Thank you.
Good afternoon, everyone. My name is Ken Neumann. I'm the national director for the United Steelworkers union here in Canada. With me is Shaker Jamal, a member of our national office research team. Our union's foundation was laid in the great industrial and manufacturing surge of the mid-20th century, and first in the steel industry, which employed tens of thousands of Canadians and literally built great cities like Hamilton, Ontario.
Over time, our membership grew to include resource extraction, forestry, and value-added manufacturing of everything from tires to auto parts, furniture, appliances, forest products, and more. Our experience over the last several decades shows that government policy and inaction in the manufacturing sector have deeply eroded the middle class in this country.
It has been replaced by insecurity, inequality, and uncertainty, which we believe must be reversed for the sake of future generations. Our written submission touches on several relevant areas and key sectors, such as steel, auto, forestry, trade, and the need for sustainable industrial policy all aimed at truly benefiting Canadians with job creation and growth in manufacturing.
Let me begin with the steel industry. Supporting the steel manufacturing sector is clearly in the country's economic interest. The sector produces $14 billion worth of goods annually, with half of the industry's annual output exported to foreign markets across the world. While the number of Canadians employed in the steel industry is a far cry from what it was in the past, 22,000 Canadians are still employed directly in this industry. The Canadian steel industry is high tech and diversified, and it efficiently produces high-quality products.
As we sit here, today, two of Canada's major integrated steel makers, U.S. Steel Canada and Essar Steel, have been in bankruptcy protection for over a year. Two communities, Hamilton and Sault Ste. Marie, Ontario, hang in the balance as these two major employers seek to restructure. We've been working tirelessly for two years to try to save the jobs provided by these employers as well as the pensions and benefits that support hundreds and thousands of families in Ontario.
We've been working hard with investors, the steel industry, and the lenders. We have received significant support from an engaged Ontario provincial government, but despite our repeated requests for help, the federal government has not been anywhere in this effort. We have received no offers of assistance from the federal government for investment, for retraining, or for labour adjustment. These are all areas in which, historically, the federal government has provided assistance.
This failure of the government to assist in saving the steel industry is part of a broader problem. For decades now, we have had a real industrial strategy problem in Canada. Other countries have industrial strategies. Germany has a successful modern manufacturing strategy, but Canada has utterly failed to support its manufacturing sector, and the crisis in the steel industry is just an example of that failure.
It is unfortunate that in the 2015 federal budget, which called for billions of dollars for infrastructure spending, there was no commitment to the purchase of Canadian-made steel. The lack of government support must be reversed.
I will move now to the auto parts sector. More than 100,000 Canadians are directly employed in vehicle and parts manufacturing, and many are USW members. This accounts for 7% of all manufacturing jobs in Canada. The automotive sector anchors the manufacturing sector, but over the last decade it has seen the loss of 53,000 jobs. Meanwhile, auto parts operations based in Canada typically enjoy a labour cost advantage compared to their U.S.-based counterparts. The industry has a highly skilled labour force, as well as a strong R and D network, with one of the lowest cost structures among advanced economies.
Leveraging the sector's competitive advantage to reverse its troubling decline requires direct government policy. This includes ensuring Export Development Canada's top priority in both attracting and supporting Canadian-based factories by making investment incentives competitive and efficient with sensible tax features.
The United Steelworkers is also a leader in the Canadian forest industry sector, with 17,500 members working in forestry and mills and other production facilities. The last decade, which has included the Canada-U.S. Softwood Lumber Agreement that has now expired, has been difficult for Canadian workers. Low lumber prices, a relatively high dollar, slumping U.S. demand, growing competition from South America and Asia, and lack of capital investment in manufacturing have all led to a decrease in output and to job losses.
China and India are importing increasing amounts of Canadian raw logs. There has been a 300% increase to China alone in the last five years.
By allowing companies to export such large volumes of raw logs, with no value-added work incorporated into them at the domestic mills, governments are failing workers in those communities. The federal government has a key policy role in promoting growth in the sector. An export tax on raw logs would incorporate the difference between export price and domestic price, and the revenue from the tax could be used to help promote the value-added sector.
By taking the lead, the federal government can reverse the declines and ensure that the sector reclaims its status as a sustainable, renewable, value-added industry, providing meaningful, lasting jobs.
The steelworkers also believe that the trade and manufacturing policies should be approached as one comprehensive economic challenge. Free trade agreements alone have not satisfied the imperative to build an economy that serves Canadians' need for a stable, sustainable future. Persistent trade imbalances and declines in manufacturing speak to the lack of a coherent industrial policy. Unfettered trade and minimal government intervention have meant that Canadian exports are biased in favour of our comparative advantage in raw materials and resources.
While the steelworkers represent more workers in the mining sector than any other union in Canada does, we believe that a trade policy that relies predominantly on resource extraction neglects job-creating, value-added, and productivity-enhancing manufacturing. Recent mega-trade agreements such as the TPP and CETA only further entrench a trade regime that takes away the ability to develop sectoral strategies that encourage manufacturing growth. Details in our written submission substantiate that fact. The steelworkers strongly urge the Government of Canada to reject the TPP and CETA and focus efforts for the future on industrial policies that are not constrained by trade deals that are neither free nor trade. This is not protectionism; this is pragmatism. Foreign investment goes hand in hand with trade when it comes to globalization and the need to grow our economy for the sake of Canadian citizens.
Performance requirements for foreign investors must be built in to ensure that Canadians are not disadvantaged by investment deals. There is no greater evidence of the negative impact of secret investment deals with no performance requirements than the takeover of Stelco by U.S. Steel. The unconditional agreement made by the previous federal government with U.S. Steel has all but destroyed the confidence of the people in Hamilton. The uncertainty and insecurity are obvious. One major reason for the crisis in the steel industry is the flooding of the steel market by imported steel. Global overcapacity in steel production has risen to 700 million tonnes, and China by itself maintains over 400 million tonnes of surplus capacity, over 30 times the Canadian steel market.
We are concerned by the government's initiative toward liberalized trade with China. We believe that China is not a market economy and that freer trade with China poses a great risk to Canadian manufacturing. We also believe that the government must amend trade laws to make our trade remedies more effective, and to make the process more transparent by allowing unions to fully participate in trade complaints against countries dumping steel in Canada. Many other jurisdictions such as the U.S., EU, Australia, and New Zealand afford workers that right.
It is fundamental in a globalized economy that workers be able to defend their jobs and communities from unfairly dumped goods. Industry can only benefit. Future trade agreements must allow local procurement, training requirements, and other offsets to stimulate local manufacturing and preserve Canada's right to negotiate community benefit agreements.
I know my time is up, and I'll stop there.
Thank you.