International Trade Committee on Nov. 1st, 2018

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

That would be great.

One thing that unites us all here is that we know section 232 is unjust. It's unfair. Mr. Neumann, you said it was completely illegal, and we feel the same way. We want this thing abolished, taken out.

There is a challenge with the USW. I read here that your U.S. counterpart, USW U.S., says, and this is before the ways and means committee in the United States, “The steel and aluminum section 232 tariffs are necessary to ensure that the United States can supply our defence and critical infrastructure needs,” and then goes on in a very supportive way about section 232. Have you spoken to your membership? Have you spoken to your U.S. counterparts and told them that this is completely illegal and wrong?

[Ken Neumann]

Sir, let me set the record straight.

There are some people who would like to play in the sandbox to make us look bad as an international union. The fact of the matter is that our union is consistent on both sides of the border that these tariffs are absurd, that they should have never been there, that they're illegal and they're wrong-headed. It's the same as the position that we've taken.

The day those tariffs were imposed, we also passed the unanimous resolution that the tariffs.... Canada is not the problem. You can go through chapter and verse with regard to what the real global problem is. We can talk about the history of how it has diminished, and that sort of stuff.

For the record, let's be very clear. The United Steelworkers international president is Leo Gerard, a Canadian. Trust me, the fact is that we're on the same page with our brothers and sisters. I have had the opportunity to speak numerous times at many our conventions, and it's an issue that I raise. Never, ever have I been challenged by the fact of them saying, “Well, look, you're Canadianizing it.” That's because they understand.

One thing that workers understand is the fact that it's an industry. Many of the companies that we represent here are also in the U.S., and they understand they interchange. You take Arcelor, or you take some of these huge companies...that's not an issue at all.

There may be some people who say that because you have an international union that somehow you're not defending them. That's the furthest thing from the truth.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

I'm just reading from the record here.

I hope that Mr. Gerard, being a Canadian, being down there representing everybody, would be defending Canadians—

[Ken Neumann]

Trust me, he is.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

—in North America.

If you can provide the committee with a statement from Mr. Gerard, that would be great.

Would you be able to do that?

[Ken Neumann]

I will.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Thank you so much for that.

In regard to unions right across Canada, we know the largest union, Unifor, is very supportive of the USMCA. They've talked strongly about this.

Jerry Dias has talked about the automotive sector. He has talked about bringing certainty and stability to the USMCA. This is what we're hearing from the union movement.

I know it might not be from USW, but this is what we're hearing from labour.

[Ken Neumann]

Well, you're hearing that from one affiliate, and the fact of the matter is—

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Well, many—

[Ken Neumann]

I've not heard from them. I've seen the press—

[The Chair, Liberal, Mark Eyking]

Sorry, your time is up, and—

[Ken Neumann]

I've seen the press releases. The fact is that there's only one union that has come out in favour of it.

Look, I support the auto industry. It's important to the industry. We produced the situation. I get that. But the fact is that in these last trade negotiations, Canada sat out while Mexico and the United States did the heavy lifting.

[An hon. member]

Hear, hear!

[Ken Neumann]

I'm pleased for the auto sector. I'm pleased that it is where it's at, but the fact is that in order to build autos, you need steel and you need aluminum.

[The Chair, Liberal, Mark Eyking]

Thank you, Mr. Neumann.

That ends our first round.

We have time for almost another round.

We're going to start off the second round, and, Mr. Peterson, you have floor.

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

Thank you, Chair.

Thank you, everyone, for being with us today. It's very informative. It's obviously a dire situation, and we're trying to make sure we do all that we can do, as effectively as possible, to help those who need it.

Mr. Whitney, I was interested in a lot of your testimony, and thank you for providing it.

I think you said that your suppliers were jacking their prices before these tariffs were even announced. Can you elaborate a little on that?

That doesn't sound fair to you, but tell me a bit about the context and how that was happening.

[Ben Whitney]

One of our suppliers is a company called Anchor Danly. They were kind enough to show me their pricing structure for the last 12 months, and things that they were selling for $950 in November were $1,300 in March. They're not producing the steel; they're just turning it into a state that I can use.

Basically, as soon as there was talk of tariffs, a bunch of companies in the steel industry saw an opportunity to dramatically make more money.

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

That seems unfortunate.

We have a full range of stakeholders here. We have labour, manufacturers; we have the chamber here, of course. I want to focus a bit on the manufacturing side of things.

To the manufacturers, the people selling to customers, are your customers mainly based in the States, or in Canada, or both?

I'll start with you, Mr. Whitney.

[Ben Whitney]

We probably sell 50% into Canada, and roughly a quarter into Mexico and a quarter into the United States. Most of our customers are global tier 1 automotive companies—big companies.

We're competing against Canadian, American and offshore on most projects. Because we're a highly engineered, value-added company, the materials are maybe a relatively smaller piece of our costs than what Iafrate might experience. However, it's still enough to wipe out the profit on most projects.

It's difficult. We might have a project quoted for a year before it's awarded, and then the project might take six months. I think what you heard earlier is that the only thing that's saving our bacon is the low currency. As interest rates rise, if we get oil pipeline certainty and our dollar starts to rise, then we're going to have a problem; the problem gets bigger.

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

Mr. Stepien.

[Gary Stepien]

In our case, it's hard to isolate the impact on a product-by-product basis because some of our products are small enough that you can pick them up with one hand. Other products are so large you need an overhead crane. The steel impact ranges across the products also because we have also locked into certain quotes. You lock your selling price in, and then your costs change. That's the issue we're dealing with.

We're really focused on the Alberta company, which distributes within Alberta and through the States. The impact on them is significant because this is a price increase that they can't pass along. They are trying to figure out how best they can do it. Right now, we're not the customer they want because we've become the high-cost supplier.

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

Mr. Juneau.

[Justin Juneau]

We exclusively sell in Canada—mostly Quebec, Ontario and New Brunswick—so the entirety of the price increase will be transferred to Canadians in the long term. In the short term, we have to pretty much internalize the increase in pricing, and bite the bullet for now.

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

Mr. Vezina.

Do I have any time left, Mr. Chair?

[The Chair, Liberal, Mark Eyking]

You have almost a minute, but keep it tight.