Good afternoon, Chairman and members of the international trade committee.
On behalf of Ellwood Group, thank you for the opportunity to present our concerns on the impacts of the U.S. section 232 steel duties and the unintended consequences of Canada's response.
My name is Dave Heath. I'm the vice-president of Ellwood Specialty Metals. I was born in Sarnia, and I've worked in the steel industry since I graduated from college. I started Ellwood Specialty Metals about 15 years ago. We have grown and developed a personal relationship with our customers in the Windsor area, but for the first time in 15 years since I've been running the business, our business is struggling and facing severe headwinds.
Ellwood Specialty Metals has been a uniquely integrated American and Canadian company since 1990. We are a proud supplier of the Canadian and American mould and tool market, in products that drive the transportation industry. We produce parts for operations across Canada, including General Motors in Oshawa, Ford Motor Company in Brampton, Honda engines in Simcoe, and Chrysler operations in Windsor and Brampton.
lt is unfortunate to report that the Canadian surtax is having adverse impacts on Ellwood Specialty Metals and our Canadian clients. Ellwood's business in Canada has significantly decreased since the surtax on July 1, 2018. A vibrant and competitive Canadian steel market is at stake.
We are working within the government processes to seek remission of the surtaxes on select specialty products in order to maintain Canadian jobs and our unique value added to the Canadian mould and tool market.
Today we operate in a facility of about 40,000 square feet, and we have a little over 20 well-paying, full-time jobs at our facility. Our facility is a prime example of the small and medium-sized businesses that make up the steel industry in Ontario. We have long-term contracts and client relationships that span decades.
Ellwood Specialty Metals is a uniquely and highly specialized product in Canadian business that no one else in Canada produces. What we do is not easily replicated. The 25% surtax on these products has removed the competitive advantage for a lot of our Canadian clients who rely on us. Our Canadian customers can no longer obtain some of our specialty products that they need at fair pricing.
The unintended consequences of the Canadian surtax are that foreign competitors with no Canadian footprint now have the advantage. We are part of a broader Canadian value chain. About 70% to 75% of our steel is processed by Canadian shops that then export the moulds and tools back out of Canada. These exports are no longer competitive and are at risk because of the Canadian surtax.
One example of the Ellwood product is our H grade of steel, or H13 modified grade, which has no competitive equivalent here in Canada. It is designed for the industry. lt is a high-quality, die-cast steel that is used for liquid injection moulds. One of the bigger products that comes from it is transmission housings, which go basically in every North American vehicle. All of these parts are vital to the automakers across Canada.
Without the ability to provide reliable and efficient steel products, our long-term customers are looking at European competitors as an alternative. Canadian jobs and future investment are now at stake.
We understand that the Canadian government is working hard to bring these tariffs to an end and that the government has taken concrete steps to support businesses and workers. We would like to thank you for your efforts on that. However, we remain hopeful that the negotiations between Canada and the U.S. will bring these tariffs to a swift end.
Ellwood must be realistic and recognize that we may be facing a long uncertain future. That is why we're here today asking for a remission for the Canadian surtax on select specialty products to save some Canadian jobs in our unique value added to the Canadian mould and tool market.
ln closing, your leadership is urgently needed to save the steel industry in southwestern Ontario. Canadian jobs, and small and medium businesses are at stake.
Thank you.