International Trade Committee on Nov. 1st, 2018

[Ken Neumann]

In its entirety, it probably has some good provisions, but there are also some provisions we're concerned about, as I said in my submission. Through their acknowledgement, with regard to the national security threats, you can now impose clause on 232. I can tell you what's going to come next. It's the uranium workers. We represent the uranium workers. That's the next thing that's going to be declared. It's going to be national security. Canada is the furthest thing from national security. We have to start from that premise. This is an illegal dumping. It should have never been there to begin with and now, people say we have a deal, but you got the deal at an expense. You sold out the aluminum and steelworkers.

To me, yes, there are some provisions that are good, like chapter 19. That salvaged us in the industry with regard to wood, but where did that end up? We had five or seven cases go under chapter 19, but we still have duties today that are punishing our members.

Yes, there are some good elements in it, but it's not an agreement that I'm very happy with, nor are our members. If you look at the trade union movement, I know of very few unions that have come out endorsing it. People are relieved because the fact is that you have a bully south of the border, but the fact is that we're going to capitulate to that and that's what the issue is.

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

Are you aware of any layoffs or job losses?

[Ken Neumann]

Yes, we've had layoffs up in the Soo. There have been layoffs that we know of and, as some of the gentlemen have spoken about here, a lot of our smaller companies are at the brink of making some decisions on layoffs. You just heard the news this morning or last night, there's a company that is 45 minutes from here that is closing its facility. I don't know if it's related to the tariffs that are taking place, but they are moving away. There is no doubt that 45% of our facilities are at potential risk. It's very serious.

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

Thank you.

My next question is for the St. Thomas and District Chamber of Commerce. We have heard from small and medium-sized firms, particularly small manufacturers, that they have difficulty applying for the programs that the government has in place.

Have any companies come to you that you are helping to proceed?

[Robert Hammersley]

We haven't hit a level yet that sees attempted remedy other than perhaps, as my colleagues have all said, the threat of relocation seems to be the biggest potential. I'll give you one example that is near and dear to me. It's a small business that started as a family enterprise with three people. It has grown to employ over 100 people. It manufactures products, castings that are principally sold in the U.S. Right now, if it were not for a 30-cent approximate differential in the Canadian-U.S. dollar, it would be to their advantage to simply pick up and move to Michigan.

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

Two more minutes?

[The Chair, Liberal, Mark Eyking]

A few seconds, yes.

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

I'll put a small question to Mailhot Industries.

You're thinking that you can go to some other country that can supply the steel. Can you tell me what are those countries that you're focusing on?

[Stephen Vezina]

We use steel tubing that's supplied by mills. We don't buy through distributors. We get it directly from the steel mill that manufactures it. That supply is fairly limited around the world. There are some suppliers in India, Asia and South America. But once again, when you're looking at three to six months' lead time on getting the steel from the mill, to change suppliers is over a one-year process.

Naturally, being in a situation where we had retaliatory tariffs, we were facing a 12- to 18-month period before being able to get new sources of supply, which would have put us in a really bad situation.

[The Chair, Liberal, Mark Eyking]

Thank you.

We're going to go to the NDP now.

Mr. Duvall, you've got the floor.

[Scott Duvall, NDP, Hamilton Mountain, ON]

Thanks, Mr. Chair, and thank you to all of you for this important information. It's been very helpful.

Mr. Neumann, I thank you for all the work you do representing the workers across Canada. Do you believe that the temporary safeguard measures are actually helping the companies? We understand from the information I got that there's about $300 million that's been collected by the Canadian government. Seventy-four companies have applied and only 36 companies have been approved for funding so far.

I know the big businesses can make an adjustment on this temporary mess but on the small and medium-sized, as Mr. Whitney has told us, they're having difficulty.

Do you see that happening right across the country?

[Ken Neumann]

We hear the complaints that it's a very complex process. Like you say, there are a lot of applications. I know of two particular situations, one in Hamilton and one in Kingston, that have actually.... We've signed letters of support to make sure that they get those exemptions. My understanding is that one of them has been approved.

We support the measures that have been put in, but again it's how expedient it is, it needs to be.... If you're going to put that money out there and make some commitments, you've got to make sure you follow through with them. From what I've seen in one particular case there were 150 jobs at risk. They couldn't source the material here. They had to go to the U.S. It was approved.

If you've got all those applications in and only a handful approved, that obviously needs some more monitoring and making sure that they get on top of it.

[Scott Duvall, NDP, Hamilton Mountain, ON]

Thank you.

