Hamilton, ON — Nov. 12, 2002 — Dofasco Inc. is initiating a program to position the Finishing Division of its core Hamilton manufacturing operations against all global competition, through a significant revamp over the next five years.

When complete, the Finishing Division Improvement Program will enhance quality, increase shipments, reduce costs and improve customer service. Dofasco expects to invest approximately $700 million in the revamp over this period. The company already has committed about $384 million to the first and most significant phase of this capital project, which will begin in 2003.

"The actions we are announcing today are part of a continuing intent to significantly and fundamentally improve our manufacturing capabilities," said John Mayberry, chair of the board and chief executive officer of Dofasco.

The improvements will be financed through internal cash flows. "This is a forward-looking investment that can confidently be made on a prudent financial basis, and that will deliver sustainable value to shareholders," Mayberry said.

"As a result of our Solutions in Steel strategy of providing value-added products to our customers, and thanks to the excellent work of our people, we are in a position to accelerate our business plans and further differentiate ourselves in our markets."

Don Pether, Dofasco’s president and chief operating officer said "This is about more than an investment in physical assets –this is about harnessing Dofasco’s intellectual capital through business process innovation, automation and integration.

"Dofasco will upgrade product capability, quality, manufacturing throughput and product mix. This investment in our future will reduce manufacturing costs as well as deliver cost savings associated with improved productivity".

The Finishing Division Improvement Program will increase the throughput of higher value-added products at lower operating costs, by focusing on:

– Coupled and continuous manufacturing;

– Automated processes; and

– Information technology that will seamlessly link manufacturing and order management.

The first phase of the program will be made up of a series of changes that will enhance product and process capabilities.

– Upgrading the company’s #4 Pickle Line to improve product quality and increase its capacity (pickling is a process that removes scale and cleans steel prior to further processing);

– Upgrading Dofasco’s newest existing Continuous Pickling Cold Rolling Mill;

– Constructing a new pickle line that will be coupled to an existing cold rolling mill (which will also be upgraded) to create a second Continuous Pickling Cold Rolling Mill; and

– Replacing the company’s Acid Regeneration Plant, which recycles and re-conditions materials used in the pickling process.

Ultimately, all Finishing operations, including cold rolling, galvanizing, tinplating, annealing and tempering will be improved through construction of new facilities, and upgrading or rationalizing existing facilities in order to create continuous production processes.

Automated product handling, and new and upgraded technology will also be introduced in order to shorten order cycle times, enhance process reliability and provide important employee safety enhancements.

These actions “will allow us to do more, do it better, and do it faster," said Mayberry.

In 2001, Dofasco completed a $135-million Hot Mill Improvement Program, and as a result increased its Primary Division output by approximately 15% (600,000 tons) while reducing operating costs.