Evidence of meeting #62 for International Trade in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was industry.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Matthew Marchand  President and Chief Executive Officer, Windsor-Essex Regional Chamber of Commerce
Huzaifa Saeed  Policy and Research Analyst, Hamilton Chamber of Commerce
Rory Ring  Chief Executive Officer, Sault Ste. Marie Chamber of Commerce
Kalyan Ghosh  President and Chief Executive Officer, Essar Steel Algoma Inc.
Conrad Winkler  President and Chief Executive Officer, North America, Evraz
Roger Paiva  Vice-President and General Manager, Gerdau Long Steel North America
Michael McQuade  President and General Manager, Stelco Inc.
Trevor Harris  Director, Government and Public Affairs, Stelco Inc.

4:50 p.m.

President and Chief Executive Officer, Essar Steel Algoma Inc.

Kalyan Ghosh

No. Both companies are under the CCAA. They're going through a change in ownership.

4:50 p.m.

Conservative

Dave Van Kesteren Conservative Chatham-Kent—Leamington, ON

The reason I say this is that Donald Trump has just come back from the G20 meeting and has set some new rules and some new standards. He's also said that he's going to scrap what happened in the Paris accord. What's going to happen to Canadian companies if the American companies—and in this case, a London-based company and a Brazilian-based company—can no longer compete with the rest of the steelmakers because of regulations that we have here in Canada?

4:50 p.m.

President and Chief Executive Officer, North America, Evraz

Conrad Winkler

I'll start. From our perspective, you've hit on a very critical issue.

First of all, we're run as a North American company. We run independently in North America and of course are reporting to our board in London.

There are a couple of things. We run 15 recycling centres as well, throughout western Canada, and it's absolutely critical. To your point, regardless of ownership structure, the issue of our global competitiveness is enormous in terms of if we're paying a tax.... Our margins now in the steel industry are thin enough that we have to be as competitive.... As each of us has discussed, we have to be at the top of our game every day to make a very small margin. If we're going to cut into any of that margin, we have to be very sensitive to what happens with competitors in China, in Asia, and in other parts of the world that have somewhere between five and 10 times as much of a carbon footprint—

4:55 p.m.

Conservative

Dave Van Kesteren Conservative Chatham-Kent—Leamington, ON

I think you've hit the nail on the head there. The Chinese have made absolutely no movement toward lowering their carbon footprint. As a matter of fact, they told me personally that they had no plans for doing that until at least 2028. In terms of the situation we're in as a result of the carbon we've spewed into the atmosphere for the last hundred years, they feel that they really weren't responsible for it.

If we're at that disadvantage, where do we have to go as a country and definitely as North America? We see where Donald Trump has gone, but where do we have to go as Canadians if we're going to accept steel...? Are you suggesting that we put a tax on the steel that comes in? The follow-up question is, would we then be competitive in our industries if we were to have a price for steel that's going to be a non-competitive one?

4:55 p.m.

Trevor Harris Director, Government and Public Affairs, Stelco Inc.

I think you've raised a very important question. It's one that we in the steel industry have been contemplating and have addressed provincially with the Ontario government as they've moved forward with their cap-and-trade program. We've entered into discussions with the federal government as well.

You can look at the cost of steel as it comes across from other jurisdictions. Obviously, they're not subject to a lot of the carbon costs that we're incurring as we're making our businesses more efficient. One of the challenges that I think the government has is finding a way to equalize that cost at the border. You've heard my colleagues here speak to the efficiencies we have in our steelmaking process in terms of providing a greener product. The transportation costs alone for moving those products from China and overseas make the carbon footprint of that steel five to 10 times greater.

We challenge government to help us find a balance here. We want to provide the green steel that goes into construction products, automobiles, and the other infrastructure projects that everybody wants, in order to provide a greener footprint for Canadian manufacturing, but we need some help to equalize those costs at the back end. Whether there's a border measure of some kind that can be implemented in the form of a tax or some form of equalization, we're obviously all ears and willing to work with you. We've made that case to both parties, here in Ontario and federally.

4:55 p.m.

Conservative

The Vice-Chair Conservative Randy Hoback

Thank you.

Mr. Bratina, welcome to the committee.

March 21st, 2017 / 4:55 p.m.