The next question is dear to me because it's from my hometown Hamilton where Stelco Canada now has gone through bankruptcy. There was great hope that they were going to expand and expand the capacity. When the tariffs came in, they just stopped. These were a lot of jobs they were looking for in the city of Hamilton.

Do you see other companies that are doing the same thing but not expanding until this issue is resolved?

[Ken Neumann]

I know a bit about Mr. Kestenbaum. He's taken over Stelco. I know he had big plans to expand. Because of this cloud hanging over, that's not going to take place. There's a lot at risk. I think Steeltown gets affected hugely. The question really becomes about investment.

I'll tell you, as someone who was born and raised and worked in the steel mills as a youngster, I know the importance of the steel industry to this country. The fact is that it's an important industry that we no longer have. All of our investments are all in companies that are from outside of Canada. We need to expand.

The reason companies come here is because we've got a good workforce. We've got a good society. We've got a good business element. That's what's important. The fact that you've got these illegal tariffs that are out there is basically going to risk any companies. Is any company really going to come and say they are going to stick billions of dollars or millions of dollars into an investment? It's very unlikely with this cloud hanging over our head. That's a bigger concern looking forward.

[Scott Duvall, NDP, Hamilton Mountain, ON]

Mr. Hammersley, thank you very much for what you said.

We've noticed today, and Mr. Neumann made a statement on it, that Sandvik announced yesterday that they're going to be closing down next year—160 jobs, and then you have the ripple effect—because of competitiveness and the tariffs. Tenaris announced layoffs right away, as soon as the tariffs... Do you see that in your area, that if something doesn't happen immediately, they could possibly close down because of not getting any kind of relief?

[Robert Hammersley]

Uncertainty is not good for any of us, but that's very real right now. I can't predict the future and say for certain, but I do know, for example, in speaking with a company that is our largest employer, that a $70-million-a-year burden is simply something they will not endure. If I were betting, I would say uncertainty and definitely negative action is a strong potential.

[Scott Duvall, NDP, Hamilton Mountain, ON]

Mr. Neumann, you mentioned the USMCA, with the tariffs not coming off. Do you believe that the government, by signing the agreement, has blown its leverage on making sure the tariffs come off, going into the future?

[Ken Neumann]

No, you give up your leverage. The fact is that you have the second round coming up. There was a commitment from President Trump that if we get a free trade agreement, which they did the morning he tweeted out that we're back to a good normal relationship, the tariffs would come off. The government never held him to account on that.

To now go ahead and sign the agreement when those tariffs are there, all we're doing is running into muddy waters. The fact is it doesn't help the industry. It doesn't help the people sitting here today, giving you testimony about the seriousness of this issue.

It's wrong-headed. It's unconscionable that we're in the situation that we are today, if you look at the trading partners that Canada and the United States have been for decades. You cross those borders no differently than any of us and you see that trade continues. We have an integrated market. It makes absolutely no sense. We're up against the bully, and the fact is you have mid-term elections coming next week, and maybe something will happen after that. We'll wait and see, but to go ahead and sign that agreement doesn't give me any comfort whatsoever.

[The Chair, Liberal, Mark Eyking]

Thank you, sir. You were a bit over your time, but that's okay.

We're going to move over to the Liberals. Mr. Fonseca, you have the floor.

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

Thank you, Mr. Chair, and thank you to the witnesses.

I'm not sure if the witnesses have been following this committee closely. We have had many companies come in. They've told us about the challenges they're experiencing. What we're doing as a government...we're all learning as we go along. When it came to the remission of surtaxes, many have brought very positive stories and experiences here to this committee.

Mr. Vezina, I think you were talking about being helped by the remission of surtax. Is that correct?

[Stephen Vezina]

Yes, definitely. We had applied to explain our situation, which was not good. It was costing us over $150,000 in retaliatory duties per month, so obviously we couldn't keep on at that rate forever. As I mentioned before, there is no Canadian source for the tubing we use, so we had no other option than to go overseas, and it takes over a year to be able to secure that type of supply for that type of product. At least there was that opening on the part of the government to allow us to apply, and the decision put forward in mid-October certainly worked to our advantage.

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

How did you go through the process to be able to do that?

[Stephen Vezina]

At the beginning, there was a process where you could ask for an exemption. We went through that and did some representations afterwards to explain our situation. We had no other option in Canada, and there are actually only two or three mills in the U.S. that supply that type of tubing used for hydraulic cylinders. Because of the application, you can't use just normal tubing for that product.

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

Thank you.

I know, Mr. Hammersley, through the chambers and other business groups, we've been able to disseminate that information. If you don't have it, we would like to provide it so you can get that out to your 600-plus members in Elgin County.

[Robert Hammersley]

I would appreciate that, thank you.