Evidence of meeting #115 for International Trade in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was workers.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Sean Donnelly  President and Chief Executive Officer, ArcelorMittal Dofasco
Flavio Volpe  President, Automotive Parts Manufacturers' Association
John White  President and Chief Executive Officer, Canadian Automobile Dealers Association
Bob Verwey  Sheriff and President, Owasco Inc.
Ken Neumann  National Director for Canada, National Office, United Steelworkers
Larry Rousseau  Executive Vice-President, Canadian Labour Congress
Joseph Galimberti  President, Canadian Steel Producers Association
Conrad Winkler  President and Chief Executive Officer, North America, Evraz
Stephen Young  Senior Commercial Sales and Marketing Manager, Janco Steel Ltd.
Jerry Dias  President, Unifor
James Paschini  General Manager, Production, ADF Group Inc.
Mathew Wilson  Senior Vice-President, Policy and Government Relations, Canadian Manufacturers & Exporters
Robert Dimitrieff  President, Patriot Forge Co.
Angelo DiCaro  Acting Director, Research Department, Unifor

12:15 p.m.

Liberal

The Chair Liberal Mark Eyking

Thank you for being here, sir, and also for being here on behalf of your 250 employees and their families. This committee's well aware of the spinoff that has on the local economy, so thank you again.

We'll go right to dialogue with MPs. We'll start with the Conservatives.

Mr. Allison, you have the floor.

June 26th, 2018 / 12:15 p.m.

Conservative

Dean Allison Conservative Niagara West, ON

Thank you.

Thank you very much to our witnesses, and thank you, Mr. Dimitrieff.

We talked about having this meeting last week, and within a day, we had over 60 companies reach out to our office saying they'd like to appear.

To say that we're not in a crisis situation would be the greatest understatement of the year. We just had two very specific examples from companies here today. I have a list here. Franke Kindred is a manufacturer that is worried about more expensive stainless steel that is not available in Canada—and, to your point, Mr. Dimitrieff, that will threaten the jobs of 100 Canadians in Midland who work there. There are manufacturers such as Red Deer Iron Works, which employs 225 Canadians to make custom products for the oil industry; Walters Group, in Hamilton, whose structural steel products can be found in the West Block of Parliament; IMT Defence, operating in Ingersoll and Port Colborne; and Ram Industries, and the list goes on and on. These are just a few examples.

The challenge, as you mentioned, Mr. Dimitrieff, is that the specialty steel you need being tariffed on the way in is going to cause irreparable damage. Talk to us about the thought process of trying to find new customers and new markets and how really, four weeks, three weeks, or two weeks is not enough time to transition and how the lead time in your industry to locate and have customers takes years. Once those customers are gone, you're never getting them back, because they're going to find another place. Talk to us about that challenge.

12:20 p.m.

President, Patriot Forge Co.

Robert Dimitrieff

The nature of our industry is that we serve sectors such as power generation, nuclear power, aerospace or defence, and other places that have critical applications where parts have to be particularly robust. Part of what's required is 100% traceability and a lot of detail about the supply chain. Steelmakers are vetted by OEMs. They are vetted by industry standards. You get a contract and you get approval to produce under what often is referred to as a first-article process. To change and redo a first-article process or to go through the process of demonstrating that your manufacturing supply chain is robust, from steelmaker right to finished product going to the OEM, requires that the OEM agree that you want to go through it and that testing, verification, and auditing of the entire supply chain is done.

While in theory it is possible to find alternative sources in Europe or in Asia, aggressively it can be done in 12 months, maybe. That requires that the American customers also agree to the alternative sources that are not the American steelmaker.

12:20 p.m.

Conservative

Dean Allison Conservative Niagara West, ON

Mr. Paschini, Mr. Dimitrieff has already said he'll be out of business July 1 or shortly thereafter if something is not done. You've experienced layoffs before. What happens to your company without anything changing, with the uncertainty and no tariff reduction? What happens to you guys over the next four, six, or 12 months?

12:20 p.m.

General Manager, Production, ADF Group Inc.

James Paschini

The bank account keeps going down, and we're going to have to lay off more people. We never want to go there, but our main market is the American market. If the Canadian market had more work for us, then surely we'd work here a lot more. With the American market being so aggressive currently, and adding 25% on the raw steel, which is almost 50% of the value of our contract, it will just kill us, definitely.