Liberal

Bob Bratina Liberal Hamilton East—Stoney Creek, ON

Thank you very much. It's a pleasure to be here.

The question that needs to be answered is whether steel should get the support of government in its decision-making. The things that are going against steel are the notions of rust belt and bankruptcy. This is unfortunate, because the image of steel is, to use a railway analogy, of a broken-down old steam locomotive rather than a modern bullet train.

I want to direct this first question to our Stelco people. What is the current state of your production facility? How good is it? Is it up to today's standard?

4:55 p.m.

President and General Manager, Stelco Inc.

Michael McQuade

Yes. Lake Erie, built in 1980, is actually the most modern greenfield site in North America, and there has been significant investment made in the Hamilton facilities. What is left operating today is, we believe, world-class. We had benchmarking, as members of the larger U.S. Steel to which I spoke briefly, that indicated we are in the top with respect to competitiveness in North America.

4:55 p.m.

Director, Government and Public Affairs, Stelco Inc.

Trevor Harris

I'll just quickly add to that.

As we have gone through a recently announced recruiting process, which Mr. McQuade alluded to, we're now repatriating Stelco and separating from our former American parent.

The biggest focus we have for recruitment right now is in the world of IT. We're building a new IT infrastructure. We understand that there is a perception out there that steel is not what it truly is. We in fact are a high-tech industry that is extremely technologically advanced. Admittedly, this is a challenge we need to meet head-on, to start demonstrating that we are as technologically advanced as we truly are.

4:55 p.m.

Liberal

Bob Bratina Liberal Hamilton East—Stoney Creek, ON

General Leslie will know that in planning in a war scenario, in the darkest days during the darkest times there are always plans being made for the offensive. In your situation now, is there a vision for the growth and therefore sustainability of the Hamilton operation?

5 p.m.

President and General Manager, Stelco Inc.

Michael McQuade

Unequivocally yes, there is. I won't get into details. We're in the midst of credit protection. We think we're in the home stretch.

Having said that, I make it analogous to a marathon. That last 20% is going to be some of the most difficult stretch, as we move through the coming months, but I believe the offer that's on the table from the interested party, Bedrock Industries, and is well publicized is going to have Stelco as a cornerstone of a much larger play that will involve growth not only within Hamilton but across North America and that will take Lake Erie up to capacity, from a steelmaking standpoint, and utilize the additional million tonnes of hot strip mill capacity. It will be a tremendous resurgence, led by this interested investor.

5 p.m.

Liberal

Bob Bratina Liberal Hamilton East—Stoney Creek, ON

We heard testimony regarding air quality and so on. I know that Hamilton's air quality has improved significantly over the past 10 to 15 years, in part due to measures taken by the steel companies.

Concerning your water-cleaning technology, millions of dollars were going to be invested in sending clean water back into the harbour. What is the state of that?

5 p.m.

President and General Manager, Stelco Inc.

Michael McQuade

As late as 2010, I believe, there was a significant investment made in the waste-water treatment plant in Hamilton. It is well ahead of the curve in terms of its overall environmental performance, compliant with standards that are out there and still to be achieved in years to come. We're already there.

5 p.m.

Director, Government and Public Affairs, Stelco Inc.

Trevor Harris

Let me just put a fine point on that. It was actually a $25-million investment that was required for us to put water back into the environment actually cleaner than when we removed it. We've demonstrated our ability to meet the environmental challenges head on, and as Mike alluded to in his remarks, we've seen great improvement, of 97%, in our water efficiency emissions since 2007.

5 p.m.

Liberal

Bob Bratina Liberal Hamilton East—Stoney Creek, ON

The bottom line is, how is the order book?

5 p.m.

President and General Manager, Stelco Inc.

Michael McQuade

The order book is strong. We're running above the North American average, but we are also poised, on emergence, to be just that much more successful. The automotive sector in particular is waiting until the supply chain is clean, and we continue to keep up our communication with them. It's a target market that is waiting for our return.

5 p.m.

Conservative

The Vice-Chair Conservative Randy Hoback

Do you have a Liberal colleague who wants to take a—?

5 p.m.

Liberal

Bob Bratina Liberal Hamilton East—Stoney Creek, ON

No, I'm happy to just conclude by saying that, with all of the remarks we've heard from your colleagues with regard to the Chinese market, these are profound issues for the steel industry, are they not?

