International Trade Committee on Nov. 1st, 2018

[The Chair, Liberal, Mark Eyking]

We're into voting season, so I apologize to witnesses on our delay. Maybe we will try to make up some time.

Welcome to the Standing Committee on International Trade. We're still in the middle of a study on the impacts of tariffs on steel and aluminum on Canadian businesses, companies, workers and families.

I see that most of the witnesses are here. We try to keep the presentations to under five minutes so that we can have good dialogue with the MPs.

I think I'll start right off with Iafrate Machine Works.

Mr. Stepien, go ahead, sir.

[Gary Stepien, Finance Manager, Iafrate Machine Works Ltd.]

Good morning, Mr. Chair, and thank you for allowing Iafrate Machine Works to provide input into this study of how tariffs are affecting Canadian businesses and workers.

First of all, we are one of the companies that were successful in their remission request.

The topics I will cover are the custom machining industry, the market for machined products and the impact of the 25% surtax on our business.

We are a custom machine shop. We do not manufacture our own line of products. Instead we invest in sophisticated computer-controlled lathes and mills that are operated by semi-skilled operators and skilled tradesmen to produce products designed by our customers. Typically, customers will specify the type of steel, based on specific chemical properties required to meet industry standards; the melting practice, which could be electric arc, open hearth or basic oxygen; the forming practice, which could be wrought using hot-working or forged; whether heat-treating is required, and if so, the industry standard that must be met; whether test coupons are required to confirm that the raw steel meets the hardness, mechanical and impact test requirements; the industry quality standards, in our case, the American Petroleum Institute's API 6A; how the material is allowed to be marked for identification; and the minimum disclosure requirements contained in a material test report. I think you can see how compliance-driven the oil and gas industry is.

Now I will talk about our markets. A significant percentage of our business is driven by an Alberta-based company that provides flow-control products to the oil and gas industry in both Alberta and the U.S., specifically Texas, Colorado, North Dakota and Pennsylvania. Therefore, any oil and gas product produced for export to the States must meet the standards specified by the American Petroleum Institute, which is the list that I just went through. The products that we machine for this customer are incorporated into complete systems that are assembled in Alberta and shipped into the States. Please note there are no steel mills in Canada that provide steel that meets the American Petroleum Institute standards that this customer must meet. This is also the case for the specialty steel that we purchase from the States for the dies that we machine. When these dies are finished, they are used in a forging process to make product that will then be machined for the oil and gas industry.

Furthermore, our customers will not accept steel from China and Ukraine. As a result the 25% surtax, charged by the Government of Canada on all steel that we purchase to serve this customer, artificially increases our selling price to them and puts them at a significant disadvantage when they incorporate our components into their system, and then export that to their distributors in the States. We have already experienced a significant reduction in our sales to this customer, which directly provides employment for over 25 full-time manufacturing jobs at our facility in Thorold, Ontario. Our U.S.-based competitors are not subject to any of the American tariffs on Canadian steel because there are no suppliers of these API grades of steel in Canada.

To conclude, if the intent of the 25% surtax on U.S.-source steel designed for the oil and gas industry is to encourage the purchase of Canadian-source steel, it won't work, because no Canadian mill produces American Petroleum Institute-grade steel. Furthermore, the failure to apply a tariff on imported industrial product that our customers compete against automatically puts at a significant disadvantage Canadian manufacturers that must purchase U.S.-source steel.

We strongly advocate for the removal of the 25% surtax because removing it will level the playing field with our American competitors, and in doing so it will protect good-quality, high-paying technical and skilled jobs in Canada. This will also discourage the potential relocation to the States of Canadian businesses that support the oil and gas industry.

We recommend that any consideration to use retaliatory tariffs or surtaxes in the future not target industrial raw material purchased by Canadian manufacturers from free-market economies, because this automatically increases production costs, reduces competitiveness in the marketplace, and risks potential layoffs due to lost market share.

If the Government of Canada wants to use tariffs to change purchasing behaviour, it should only target foreign-finished goods with tariffs. This will encourage Canadian consumers to purchase Canadian goods, without distorting Canadian production costs, which puts Canadian businesses and jobs at risk.

