Good morning. Thank you for inviting me to speak to you today on a topic that is of tremendous importance to our country's economic health and one that's very important to me and my employees.
I am the president and majority shareholder of GGS Structures Inc. We directly employ 80 people, most of whom live in the Niagara region. Additionally, we create jobs for construction contractors, heating installers and numerous Canadian companies that provide ancillary products that are required when new greenhouses are built, such as irrigation systems and environmental control computers.
From our factory in Ontario, we manufacture specialty prefabricated buildings that are designed to provide environments for customers to grow. Our product lines include greenhouses for agriculture, research facilities, fabric-covered buildings for riding arenas, livestock housing, salt dome storage, and recreational centres. While the majority of our customers are in agriculture, we also supply large multinational retailers and government agencies.
Almost 50% of our sales come from exports and the vast majority of that is to the U.S. Like many companies in the world today, we do business buying and selling all over the globe. Raw material and some finished goods that cross Canadian borders are further processed at GGS and then shipped all over Canada, to the U.S. and overseas. Our products are primarily made from steel and aluminum, with steel and aluminum purchases accounting for more than half of our total material costs.
Today, you have asked me to address the impact of the U.S. steel and aluminum tariffs and our countermeasures. This is what has happened to us this year.
First, when the U.S. government announced tariffs on several foreign steel suppliers, Canada responded in kind, by matching the U.S. tariffs for those countries, so that cheap steel would not divert to Canada, with the hope that would keep us in good standing with the ongoing NAFTA negotiations. The result was that Canadian steel suppliers increased their prices to benefit from their competitors sudden cost increases and the shortfall in supply. My Canadian tubing suppliers were not able to absorb the cost increases or get adequate local supply, so they raised their price to us. The price of steel at GGS has gone up four times this year, for a total 28% increase since January, and aluminum is up 9% in turn.
As my costs increased, so did the price our customers paid for their greenhouses, dairy barns and storage buildings. In turn, they increased the price of their goods, and on and on it went, as everyday Canadians have found that their food bills have increased significantly.
The Canadian greenhouse produce growers are under tremendous pressure to absorb cost increases, despite already low margins. They are concerned that continued tariffs would result in investment leakage to the U.S., which potentially could create a ripple effect that could threaten food security and sovereignty. Meanwhile, our European greenhouse manufacturing competitors are able to import their greenhouses to both Canada and the U.S., without the additional tariffs, making their products more affordable, as compared to ours.
Second, when the U.S. government included Canadian steel and aluminum in their tariffs, Canada responded in turn, by putting tariffs on U.S. steel and aluminum, as well as some other products. Due to the low Canadian dollar and our strong domestic supplier relationships, at GGS, we have been buying the majority of our steel and aluminum extrusions from Canadian manufacturers anyway, so we did not see a major impact from this.
However, for certain products where suppliers did have U.S. supply chains, we also saw increases over the summer. Furthermore, the tariffs on insecticides, fungicides and herbicides impacted many of our Canadian customers, who are smaller commercial growers, and this may affect their profitability and ability to expand their operations, which is a potential risk to my domestic market.
We have a new NAFTA, the USMCA. I have not yet researched the specifics of this agreement, though I understand that the steel and aluminum tariffs remain in place for the moment. Going forward, I would like our government to work diligently to remove the tariffs, and under no circumstances should they be expanded to a global supply.
The response to the U.S. tactics against Canadian steel and aluminum has been an appropriate countermeasure, limiting the response to U.S. goods. Primary steel producers will lobby to increase tariffs for their own self-interests, enabling them to increase prices further.
I petition you not to give in to this mentality, as the ripple effect of global tariffs would dramatically increase costs throughout the entire production chain, a cost increase that will weigh heavily on Canadian consumers in the end.
I hope my comments provide helpful context as the government makes determinations on how to move forward.
Thank you, and I look forward to the discussion.