5 p.m.

President and General Manager, Stelco Inc.

Michael McQuade

They absolutely are. When you have 400 million tonnes of surplus capacity over and above what's already being exported, just the presence of an offer—it doesn't even have to be a boatload—has a tremendous suppressive effect on pricing and is detrimental to the Canadian steel industry and to the North American steel industry, for that matter.

5 p.m.

Conservative

The Vice-Chair Conservative Randy Hoback

Perfect. That was five minutes right on the nose.

Ms. Ramsey.

5 p.m.

NDP

Tracey Ramsey NDP Essex, ON

Thank you so much to all of you for being here. It's such an important study.

Some of the key things that you've been hitting on are, of course, how environmentally clean Canadian steel is and the good jobs it supports. In my riding of Essex, there's Atlas Tube, which was mentioned—a wonderful employer in a small community. The spinoff from those jobs sustains that community. It's so incredibly important.

The other thing I've heard from all of you is innovation. You're innovating; you're constantly moving forward. With all the infrastructure projects that are coming with the government, what ideally I think we'd all like to see is all of you operating at top capacity, employing people to the highest level, sustaining all the communities that you're part of.

My question is going to be, not surprisingly, to my own chamber president, Matt Marchand, from Windsor-Essex. I represent the riding of Essex, and we've had many conversations and done some work together around steel dumping and how we address this issue. Something that came up today, modernizing our trade remedy system, is number one. We have to do that. There was a report that came out of the finance committee to do so, and we need the government to implement that so we can start that remedy to come in line with other countries.

The second thing, really, is about China. It's about the market economy status, and it's about the impact of them receiving that. This is a very pertinent issue. Of course, you all know it's sitting right now at the WTO. Could you speak to the impact there would be on producers, like Atlas Tube, in our own area if China were to achieve market economy status?

5 p.m.

President and Chief Executive Officer, Windsor-Essex Regional Chamber of Commerce

Matthew Marchand

What I can say is that if we solved the dumping issue, just in the Windsor-Essex area alone the impact would be that the Atlas Tube plant in Welland could be reopened. That's 100 jobs there. In the Windsor-Essex area, the Harrow plant would increase its production to about 150,000 tonnes. Right now, they do 25,000 trucks a year. If we could solve the China dumping issue, if we could have fair trade as our leaders in the steel industry have told us, we could up production at our plant in Windsor-Essex by 35%, or something in that neighbourhood, and the Welland plant could be reopened—that's 100 jobs.

When you start looking at the spinoff effect of the steel industry, it is huge. The colleagues here have been very generous. It's a minimum 3:1, probably 4:1, high-value manufacturing jobs.

I would call on Bob Bratina. I just want to bring something to your attention. You mentioned earlier the state of plants. I would encourage the entire committee to come to Windsor-Essex. We will set up a tour with Tracey and Atlas Tube and you will see innovation front and centre. We'll go up the 401, and we'll stop and see our friends in Hamilton. I'm telling you right now that when you see what goes on with the high technology here in Windsor-Essex and across Ontario, you'll see that this is the innovation area: steel.

Thank you very much, Tracey, for the question.

5:05 p.m.

NDP

Tracey Ramsey NDP Essex, ON

Scott, do you want to go ahead?

5:05 p.m.

NDP

Scott Duvall NDP Hamilton Mountain, ON

I just want to thank everybody for coming out today.

When I worked in the steel industry, I did work with Mr. McQuade for quite a few years. He was my plant manager.

I've listened to all of you, and I've also talked to other people in the steel industry. How much damage has the steel dumping caused? I know two of you are in credit protection. You've been there a couple of times. Is the main reason because of the dumping of steel? Is that the major reason, or are there other reasons? If we don't do something to protect our borders with regard to the dumping of steel, where do you see the steel industry going, and how many job losses would happen?

5:05 p.m.

Vice-President and General Manager, Gerdau Long Steel North America

Roger Paiva

I can speak for Gerdau in terms of damage. In 2012, we idled our melt shop in Cambridge. As I said, we are today running at 70% capacity, so we laid off people in the past. If we didn't have the unfairly traded steel, we would be running our plants at close to staff capacity, adding more jobs to the economy, and using more green steel, thereby helping the world become greener.