Thank you for your time.

[The Chair, Liberal, Mark Eyking]

Thank you, sir.

We'll go to Quebec now, to Mr. Juneau from Cedomatec.

Welcome.

[Justin Juneau, Director of Operations, Cedomatec Inc.]

Thank you, Mr. Chair.

First of all, I'd like to thank you for giving us this opportunity to voice our opinion on the matter.

I'm Justin Juneau, director of operations for Cedomatec. We're a third-generation family business located in Repentigny, Quebec. We are a manufacturer of steel and aluminum garage doors. We've been in business since the fifties, back when we were manufacturing hardware for garage doors. We've been building panels since 1987. We have a staff of about 25 employees. They come from a wide range of income distribution and skills backgrounds.

Being in the business of steel and aluminum garage doors, of course, we've been greatly impacted by the tariffs that took effect on July 1. We see impact in three major areas: on our costs of goods, on our supply chain management and on our revenues.

If we dig deeper into the impact on our cost of goods, all of the raw material we directly import from the U.S., such as some of the aluminum we use, is directly hit by the tariff, even if the orders were made way before tariffs were even on the table. Because of the usual lead time of six months, we still have to pay tariffs on the orders placed in February. That was, of course, not planned.

We also see repercussions when sourcing from Canadian suppliers of steel and aluminum. We see them try to transfer the tariff onto us, or else they carry a lot less inventory due to the climate of uncertainty, which leads to shortages of some types of steel. The scarcity also creates price hikes. For example, for one type of galvanized steel we use, we've seen an increase of up to 70% compared with the price of last year's material.

If we take a look also at the impact on our supply chain management, we have a concrete example of a partner that we were developing in Asia to source our steel. Unfortunately, they pulled out of the deal before we could place our first order because of the possible anti-dumping measures asked for by local steel mills. To give you some context, it can take up to four months to develop a partnership due to the specificity of our material. That includes sourcing, negotiation, testing and trial runs. All of that time and energy went to waste when that partner pulled out of the negotiation.

We also have to start a process to find new suppliers for our aluminum that comes from the U.S. That means ending a relationship that lasted more than a decade with a very trusted and reliable supplier. We have to start all over again, with, again, complicated material. This climate reduces our leverage when negotiating with local suppliers. The intensity of the competition has diminished a lot in the last months.

If we look at the impact on our revenues, of course, the increased price of raw material had an impact on our gross margin, which diminished sometimes to a single-digit gross margin on some products. Industry-wide, we've seen an increase in prices on garage doors in Quebec, but since our product is mostly seen as a commodity and the elasticity of demand is very high, we cannot pass the increase in price on down the supply chain. We pretty much have to foot the bill.

This, of course, impacts our shareholder value as well as our workers, whose wages have been stagnant for the last months. Unfortunately, this winter we have to consider furlough due to the climate of uncertainty. We do not want to stock too much inventory, because we expect a decrease in demand due to the higher prices. We also have to delay investments that would have increased our productivity and our competitiveness in the market. These are all measures that go against our long-term vision, but in such a grave situation, we have no choice but to prioritize the viability of the company.

I think our situation clearly demonstrates that tariffs always end up hurting people, not organizations or countries. In our situation, due to the market conditions, it's mainly the Canadian workers and entrepreneurs who are hit. Therefore, we think these tariffs are inefficient, since the prime payers are Canadian workers and entrepreneurs. In the long term, it will be consumers who will have to pay this increase.

We therefore demand the abolition of the 10% tariff on U.S. aluminum and the U.S. 25% tax on steel and, as well, to maintain open borders for steel and aluminum coming from foreign countries, especially Asian countries. This would maintain price competitiveness and benefit a large number of businesses, both large and small, as well as ultimately benefiting the consumer.

I thank you for your time and look forward to your questions.

[The Chair, Liberal, Mark Eyking]

Thank you, sir.

I think we're going to stick with the video conference and stay with Quebec.

Mr. Vezina, from Mailhot Industries.

