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Lethbridge Herald Newspaper Archives

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Lethbridge Herald, The (Newspaper) - September 3, 1974, Lethbridge, Alberta Tuesday, Scpttmbtr 3, 1974 LETHBRIDGE HERALD Analysts caution against steel profit limitation TORONTO (CP) A group of investment analysts told the federal steel profits in- inquiry on the weekend that any attempt to limit the pro- fits of Canadian steelmakers would harm the industry's growth and hurt the Canadian economy. In a brief compiled by seven major Canadian investment firms, the analysts said limiting profits would damage investor confidence, making it more difficult to raise money for expansion. "The access to capital mar- kets is absolutely essential in view of the expansion programs announced or already in they said. "The implications of im- pairing this access to capital for the companies, the shareholders and eventually the Canadian public is indeed ominous." The study, which included an 18-page brief and a mass of charts, gave a detailed exam- ination of Algoma Steel Corp. Ltd. of Sault Ste. Marie (Al- Dominion Foundries and Steel Ltd. (Dofasco) and Steel Co. of Canada Ltd. both of Hamilton, in the period 1959-73. Providing 80 per cent of Canada's total steel produc- tion, the companies are under investigation for price increases dating back to last May. Headed by Mr. Justice Will- ard Z. Estey of the Ontario Court of Appeals, the public portion of the inquiry finished Friday. More private ex- ecutive sessions are scheduled and the auditor's report is to be submitted before a final decision is handed down in about one month. The analysts said price in- creases up to the end of 1973 were insufficient to recover rapidly rising costs of raw materials, labor and other factors of production. As well, the increases did not enable the steel producers to achieve a level of profits which they had attained historically. Over the last 15 years there has been a deterioration in steel company profits, they said, and the steel producers have been "sorely pressed" to maintain reasonable profit levels. Now they faced expansion plans that "boggle the im- agination" to meet Canadian demand. Without expansion, the Canadian economy would be more dependent on im- ported steel. Taking a look at the steel in- dustry in the United States, they said attempts to limit prices there "aggravated" shortages of many types of products, forcing consumers to pay premium prices for im- ported as much as 200 per cent higher than the controlled domestic prices for comparable products. And while U.S. producers starting exporting to get higher prices, "our Canadian producers have deliberately elected to forgo the tremen- dous extra profits available to them in offshore export markets, a move which would have aggravated the shortage of steel in they said. But the added costs were