International Trade Committee on Oct. 18th, 2018

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

These tariffs are obviously an exceptional circumstance, and they are most unfortunate. Obviously, they are retaliatory because the American administration put these tariffs on steel for national security reasons, which is just most unfortunate, to put it mildly.

It's a good opportunity, actually, for us to look at the steel industry more generally. You've raised some important issues and some important trouble spots, I'll call them, in the industry. This committee did a study almost two years ago on dumping and the impact that has on the industry.

It seems to me, though, Mr. Zekelman, that you've thought about a lot of solutions, which is good. You mentioned quotas as an immediate step, but you didn't have much time, because it was in your opening. If you want to expand on how that would work and how it would improve the industry, please take the time to do so.

[Barry Zekelman]

Sure. Look at the hot-rolled coil, cold-rolled coil or galvanized coil that floods into Canada. You should put a quota on that product category—not necessarily a country, but that product category. Let's say a million tonnes of hot rolled coil comes into this country, but we have steel mills that could easily produce 600,000 more of those. You should put a quota down to 400,000 tonnes so that the domestic steel mills could fill themselves up and employ the people to do that.

The same applies to pipe and tube. Again, I could have 120 people working for me in Welland, producing—and consuming, by the way—140,000 tonnes or 150,000 tonnes of steel, but the imports come in, standard pipe from the likes of Korea, Thailand and Vietnam. If we quota that product down, I could start that plant up again and support the domestic steel industry, but we just let the product pour in.

I'll give you an example, and I'll try to do it very quickly. It concerns piling, which we pound into the ground. We filed a dumping case against China on piling, and we won that case. It took 18 months and I spent $2 million. I won that case. The very day I won the case, the gentleman who was importing that product changed the tariff code to API 5L line pipe and brought it in as line pipe. I had to then file another 18-month dumping case on line pipe to get that blocked out, and we blocked it out from China. The very next day, he brought it in from India. I've spent $3 million and got no relief.

You need to put quotas on the product category from all countries, and then block it out from here. Let the domestic producer produce it, support our industry, create jobs here and pay taxes.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thank you.

Mr. Clark, I just want to learn a little more about your business.

Am I correct that the input you're buying is from the States?

[Dave Clark]

Yes. We buy beams from the U.S. and HSS materials from Canada. Some jumbo sizes that aren't available in Canada we get from the U.S., so we get hit twice.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

The stuff you're buying from the U.S. isn't generally available in Canada—is that correct, or am I making a false assumption?

[Dave Clark]

It's just the W shape, so it's beams, essentially.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Okay. Are those now coming in tariff-free and duty-free? How are they treated?

[Dave Clark]

There's no tariff from Canada on the beams, I believe.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

You said some of your customers were in the eastern United States. When you're selling back to the United States, are there any tariffs, duties or surtaxes put on that product?

[Dave Clark]

No. There is no tariff on our materials. It's fabricated structural steel. The tariff is only on raw materials.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

That's what you're having trouble collecting, and we can hopefully help you with that.

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you, Mr. Peterson.

We're going to move over to the NDP now. Ms. Ramsey, you have the floor.

[Tracey Ramsey, NDP, Essex, ON]

Good morning, gentlemen, and thank you for being here.

We have been talking all this week about the fact that we're in an emergency situation right now.

Barry, it's wonderful to have you here. I often speak of Atlas Tube here at the committee and the importance of those jobs in a very small rural community in our riding—good-paying jobs that are sustaining that entire community. I appreciate you being here to share your thoughts with the committee.

We've learned a couple of things today. Out of the government's money that's been put toward improving, preventing and circumventing, only 10 people have been added at CBSA. We heard today that of the people applying for the duty drawback and other programs, only 36 companies have been approved, and we have yet to hear from one that's received the money.

We're in this very long, slow process that is killing business across our country and costing us jobs. We're trying to bring that here to the government so that it understands the urgency we're facing.

One of the things I want to touch on.... Barry, you mentioned the full utilization of domestic steel and what that looks like. Both of you commented on the LNG. It's just unfathomable that we are now giving a free pass to a company and a product that we know is being dumped into our country and costing us jobs every single day. It's just beyond comprehension.

I wonder if you could speak a little further about other ways we can improve our domestic consumption, perhaps through government procurement or federally funded infrastructure projects.

Barry, I'll pass it to you for your thoughts on how we can do that.

[Barry Zekelman]

Thank you, Tracey, and thanks for all of the work you've done for our company and our community.

I'll give just one example. We know that beams aren't manufactured in Canada at all. When we did the Herb Gray Parkway, which was built in Windsor, 30,000 tonnes of piling for the footings of the bridges and overpasses were done with beams. I'm 20 miles away, and I can produce pipe piling for that out of Canadian steel, yet we procured beams from the United States and foreign countries to go into that highway. Here again, my tax dollars are going to U.S and foreign companies to put into an infrastructure project that I'm 20 miles away from and that I could supply.

We just do some dumb things. We certainly need to put in a “buy Canadian” policy for those projects, particularly when products aren't even made here and there are alternate products.