[Stephen Vezina, Vice-President, Sales and Marketing, Mailhot Industries]

First of all, thank you for giving us the opportunity to explain the situation we're in and the outcome of the retaliatory tariffs in our situation.

My name is Stephen Vezina. I'm the vice-president of sales for the company. Mailhot is a Canadian-owned company that manufactures hydraulic cylinders for industrial use. Our company was founded in 1956. The company is based in St. Jacques de Montcalm in the Lanaudière region, close to Joliette, northeast of Montreal, and it is among the biggest employers of the Lanaudière region.

We have two production facilities, one here in St. Jacques and another one in Silao, Mexico. We operate an R and D centre in Terrebonne, Quebec, as well as two service and distribution centres, one in Edmonton, Alberta, and one in New Hampshire.

As I mentioned, we build hydraulic cylinders that are used for mobile equipment. Mostly we sell to original equipment manufacturers in the waste, snow removal and construction industries. Our company employs 323 people, with close to 200 in Canada. We import on an annual basis about 2,800 tons of steel tubing from the U.S., which represents a value of over $8 million Canadian.

The steel tubing that we import from the U.S to do the cylinders is unfortunately not available in Canada. There are no suppliers in Canada. Therefore, we have no choice but to get our steel from the U.S. or other countries. We are working on getting alternative supplies from Asia, but as my predecessor mentioned, that cannot be done overnight, so we have an immediate impact on our cost of production.

The situation we're in is that our competitors are all U.S.- or foreign-based and do not have to put up with the retaliatory tariffs. Therefore, it puts us in a less competitive position versus our customers. Our major customers are from the U.S., Brazil, China, India and Europe. Those products are not subject to import tariffs into Canada, so we are put at a disadvantage versus all of these competitors.

Naturally, because of the price increase in the last year, we've passed on some increases to our client base, but there is a limit to the elasticity of the price increase that we can pass on, especially when our competitors are not doing that.

Mailhot products are a crucial component of large pieces of mobile equipment. Our products are used in core parts of the Canadian economy, such as waste removal, construction and snow removal. Several of our customers are large OEMs in Canada that employ many thousands of people. They are in a position where they're competing against foreign and U.S. competitors, so they can't just increase their price to their base. With us increasing our selling price to our customers, it's putting them at a less competitive advantage and into a situation where they have no choice but to source their hydraulic cylinders from suppliers other than us.

It puts us in a situation where we're less competitive, and we ourselves are thinking of our investment. We were thinking of our investment decisions and of putting at risk well-paid jobs that we have in Canada in welding, machining and different skilled trade areas that are in high demand. It puts us in a difficult situation.

During all of this process, we did some representations as a company to the finance department in Ottawa on the impact this has had. In our case, we had some very good news in mid-October.

There was an initiative by the Department of Finance to give relief to Canadian businesses from countermeasures on U.S. imports, and the HS codes we use are part of that initiative. Our situation was not good. Going forward into the future, we could not sustain the situation that we were in. We made some representations and, happily, the Canadian government has answered those requests and did put out an initiative to exempt some products for all companies that are using them in Canada.

Fortunately, the products we were using are on that list. We had the same request that I'm sure everybody else who's using steel in Canada had, as far as the impact of tariffs. In our case, I think the conclusion for now is positive and going in the right direction.

[The Chair, Liberal, Mark Eyking]

Thank you, sir.

We're going to go right now to Armo Tool. Mr. Whitney, you have the floor.

[Ben Whitney, President, Armo Tool Limited]

Thank you, Mr. Chair.

My name is Ben Whitney and I have the privilege of being the owner and president of two London, Ontario manufacturers: Armo Tool and Abuma.

Thank you for the opportunity to explain the impacts of steel and aluminum tariffs on Armo, Abuma, and our 225 Canadian team members.

My companies design and build things that make things. Some 80% of our business is in the automotive industry. We have risen to the challenge of going global, exporting 50% of our production, with most of our exports going to the United States and Mexico.

