Thank you.
Good morning. My name is Tom Dodds. I'm vice-president of Central Wire Industries in Perth, Ontario, where I've worked since 1998. It is my privilege to represent not just our company but our fellow employees in discussing the impacts of tariffs on our business.
I'll give you a bit about our company. Production began back in 1955 to manufacture fine diameter wire used in the weaving of fabric in the paper industry. In 1979, a group of Canadian investors, along with senior management, acquired the company we now know as Central Wire from Albany International. The same original family of investors continued to participate, along with current management, as the principal private shareholders of our company.
Now, in 2018, here in Perth, Central Wire Industries manufactures stainless steel wire of all types, grades, sizes and packages for all applications in automotive, aerospace and industrial markets. For almost any market you can think of, we're producing the product. In 2017, our location in Erin, Ontario, unfortunately was forced to close, leaving Central Wire Perth as the last manufacturer producing stainless steel wire in Canada.
To manufacture the many grades of stainless wire that we do, we buy a product called stainless steel rod, which is hot-rolled, annealed and pickled into regular round coils. Basically, picture a rod with a diameter the size of your finger. We take that and draw it down as fine as your hair, depending on the application.
In this discussion, we've been well-immersed both on our supply chain and on our customers, because our biggest cost is stainless steel rod and, of course, our livelihood is stainless steel wire.
Central Wire employs more 80 people in Perth, Ontario, and continues its significant contributions to the community, both in direct employment and in other community-oriented activities. Perth is not a very large town, but it's a pretty town.
Since February of this year, the topic of steel and aluminum tariffs has dominated and consumed many hours of many days in our stainless steel market. The resulting impact since the U.S. imposition of section 232 has had a negative effect on our Canadian operations, our customers and our vendors. The two primary negative effects, of course, are increased costs in terms of stainless steel wire going to the United States and the diversionary tactics of those that once exported to the U.S. and are now looking for other markets.
Specifically with respect to the cost, the United States is an important export market for us. The imposition of the 25% duty on Canadian exports to the U.S. has been very harmful. Our U.S. customers will simply not accept such a significant increase. We're forced to absorb the cost or to try to find other markets or customers. The Canadian market is simply not big enough for all the production that we can produce.
Increased exports to Canada can be the direct result and consequence of the U.S. imposing the 25% tariff on products going into the U.S. Historically, they were bound for the U.S. and now these people are looking for places to bring their products. I'm sure you've heard this story from many other people. At the end of the day, we can absorb but can't compete with some of the low pricing that was once heading to the U.S. and is now reaching our borders.
The impact of section 232 on motor vehicle parts is a hotly debated topic these days, so I want to touch on that briefly in terms of some of the markets that we produce for in the automotive industry. Stainless steel wire is used for the manufacture of airbags, exhaust systems, seat frames and all kinds of components, fasteners and springs in your automobile. Our customers are unwilling to pay for those 25% increases in our manufacturing costs. If we want to sell to our U.S. customers, we have to find a way either to absorb that cost or, as I said, find another market or another home for our products.
As a result, this is not a profitable situation for Central Wire Industries. As offshore imports of stainless steel wire become prevalent in Canada, we're going to continue to face increased competition for our historical customers. Imports are gaining traction in the Canadian market and they're certainly a threat to us in future sales as well.
Our manufacturing facility and our employees in Perth are now at a very critical crossroads in our long history. We remain anxious for a potential resolution on section 232. We are also very hopeful and very supportive of the recent announcement the government has made on safeguard actions. We plan to participate fully in that process.
We believe that in light of recent trade measures globally, particularly in the U.S., it is vital that the Canadian government take certain action to ensure that the Canadian producers are not forced to shut down Canadian production.
Thank you very much for your time.