Good morning, honourable members of the committee.
Thank you for the opportunity to speak today regarding the Canadian steel industry in relation to the section 232 tariff.
Evraz is North America's leading producer of large-diameter line pipe, employing over 2,100 people in Saskatchewan and Alberta. We recently completed a $270-million investment in Regina on leading-edge steel-making and pipeline technology for quality and safety. We're in the midst of a $30-million investment to produce high-strength casing and tubing in Red Deer. We also employ over 1,500 people in the United States and are the largest producer of rail steel in North America as well as the only producer of plate in western North America.
We are extremely integrated between the United States and Canada, sending rail steel from Colorado to CN and CP, sending steel from the U.S. for pipe production in Canada, and, most significantly, producing pipeline pipes in Canada for Canadian and U.S. operators. In fact, we also send some plate from Portland up to Camrose, which subsequently goes into U.S. and Canadian pipelines.
The U.S. measures have a tremendous and immediate impact on us and our U.S. customers. Our large-diameter pipe business is very project-oriented. Section 232 tariffs could delay U.S. projects and cost U.S. construction and energy jobs. For our own operations, they have caused a reluctance to ship large volumes of pipe destined for pipeline projects across the border due to the tariffs and the delays in posting product exclusions. This, in turn, is causing us to have working capital issues, disrupted operations, surplus pipe, and delayed realization of revenues.
We will keep impressing upon U.S. legislators and the administration how important Canadian steel is to the U.S. economy. Perhaps more importantly, our ties between Canada and the U.S. are deep, with many of us having fought side by side against oppression and for freedom throughout the world. We ask the government to continue its strong advocacy for Canadian steel while also working towards an agreement on a modernized NAFTA.
Over the last 18 months the government has been supportive in fighting for steel. As a result of the section 232 measures, we are working closely with the government in an expedient manner but we will need continued close collaboration and effort to defend our workers to get through this in the short term and again in the long term.
In addition to taking steps to ensure free and fair access to the U.S. market, the government should consider taking significant measures to ensure a viable domestic market for steel. Energy tubular imports as a result of diversion of pipe otherwise bound for the U.S. surged 70% in 2017 and have increased an additional 18% in 2018 with no increase in drilling activity. At the same time raw material costs in Canada have been significantly driven up by increased activity of U.S. steelmakers. That is not the case for our overseas competitors. This triple impact of massive increases in diverted energy tubulars, higher raw material prices, and the effective closing of the U.S. market will have a significant impact on our Canadian operations.
As the Minister of Finance has stated, a study of global safeguards is under way. We know adopting such measures is very serious but we are in a serious situation with the domestic market deluged with low-priced imports and significant barriers to the U.S. market. Strong action is necessary.
Finally, trade measures by the U.S. underscore the importance of the energy market here in Canada through pipeline construction that grows oil and gas exploration and production jobs, well-paid permanent middle-class jobs. Building LNG export facilities is vital for Canada's energy economy. We are ready to build those pipelines and pipes from recycled steel with the lowest carbon footprint in the world for Canada, in Canada.
I am confident that we can continue to grow well-paid middle-class skilled jobs if the U.S. and Canada can return to stable integrated steel trade. We can and will invest significantly in Canada and the United States.
I look forward to answering any questions you may have.
Thank you.