When tariffs were announced, my hope was that competitors in the U.S. market would be paying more for steel and that, by buying Canadian materials as well as materials from elsewhere, I would have a competitive advantage. Instead, all of my suppliers raised their prices. Armo is paying 17% to 33% more than we were a year ago for steel of all types. Most of the steel is produced in Canada or from offshore. These price increases occurred almost immediately upon the discussion of tariffs. It did not wait for the tariffs to take effect. I am paying $50,000 per month more for steel, aluminum, and metal components than I was a year ago.

If the Canadian government implements anti-dumping measures, I fear rising costs on steel plate and possible shortages. On more than a quarter of projects, I am competing with companies in China. These Chinese firms can buy steel cheaper than I can. They consistently deliver quality parts on time. They are very serious competition.

After Bush's 2002 steel tariffs, the U.S. discovered the unintended consequence of tariffs was to lose 10 times as many jobs in value-added manufacturing as were saved in steel-making. These tariffs are endangering manufacturing jobs on both sides of the border.

I don't need help to compete with the Americans. Just don't make it easy for our offshore competition.

We are a moderately sophisticated mid-size business. Many automation integrators, fabrication shops and tool-and-die companies are smaller and more localized. I have good support from a national accounting firm and experienced import brokers, but I am still not able to get duty relief on steel we are buying, even when it is used to manufacture goods for export. This is because we buy the vast majority of our material through local steel and aluminum distribution companies. Our material purchases are too inconsistent and require delivery times that are too short to go direct. Local distributors do not break out the cost of the tariffs in their invoices, and we cannot get the required import paperwork. We can't apply for duty drawback. If Armo, at a 200-person size, cannot figure this out, most companies in our industry will not be able to.

I hope and trust that these tariffs will soon be a thing of the past. I know the government intends to use tariffs collected to help companies that use steel and aluminum. Other than returning tariffs paid through duty drawback, I understand that some of the funds have been pointed towards the SIF program. The minimum project size for SIF is too large at $25 million and will only help companies that are large enough to figure out how to get duty drawback or their cost passed on to customers.

What is needed is funding of much smaller projects, like the digital technology adoption pilot program, DTAPP, from a couple of years ago, which could promote industry 4.0 investments, or the CME SMART program for supporting capital purchases.

The simplest measure might be allowing accelerated capital cost allowance on capital equipment for processing steel or aluminum. A targeted ACCA could be implemented immediately with a minimal amount of administrations.

Congratulations on finishing the USMCA agreement. I hope you get these mutually destructive steel and aluminum tariffs removed as soon as possible. Thank you for your interest and support.

[The Chair, Liberal, Mark Eyking]

Thank you, sir.

We're going to go now to the St. Thomas and District Chamber of Commerce. We have Mr. Hammersley. Welcome.

We had a crew from your neck of the woods here a couple of days ago. I think it was your economic development corporation.

[Robert Hammersley, President and Chief Executive Officer, St. Thomas and District Chamber of Commerce]

Correct. I tried to be here at the same time, but flight schedules just wouldn't let it happen.

Good morning, committee members. I know this committee has heard from a diverse cross-section of interests across industry and the commercial sectors impacted by tariffs on Canadian businesses. Thank you for allowing me to appear today.

I'd like to examine those impacts through a different dimension, I believe, that incorporates the anxiety most businesses are confronting alongside the pressures this government is working to overcome.

I am the president and CEO of the St. Thomas and District Chamber of Commerce. Our membership is close to 600 businesses and organizations. We count large industry to small businesses, which make up the majority of our commercial sector and employ over 14,000 people.

This committee is doubtless aware that St. Thomas, Elgin County and the broader region of southern Ontario were ground zero during the unparalleled economic contraction between 2008 and 201O. Since then, however, we have worked diligently to turn the page. Our industries and commercial sectors create everything from auto parts, which have been our traditional hallmark, to consumer goods and electronics, to home fixtures, beverages, agricultural and agrifood products, to fuels and even clean energy enterprises.

