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Algoma's man of steel: Denis Turcotte is charting a new direction for the steelmaker.

Denis Turcotte says right off the top he hates laying off people.

But he reconciles it as necessary when faced with the bare facts of the Sault Ste. Marie steel company's past business performance and the condition of the global steel market.

[ILLUSTRATION OMITTED]

Edging forward in a leather-bound chair in his office over looking the St. Mary's River, the 42-year-old president and CEO of Algoma Steel says he refuses to manage from a crisis situation. But he says he has a "moral responsibility" to make the tough decisions and do the right things pro-actively to place the 103-year-old steelmaker on solid financial footing and reposition it globally.

Turcotte is the new driving force behind a cultural change taking place. With a new logo in place, a tighter management structure and a pared down workforce by 18 per cent. Algoma has taken steps to reduce inefficiencies, show faith in employee expertise, give better service to customers and gain some confidence from investors.

In May, as steel markets began to improve, the new management took a paring knife to reduce its 3,400-person workforce by 600 this year through their market adjustment plan. Many of the workers were temporary employees and others will leave through attrition. In an effort to reduce inefficiences, the company eliminated layers of management by cutting two of eight organizational levels that separate Turcotte from the shop floor.

As steel markets began to improve in the last quarter of 2002 and the first quarter of 2003, Turcotte felt the company "had to act as quickly as it could" and it "acted in a pro-active way."

Pragmatic and optimistic, analytical and expansive in his thoughts, Turcotte has spent his year behind the president's desk of the sheet and plate producer and on the shop floor understanding the strengths and weaknesses of the company and dissecting the problems plaguing the Canadian steel industry. He has been crafting a plan for success.

Born in Beardmore and raised in Thunder Bay, Turcotte understands the socioeconomic roots inherent in one-industry towns and how sometimes competent, capable managers can be paralysed with community pressures that lead to either indecision or bad judgment that might cause their neighbour to lose a job.

After an 11-year career at Tembec, most recently as president of its paper group and executive vice-president of corporate development and strategy, Turcotte was brought in, in September 2002, by a search committee, after the resignation of Sandy Adam.

Algoma was known as a bloated, management-heavy company in the early 1980s, employing as many as 12,000 workers producing a vast array of heavy structural products rails, grinding balls, plate and sheet steel.

Now leaner and meaner, the steelmaker emerged from bankruptcy protection for the second time in a decade in market conditions that remain lousy, with global over capacity, weak demand and see-sawing prices.

Rising profits

However, the company has posted narrow profits in the last few quarters, including a modest $6.7-million second quarter profit, its cash flow looks positive and it is reducing debt.

Turcotte is familiar with that age-old refrain of many industry analysts who question whether a large integrated Northern Ontario steel producer located a day's drive from its principle end markets in southern Ontario and the U.S. Midwest can survive in such a competitive and dynamic market.

There are the enormous cost challenges of transportation, raw materials, electricity, steel market issues and social pressures that plague all northern companies, "but clearly I see the potential of the things within our control that we can influence. That drives our focus, our efforts and our resources."

It takes leadership to make the tough decisions when necessary.

Turcotte was thrust into a sudden leadership role to lead an employee ownership group at the Spruce Falls pulp and paper mill in Kapuskasing when he spearheaded the largest, most successful employee buy-out in Canadian history in the early 1990s.

During a town hall meeting, Kimberly-Clark senior management advised employees that their attempt to sell the operation had failed and a massive restructuring would ensue instantly reducing the workforce from 1,400 to 200.

As a young project engineer graduate fresh out of the University of Western Ontario with a masters of business administration, a secretary turned to Turcotte after the meeting adjourned and said "you're the guy with the business training, can't employees buy the company?"

He began phoning contacts in the financial community and 17 months later had engineered a $350-million restructuring plan to restore the mill into a competitive and profitable operation as part of the Tembec chain, the Temiscaming, Quebec forest products giant.

Described by Algoma insiders as a down-to-earth manager who is communicative and visible on the mill floor. Turcotte insists on accountability on a department-by-department level. He is also one who is willing to give managers and employees the authority needed to make decisions within the realm of their work.

"Part of the cultural change I'm trying to drive here is we're all in this together," he says. "We're all in a raft floating in a sea. This notion of 'your management, I'm union' is incorrect. This is not about class struggle.

"This social nuisance doesn't let us think clearly and act decisively."

Repositioning Algoma

"In the past this company and many in the North only acted on those painful decisions like laying off people when they were faced with a crisis, when the situation made the decision for them.

"I have nothing but criticism for people who let themselves into that situation...all you're doing is succumbing to that natural pressure and human emotion of not wanting to face that difficult decision. I don't accept that."

Turcotte has embarked upon a three-legged stool strategy to reposition Algoma for success by satisfying customers with good products and no-hassle, taking steps to build trust and confidence among investors and keeping employees informed of the business situation with effective communication.

"Clearly I see the potential, but there are things within our control we can influence and things outside our control. We've got to be the best we can be because as we build and improve and the capital markets showing that - we're building credibility, we have more access to capital, we'll generate a better portfolio of products and people will want to be aligned with us."

Of those situations Algoma cannot control, Turcotte believes Ottawa can do more to protect the Canadian steel industry from foreign dumping within a free trade regime.

The federal government's primary responsibility is to act in the steel industry's best interests.

He holds no grudges against "decisive" American trade policy that stops foreign producers from dumping steel once a complaint has been lodged, while Ottawa's process remains a long and agonizingly methodical procedure where those responsible for dumping continue to ship during the investigation.

As to what Algoma will resemble in five to 10 years. Turcotte says the company is receptive to any opportunity be it through joint venturing, alliances, mergers or acquisitions with customers or competitors.

With a deep-draft seaway dock, empty mill space and some industrial lands available, Turcotte says he will "look at anything and everything" to possibly partner with others to make Algoma successful. "No idea is a bad idea.

"I learned a ton from (Tembec president) Frank Dottori and one of the important things is to be open-minded and try to see everything around you for what it's full potential is."

A major cornerstone asset to rebuilding Algoma is using the full capacity and untapped potential of its new high-quality, low-cost Direct Strip Production Complex, a cutting-edge mill considered a "world class asset" that produces some of the best quality hot rolled coil in North America.

Algoma's finishing assets, such as cold-rolling facilities are also critical, while its cash consuming No. 7 blast furnace may be less of a strong contributor.

By IAN ROSS

Northern Ontario Business
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Author:Ross, Ian
Publication:Northern Ontario Business
Geographic Code:1CANA
Date:Oct 1, 2003
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