I can, by all means. Good morning.
I'd like to introduce myself. I am Chris Wharin. My company is Bohne Spring Industries. We're manufacturers of precision mechanical springs and wire forms in Toronto. Our business has been in continuous operation since about 1891. We employ approximately 42 people and are responsible for the livelihoods of basically 40 families.
When we first learned about the tariffs and in particular the countermeasure tariffs, we certainly felt as though we had been thrown under the bus somewhat, with respect to our own business plus our entire industry. These tariffs have put us under tremendous stress personally as we try to mitigate the damage caused by them.
The questions that were asked when we were first invited to make this presentation seem a bit redundant now. They seem like questions that were asked back in June, when the consultation process first began. I had written a submission back at that time stating that ultimately I think the countermeasure tariffs will have a greater negative impact on businesses and consumers in Canada with the prices of everything rising.
Unfortunately, I don't feel as though our voices were necessarily heard then, and the result is that the government did impose huge tariffs on a wide range of products as countermeasure tariffs, in retaliation for the section 232 tariffs that the Americans implemented.
I was and still am adamantly opposed to these countermeasure tariffs, as I don't believe they're doing anything to help Canadian manufacturers or citizens. The only companies that may have benefited from these countermeasure tariffs are the steel and aluminum producers, who may be receiving government assistance to help them cope with the loss of sales to the U.S. market.
The countermeasure tariffs have had a very serious negative impact on our business. As I detailed in my initial submission, much of the material we use to make our products comes from the United States and is subject to the 25% tariff.
Since July 1, when these tariffs came into effect, we've paid over $50,000 in surtaxes. That, on an annualized basis, would be about $150,000. This is having a crippling effect on our cash flow and profits because we are not able to pass along all of these substantial increases to our customers. Not only are we paying the 25% surtax but we're also experiencing upwards of 25% increases in the base price of materials from suppliers due to shortages in the industry. This means that our costs have risen 50% to 60% in some cases.
We are all very concerned about the additional tariffs coming into effect on October 25 for materials coming from outside of North America and the impact this will have on the price of materials. I've been told that all stainless steel spring wire coming from Korea, for instance, will have a 25% surtax. Stainless steel wire is not available in Canada in the quality or grades that we require for our products. Most of the materials we use are not available in Canada, and yet they are subject to the surtaxes.
We were relieved to see, on October 11, duty remission order 18-16. This will certainly help between now and the end of the year, although I don't think the schedule was complete, as it omitted some particular items that we use on a regular basis, which we cannot obtain locally—specifically, music wire and hard drawn spring wire.
Some of these materials are available in Canada from Sivaco and Mittal, but not in the finer sizes that we require, i.e., 1.14 millimetres and under. The other issue is that Sivaco and Mittal have 8,000 to 12,000 pound minimum order quantities and 12-week lead times. In our business, we don't use sufficiently large quantities of material to warrant buying directly from a mill. We must rely on local warehouses to provide smaller quantities, and then we're at their mercy in terms of whatever material they have in stock.
We have had a particularly difficult time passing these surcharges onto our customers, particularly in the automotive sector. We cannot afford to absorb these surtaxes. As I said, the stress associated with trying to pass them along to customers has been inordinate.
It doesn't make any sense to us to penalize Canadian manufacturers for purchasing raw materials that we can't buy locally. If anything, tariffs should have been placed on the finished products, to help protect Canadian parts manufacturers and jobs. Canadian companies, primarily Canadian auto parts manufacturers that purchase finished springs, wire forms and stampings from the United States, do not pay a tariff, so they can buy these items more cheaply in the United States or from overseas than they can in Canada, even though the Canadian industry is fully capable of supplying all the products they require. Ultimately, this will significantly harm our industry in Canada.