We're turning the corner, but that transition is being threatened by the imposition of tariffs in our largest market, the United States. Directly, there is a threat in my community to over 5,000 jobs. That' s one of every four jobs in our market. Indirectly, that threat extends to several thousand more. Any loss of these jobs would have direct impact on this government's priorities. The cost of tariffs in our market area is staggering. In a random sampling of businesses we know to be affected, we found the annual impact at $40,000 for a craft brewery using aluminum cans, to over $70 million for our largest employer, with a direct impact on 1,500 jobs.

Enterprise in Elgin County builds critical products whose uses go to the heart of many of the policy objectives of this government. Our area boasts manufacturers of critical components and finished products that contribute to positive outcomes in neonatal and newborn health. For example, we create parts for incubators and other medical devices that are essential to strong public health. Healthy outcomes for people here in Canada, in the developing world and around the globe depend on what is built right now in our community.

While the auto manufacturing sector is but a fraction of its size prior to 2008, innovation and quality continue to hold high value among our U.S. and international consumers. But its viability is at stake and mitigated in this tariff environment largely by a lower Canadian dollar. As commodity prices will go up, so will our dollar, making the continued viability of our area industries all the more untenable.

It is not unreasonable to observe that many of our existing businesses may find it necessary to leave the country, relocating in whole or in part to the U.S. Our local innovation extends beyond hard products alone. We are proud to count internationally recognized leaders in the agrifood sector. Their processes and efficiencies, by design, contribute to lowering food prices and opening greater access to high-quality, sustainable, and locally grown or raised produce, fish and others. Their machinery and equipment needed to produce and deliver their product excellence relies upon steel and aluminum. While this sector is providing vital food access for Canadians, and globally, their access to the needed inputs to their operations is either narrowing or has closed.

Like other regions of southwestern Ontario, we have become a gateway for foreign companies to establish Canadian operations and footprints. Further progress depends on the government's constant and ongoing efforts to attract diverse investment to rural Canada.

Mr. Chair, my chamber and I recognize this is a difficult dilemma. The near-term consequences for our businesses are extraordinarily real and can undo what has taken nearly a decade to build. The jobs factor alone captures the most attention for obvious reasons, but the implications extend further. From health care to transportation, to what we eat, to bettering society for all, these are all amplifiers for this government. St. Thomas and Elgin County are solution destinations. I trust this government will deliver practical and prompt relief so our solutions can continue to deliver results locally, across Canada and around the world.

Our position in representing the business community and the people of our region is firm. Canada should receive nothing less than a full and permanent exemption from steel and aluminum tariffs.

Thank you, Mr. Chair and committee members. I appreciate the opportunity to be with you today.

[The Chair, Liberal, Mark Eyking]

Thank you, sir.

We're going to wrap up with our last group of witnesses from the United Steelworkers. You're no stranger to our committee and it's good to see you back. You also helped us down in Washington when we were down there.

Mr. Neumann, you're taking the floor. Go ahead, sir.

[Ken Neumann, National Director for Canada, National Office, United Steelworkers]

Thank you.

On behalf of the members in the steel and aluminum industry, I want to thank you for this opportunity to speak to the committee on the crisis that becomes more intense with each passing day the tariffs are in place.

With me is Jamal Shaker from our national office research team.

The Steelworkers is the primary Canadian union representing workers of steel and aluminum. The absurd section 232 tariffs continue to cause massive uncertainty for 175,000 Canadian workers, whose jobs are directly or indirectly tied to steel and aluminum industries.

I want to say right off the top, Canada must not commit to signing the USMCA unless and until there is a guarantee that the steel and aluminum tariffs will be repealed. It is a massive betrayal of our steel and aluminum members that the tariffs still remain after the conclusion of the USMCA negotiations.

Canada is the United States' closest trading partner. It is completely inconsistent to sign a new trade agreement that will govern the commercial relations between the U.S. and Canada for decades to come while at the same time maintaining these illegal and punishing tariffs. I must also note that the dangerous precedent of including references to section 232 tariffs in a side letter of the USMCA only serves to legitimize what has been an obscure clause in U.S. trade law, a clause that is supposed to deal with real national security issues. The longer these tariffs are in place, the more devastating they become. We have already seen layoffs in Sault Ste. Marie as a result of the tariffs; 45% of our steel industry is at risk from these tariffs.