It all comes down to steel coming in. I'll tell you that I've imported steel into Canada from Russia and other places, and it makes me sick to my stomach. The reason I had to import that steel is that I needed it at cheap prices to compete against finished imports that compete against my product.

It's ridiculous. I could have bought that steel from Stelco, Algoma or Arcelor Dofasco and made product and shipped it into the market, but I would had to compete with stuff from China or Korea or Taiwan.

It's unconscionable that this is going on when places aren't running at capacity. Stelco is a very good steel mill. It has great costs. It has been in bankruptcy twice. Look at Algoma. The only reason those mills went into bankruptcy is that any time they had pricing traction, where they could get to real, sustainable, profitable levels, imports flooded in and crushed them, just pulled the rug out from under them.

If we had a system that put quotas on these products coming in, or blocked them out, we would have a very vibrant and successful steel industry that would have reinvested hundreds of millions of dollars, as we would have. We need a way to block out these imports, much like the U.S. has.

[Tracey Ramsey, NDP, Essex, ON]

Can you share with us quickly what the dumping has looked like over the last year for your company?

[Barry Zekelman]

Again, with respect to piling, we're not even in the business in Canada. These guys circumvent and bring it in from every country, and it's virtually unstopped, because they just change the country of origin or the product code. That's how they circumvent.

It's the same on structural tubing. Yes, we're producing and doing well in Canada, but how much better could we do? How many more people could we employ and how much more steel...? We've seen HSS imports increase dramatically.

Again, I'll point to the plant I have in Welland. It's completely shut down. I could have 120 people working there—who were earning, by the way, $25 to $30 an hour—and be buying $100 million of steel out of Stelco Lake Erie, but I can't even light the place up because of imports from Thailand and Korea and Vietnam.

We need to block those imports out. Then I could start the plant tomorrow.

[The Chair, Liberal, Mark Eyking]

Okay. Thank you, sir.

[Tracey Ramsey, NDP, Essex, ON]

Thank you.

[The Chair, Liberal, Mark Eyking]

We're going to move over to the Liberals now.

Mr. Dhaliwal, you have the floor.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Thank you, Mr. Chair, and thank you both, Barry and Dave, for being presenters.

You both mentioned LNG. I come from British Columbia. It's great news for British Columbia and great news for Canadians with this type of project. It will also help develop, as Tracey was saying, high-paying sustainable jobs. It will help the steel industry. Do you agree?

[Barry Zekelman]

It depends on where they get their fabricated product. The government spent $3.5 billion buying a pipeline—great. Again, that's with my tax dollars and the gentleman from P.E.I.'s tax dollars, and now they're going to allow a company to hook up to that by bringing in imported fabricated product not made here in Canada because they claim it will cost them a billion dollars more.

I didn't see my company getting a bailout like the automotive industry did for $12 billion from the government, yet we're allowing this company a billion-dollar cost on a $40-billion project? It's unconscionable that we let that happen.

You're talking about a project that will last for 50 years. They're saying it's a billion dollars cheaper, yet it's on our back. There are fabricators that could be busy here using Canadian steel and Canadian labour to fabricate this, and we've granted them a hall pass. Do you think they're not going to do this project for the billion dollars? It's ridiculous.

By the way, it's more than the billion dollars. You're talking about tens of billions of dollars of fabricated product that could be made here. Great—if the government wants to buy a pipeline and bail everybody out, tell them to give LNG Canada a billion-dollar loan to have $15 billion dollars' worth of product made here. I think that's a better return than letting it be made in China.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

When you talk about quotas, there must be some drawbacks as well. How can it be equitable? I'm trying to understand. If one company takes that quota and then goes to the other companies, can you explain it to me so that I can understand the quota system that you suggest is equitable?

[Barry Zekelman]

The quota would have to go to the countries importing the products. Are you talking about the consumer in Canada accessing that quota?

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

That's right.

[Barry Zekelman]

The consumer in Canada will have access to the product that's made in Canada. What's the difference? Wouldn't they buy Canadian product rather than imported product? If I could start up my plant, I'd have available product for them. They don't need to access that quota. I'll make it for them. I'm trying to be compromising: Okay, we'll let some of it come in, but not the vast amount that comes in today that displaces Canadian workers.

If you're talking about the cost of steel in a product, I'm going to give you an example. Everybody says, “Oh, my God; the cost of steel has gone up, and it's a huge problem.” The gentleman from P.E.I. is right. He had a transition period when he bid on a project, and the cost went up. Once he bids on the project with the cost of the product that he goes in with, he's fine. He's competitive, because he's on the same playing field as everybody else.

Steel—typical fabricated steel—is four times the cost of the raw steel itself, so the real extra cost is labour and all the work they do to it. If the raw steel itself goes up by a couple of hundred dollars a tonne in that transition period, is it a problem? At the end of the day, it doesn't make the product uncompetitive.

I don't know the last time the price of a car went down, but the price of steel bounced up and down for decades. You didn't see the price of a car go down because of the price of steel, yet automotive companies will claim that it's killing them. They should stop giving $3,000 rebates per car.