Hamilton-based steelmaker Stelco Inc. says it will move ahead with hundreds of layoffs at its Hamilton plant, rejecting the federal government’s claim that doing so would breach binding employment commitments made under the Investment Canada Act.
In a letter obtained by CBC News, Paul Simon, president and general counsel at Stelco, told Industry Minister Mélanie Joly that “your representation that Stelco’s planned layoffs cause it to breach its undertakings is false.” Citing the Act’s guidelines, Simon wrote that the undertakings do not require the company to avoid layoffs or to keep employment above a certain level on any given day during the five-year commitment period.
The letter follows an ultimatum issued by Joly last week, giving Stelco a choice between presenting a plan to protect up to 500 jobs at the Hamilton plant or facing possible legal action. Stelco is owned by Ohio-based Cleveland-Cliffs, which acquired the company in a $3.4-billion cash-and-stock deal. At the time, a news release on the deal said it kept “national interests at the forefront” and recognized the “importance of the workforce.”
According to Joly’s letter, the undertakings include a commitment to continue employing at least the same number of unionized employees and the vast majority of non-unionized employees as were on staff when the transaction was announced.
Union Says It Was Left Out
Ron Wells, president of United Steelworkers Local 1005, said in a statement to CBC News that he was “not surprised with Stelco’s convoluted response.” He said the union, which represents the affected workers, was never given a chance to review or weigh in on the employment undertakings agreed to as part of the Cleveland-Cliffs acquisition.
Joly’s office said in a statement on Saturday that the federal government still expects Stelco to “meet its legally binding commitments to employees,” adding that those commitments do not cease to apply because of changing business strategy or market conditions. The office said its legal team is reviewing Stelco’s letter and that “all options are on the table.”
Prime Minister Mark Carney said last week that Ottawa will “use all powers that we have” against Cleveland-Cliffs and will pursue the company to the “fullest extent of the law.” The federal government previously took similar legal action in 2009, when Industry Canada sued Stelco’s then-owner, U.S. Steel, over job protection commitments; that case was settled out of court in 2011.
Stelco Points to Tariffs and Financial Aid Dispute
In its letter, Stelco said its situation stems from “factors beyond its control,” pointing to the impact of U.S. President Donald Trump’s 50 per cent tariffs and the broader trade war. The federal government has said Stelco turned down offers of financial support before announcing it would idle finishing lines at its Hamilton plant.
Stelco disputed that characterization, saying the government’s offers of assistance “were not responsive to the issues at hand” and did not address the root cause of its decision. The company also alleged that Joly was “inaccurate and misleading to the Canadian public” in suggesting Ottawa only recently learned of its intentions, saying it had been in regular contact with the federal government about its financial concerns.
Stelco said it did provide a plan intended to address compliance with its job commitments under the Investment Canada Act, as Joly had requested, but reaffirmed it will proceed with the Hamilton layoffs, again citing external factors affecting the company’s ability to profitably produce certain steel products. It said affected workers could be offered the chance to fill open positions at its Lake Erie plant, and said it would continue to engage with the federal government.
Asked what action it wants from Ottawa, Stelco said the government should impose further restrictions on imports of cold-rolled and coated steel products into Canada, limit import substitution, and eliminate remissions for steel products that Canadian producers, including Stelco, are able to supply.
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