Remember, 90% of both steel and aluminum exports from Canada go to the United States. We have seen a sharp decline in those exports since the tariffs came into effect. The impact of the tariffs is only worsened by the events like the new, now 10-month lockout of our members at the Alcoa aluminum smelter in Bécancour, Quebec.

The steelworkers on both sides of the Canada-U.S. border reiterate our common position that the section 232 tariffs must be cancelled now and unconditionally. Further, quotas must not be seen as a trade-off for tariff removals. We oppose any system that only helps some part of the industry while harming others. We call quotas nothing more than voluntary export restraints. The tariffs and threats of quotas are already having a negative impact on the steel industry. For example, we've been anticipating an announcement that steel will again be made at the Hilton Works facility in Hamilton. Now that we are mired in this trade war, the uncertainty has delayed any such decision. We can only imagine the impact if Canada agrees to a quota.

As well, the proposal to base quotas on historical averages with entrenched Canadian export levels has been negatively impacted by global overcapacity from bad international actors such as China. We would like to emphasize that our impact of the tariffs goes beyond steel and aluminum. Our union also represents workers across the manufacturing sector, where smaller companies employing our members are also feeling the impact of the tariffs with increasing layoffs and slowdowns. Repeating what we said to this committee on July 31, to protect workers in manufacturing, particularly those in small and medium enterprises, the Steelworkers assert that the worker and industry support package must cover industries across the supply chain.

We must ensure that the industry supports are going to go to those who need them, particularly where there is a real threat to the good jobs. We also emphasize the need for improved worker support, including additional reform to employment insurance, and work among unions, business and government to prevent as much job loss as possible. Not only are our members suffering from the uncertainty caused by tariffs in Canada, but they're also dealing with the ripple effects of the tariffs Trump first imposed on the rest of the world in March.

Imports of certain steel products to Canada have surged, threatening good Canadian jobs across the industry. Since March, the Steelworkers has been calling for additional trade remedies to counteract these abnormal increases in imports from non-NAFTA countries. While we were relieved when the Ministry of Finance finally announced interim safeguard measures earlier last month, we were puzzled why it took some five months to have these measures implemented.

We also support the remission order listed by the government, in particular, as I said earlier, to protect the jobs in manufacturing.

In conclusion, the Canadian government must do everything in its power to eliminate the section 232 tariffs. That means standing up to the Trump administration and drawing a line in the sand. We must not sign the USMCA unless their tariffs are removed.

The government has already lost one opportunity to cancel the tariffs. Do not sell out our steel and aluminum workers again.

I would refer you to our full submission, which we filed with this committee on Tuesday. My colleague Shaker and I are here to answer any questions that you may have.

Thank you for the opportunity.

[The Chair, Liberal, Mark Eyking]

Thank you, sir.

That wraps up the presentations by our witnesses.

I also would like to welcome some visiting MPs to our committee, MPs Duvall, Mihychuk and Ellis.

We could have votes any time, so we're going to start right off with the Conservatives. I would suggest to MPs that you keep your questions nice and short because we have six witnesses.

Also, witnesses, do your best to keep it short so that we can have a lot of dialogue over the next 45 minutes.

Without further adieu, Mr. Allison, you have the floor.

[Dean Allison, Conservative, Niagara West, ON]

Thank you, gentlemen, for being here today and for taking the time. I know I had a chance to speak with a few of you this summer.

Ben, I know I had a tour of both your facilities.

I know, Gary, that someone from your office was at one of our round tables. Was it you? No, I didn't think it was you.

Let me just go to you. I only have five minutes, and it's tough to cover all these topics.

I guess our biggest concern is that, with great fanfare, this government talked about $2 billion in relief, which really ended up being $1.7 billion for EDC and BDC loans. Obviously, taking on more credit or, as they say, reducing your capitalization is probably not the greatest thing for what bankers will want at the end of the day.

Then, of course, you talked about the strategic innovation fund. It's $250 million, which really puts out a lot of small and medium-sized enterprises. Talk to us in terms of how you haven't really found any program that fits for what you need at this point in time. Is that correct?