12:20 p.m.

Liberal

The Chair Liberal Mark Eyking

You have one more minute.

12:20 p.m.

Conservative

Colin Carrie Conservative Oshawa, ON

Looking at the big picture, we're dealing with these tariffs right now, but what is the point of view of the Americans on this? I don't know if you saw it, but when Secretary Ross was in front of their committee, he was very clear that the target wasn't Canada. The security threat was not Canada, but they were using these tariffs as a tool against China. I know we have to deal with this immediate issue.

Ross described the tariffs as a tool to persuade allies to reduce the amount of Chinese steel that passes through and is diverted. He said that some partners, including Canada and the EU, have already taken positive steps in that effort. In other words, we've started to mark our steel, which I guess is what the Americans wanted us to do. He said, “The only way we're going to solve global steel overproduction and overcapacity is by getting all the other countries to play ball with us..... while they're complaining bitterly about the tariffs, the fact is they're starting to take the kind of action, which—if they had taken [it] sooner—would have prevented this crisis.” That's what I found very disturbing. We had Minister Freeland here last week, and she said they had had conversations and were made aware of this last year.

I was wondering, Mr. Dimitrieff, could you—

12:20 p.m.

Liberal

The Chair Liberal Mark Eyking

Sorry, Mr. Carrie, that is going to have to be a comment. There might be room for you guys to get a question in, so just finish your comment because your time is up.

12:20 p.m.

Conservative

Colin Carrie Conservative Oshawa, ON

I was just going to ask this: do you feel that the big picture of the illegal dumping of steel into the North American markets has been brought up? Would you support a coordinated international effort to decrease this?

Canadians expect our automobiles, our aerospace industry, to use quality steel and aluminum and the diversion from China means we don't get steel and aluminum that is of the same quality. Would you support that type of action moving forward?

12:20 p.m.

Liberal

The Chair Liberal Mark Eyking

I'm sorry, but I have to do a little intervention here. It's a really good question, but he has no time. He will have the floor later on, and you can take that question up the next time around.

12:20 p.m.

Conservative

Colin Carrie Conservative Oshawa, ON

Okay.

12:20 p.m.

Liberal

The Chair Liberal Mark Eyking

We're going to move over to the Liberals.

Madam Lapointe.

12:20 p.m.

Liberal

Linda Lapointe Liberal Rivière-des-Mille-Îles, QC

Thank you very much, Mr. Chair.

I thank the witnesses for being here today, and also those who are with us via video conference.

Welcome.

Mr. Paschini, you have the advantage or the privilege of being located on both sides of the border, in Montana and Terrebonne. Some of the people from my riding work in Terrebonne.

You referred to 500 employees. Since you are on both sides of the border, what is your strategy to retain as much business as possible? You said that 80% of your production goes to the United States.

12:25 p.m.

General Manager, Production, ADF Group Inc.

James Paschini

We try to limit steel purchases in the United States as much as possible. We know that some fairly high tariffs will apply to steel imported into the U.S. So we are trying to purchase steel outside of the United States, or in Canada, if possible.

As for the business we do in the United States, it's more or less the status quo. We are on an equal footing with American steel sector enterprises. American enterprises buy American steel, as do we, and they produce like other enterprises. So we have a slight advantage in that way, but this is a big disadvantage for our Terrebonne plant. The more American projects we have, the more difficult it will be to remain competitive over time.

12:25 p.m.

Liberal

Linda Lapointe Liberal Rivière-des-Mille-Îles, QC

If I understand correctly, in order to mitigate the effects of this, some of the jobs you cannot keep in Terrebonne may be moved to Montana or elsewhere.

12:25 p.m.

General Manager, Production, ADF Group Inc.

James Paschini

It's easier to move management jobs than assembler or welder jobs. It's impossible to move those employees, because they really work in the factory. The Terrebonne plant is at a disadvantage with regard to the Montana plant, because transportation is far too expensive to simply move production and manufacturing operations from Montana to Montreal. So there are very few alternatives.

12:25 p.m.