[Ben Whitney]

That's correct.

I thought that the duty drawback was going to work for us. Then I started talking to our suppliers. The paperwork that I would need would show who they're buying from and how much they're buying it for, so they're not going to supply that to me.

The other issue is that as long as these tariffs are in place, I'm paying 24% more for Canadian steel. All the steel guys recognize what has happened to the market, and they are making good profit from me. They may be losing money on sales that they used to make in the U.S., but they are making a lot of money from me. That's happening from the Canadians, the Europeans...everybody.

So, no, I don't see a program that really works for me. With regard to the amount of money that this is costing us, we can pass a little bit on to customers, and then, basically, it just reduces our profitability substantially. It's not a life-or-death issue probably for us, but it makes us less competitive against foreign or American suppliers.

That's why I'm suggesting small programs like DTAPP, SMART or even—

[Dean Allison, Conservative, Niagara West, ON]

Accelerated capital.

[Ben Whitney]

—accelerated capital, just to put a little bit of money back into our pockets to invest in the business. We're growing quite rapidly. This just sort of drains some of the oxygen out of our organization.

[Dean Allison, Conservative, Niagara West, ON]

Perfect. Thanks.

Gary, talk a bit about what's going on in Niagara. I know you guys are out of Thorold and Welland, but what I'm sensing.... Maybe it was your remarks, but someone for sure said that they were laying people off as a result of orders and lack of ability. Could you just talk about your experience with what you understand is going on in Niagara as it relates to people either shifting production to the U.S. if they have that option as a company, or laying people off as a result of lost sales?

[Gary Stepien]

We haven't got to the point of laying people off yet. That is a possibility. Like I've said, we've had a serious hit to our sales. The issue really is that we make what our customers need, and our customers are finding that we're too expensive now. They're basically looking at what their options are to essentially replace us. That's an impact of 25 people on our floor. We're talking about skilled trades and that type of people. It's a serious risk.

The thing is that our customers not only ship into the States, but into Canada, and in their case, they're competing against foreign product that is not exposed to any of these tariffs because that product comes from either Asia or Europe. It isn't a level playing field at all. We're kind of caught in the middle.

[Dean Allison, Conservative, Niagara West, ON]

As we look at supply chain when dealing with those things, one of the concerns is that if customers in the U.S. are saying that they don't want to pay that price, they then shift to the U.S., which then erodes the whole ability to be competitive and once you lose those customers, you may never get them back. It takes years to accumulate these customers, right?

[Gary Stepien]

We are aware that companies are seriously considering hopping the border because that's a quick fix to solve their problem. You have to remember that we have millions of dollars of super expensive, high-technology equipment, like CNC machining lathes and mills. If it comes down to it, you unbolt it and move it. That's the reality of it because we're talking about private families that, in our case, have 42 years of business that is at risk simply because of this type of paperwork legislative issue that was never even considered when all of this investment was made.

We have gone through 20 years of NAFTA with none of these issues. You have private wealth accumulating and reinvesting, but all of a sudden, the rug is pulled out from underneath them and it's serious because you have investment that has to be utilized. It impacts cash flow. It impacts market share and all of that.

[The Chair, Liberal, Mark Eyking]

Thanks, Mr. Allison.

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

Mr. Dhaliwal, you have the floor.

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

Thank you to the presenters.

My first question is for Mr. Neumann and Mr. Jamal. The United Steelworkers are very diverse. I want to thank you for the great work that you do.

You are telling us here that we shouldn't have signed the USMCA, but when I'm on the ground and when I'm talking to the workers and to companies, they are very happy. In fact, they are saying that it creates certainty.

Does the USMCA help the United Steelworkers?

[Ken Neumann]

Let me back up. I can tell you that I've talked to a lot of our workers as well and the fact of the matter is that this deal was signed, but what was left out was that we were abandoned on steel and aluminum. It was a commitment right from day one.

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

If I leave that aside, if I just have to focus on USMCA, can you tell me the impact it has on the Steelworkers union?