Liberal

Linda Lapointe Liberal Rivière-des-Mille-Îles, QC

We spoke earlier with Canadian Labour Congress representatives, and we'll be hearing from Unifor representatives a bit later.

People who work in the steel sector are highly skilled and we mustn't lose those workers. What measures would you like to see put in place in order to be able to retain these people in your sector?

12:25 p.m.

General Manager, Production, ADF Group Inc.

James Paschini

A gentleman whose name escapes me spoke about this earlier. We have used the federal government's Work Sharing program. Our application was accepted and we have benefited from this for about a month.

Given the current circumstances, there is no doubt that a 26-week period is very short. We absolutely need to find ways of extending that period. Given everything that is going on, we can't predict how things will go in the future. It's reassuring for our employees and all of our personnel to know that that program might be extended.

Mr. Young referred to a kind of sharing of tariffs. I think that is an excellent idea. It would not meet 100% of the needs, but it could certainly help us.

12:25 p.m.

Liberal

Linda Lapointe Liberal Rivière-des-Mille-Îles, QC

With regard to production at your Terrebonne plant, you said that reinvesting the tariffs could help you keep your contracts.

12:25 p.m.

General Manager, Production, ADF Group Inc.

James Paschini

That is correct.

12:25 p.m.

Liberal

Linda Lapointe Liberal Rivière-des-Mille-Îles, QC

Thank you.

I would now like to speak to the Unifor representatives.

Good afternoon.

Mr. Dias, the Canadian Labour Congress representatives told us about a mitigation strategy designed to try to keep workers in the sector. For your part, what would you suggest?

12:25 p.m.

President, Unifor

Jerry Dias

There is no question that we need it. We need to make sure that we find a mechanism for the jobs that we currently have within the key industries to stay. For example, we'll take a look at the auto industry. We're going to have to make some different decisions because the overwhelming majority of the steel that goes into Canadian assembled vehicles comes from the United States. As a mechanism to ensure that steelworkers here in Canada stay employed, we're going to have to make sure there is a shift in where the steel is going to go. Frankly, it should be shipped to the Canadian assembly plants from Canadian steel operations.

Number two, we need to buy ourselves some time. On the discussion about 26 weeks of work sharing, obviously we're going to have to find a mechanism to expand that. So, first, we are going to have to put together some monetary programs to shore up the companies that are facing the immediate crisis, but second, we need to put a mechanism in place that keeps workers employed until we get through this difficult period.

I don't mean to belabour this, but I don't believe anything's going to happen until after the mid-term elections in the United States. The unfortunate reality, whether it's about NAFTA or the tariffs, is that this is all about politics; it's not about economics, in the eyes of Trump, but of course, the economic hardship is significant. In my opinion, at a minimum from here until November, we need to make sure that everybody's shored up, and then we'll see what happens after the mid-terms.

12:30 p.m.

Liberal

Linda Lapointe Liberal Rivière-des-Mille-Îles, QC

Thank you very much.

12:30 p.m.

Liberal

The Chair Liberal Mark Eyking

Thank you, Madam Lapointe and Mr. Dias.

We're going to the NDP.

Ms. Ramsey, you have the floor.

12:30 p.m.

NDP

Tracey Ramsey NDP Essex, ON

Thank you all for being here today. It's a sobering conversation we've been having this morning, but the consistent message today has been that we know that the U.S. doesn't care about implementing these tariffs. It's become crystal clear that we can't predict what Trump is going to do. I'm extremely worried about what he'll retaliate with after the July 1 date, particularly given what you're saying will immediately happen to some of your businesses, to the folks who are here today.

We need to move now to protect jobs. I don't think I'm the only one sitting in this room with a pit in my stomach right now that's telling me we have to do something immediately. Quebec came out with a package of $100 million for workers. We've yet to see anything come out from the federal government. I don't know what it's waiting for. We need something immediately to offset all of the things you've brought forward.

I know that Unifor represents 8,000 people in aluminum and steel. For the auto sector more broadly the numbers that came out last week were that we would lose one in five jobs if these auto tariffs come on. That would devastate us beyond anything we've ever seen in southwestern Ontario and in a lot of portions of the country. I want to ask Unifor specifically about some proposals for how we can allocate the tariffs we're going to be receiving.

Do you have an idea of how we should use that money to provide those supports for workers?