Thank you.
Good afternoon, honourable members.
I'm Sean Donnelly, president and CEO of ArcelorMittal Dofasco, Canada's largest flat-rolled steel producer. I'm also chair of the Canadian Steel Producers Association, which testified here earlier in March; a member of the board of directors of the American Iron and Steel Institute; as well as a member of the Canadian Automotive Partnership Council.
Let me start by saying that ArcelorMittal Dofasco welcomes the Government of Canada's budget 2017 commitment to improve its ability to defend Canadian manufacturers against dumped and subsidized imports by implementing measures that effectively modernize the Canadian trade remedy system. These legislative and regulatory amendments will improve the enforcement of trade remedies, address the circumvention of duties, and better account for market and price distortions. These measures received widespread support from manufacturers and business associations across Canada.
I have been monitoring the committee's proceedings over the past weeks, and appreciate the time and effort of everyone involved. I'm pleased to also add some context to this study.
To answer the question being asked about whether the Canadian steel industry can compete internationally, for ArcelorMittal Dofasco the answer is a resounding yes. In fact, Dofasco is one of the top-performing businesses within all of ArcelorMittal, the largest steel company in the world, with a presence in 60 countries. In Canada, ArcelorMittal has more than 9,500 employees across seven business units that include mining as well as steelmaking and finishing for flat carbon, long products, and tailored blank steel.
Steel is a capital- and technology-intensive industry. In fact, at ArcelorMittal Dofasco we often say that we are a technology company that makes steel. We rely on processes and product innovation to be successful in the North American and global steel industry.
Having said that, we also know that people are our competitive advantage. You likely know our long-standing motto: “Our Product is Steel. Our Strength is People.” In Hamilton, we continue to live by this belief. We have 5,000 employees and are responsible for another 20,000 indirect jobs.
We continue to experience a wave of retirements. We are in the marketplace hiring, and have been for the past five years. Nearly 30% of our workforce has five years or less experience with the company; and we continue to bring on approximately 300 new employees per year, over the next number of years. These new employees soon realize that learning and development is a core commitment at ArcelorMittal Dofasco, whether on the job, in the classroom, or even outside the workplace. In fact, ArcelorMittal Dofasco operates the only North American campus of our global ArcelorMittal University.
In terms of capital expenditure, between 2013 and 2015, Dofasco invested more than $1.3 billion in the Hamilton facilities. Between 2016 and 2018, we will invest another $1.5 billion. These investments are in both product and processes, including new finishing lines as well as restoration work. They demonstrate our commitment to innovation, which is driven through collaboration with our global colleagues, our global R and D facilities in Hamilton, local clusters in the city of Hamilton, and the contributions and the strength of our people.
Again, the government's budget 2017 announced yesterday will create a national advanced manufacturing economic strategy table with a commitment to increase value-added exports, as well as the establishment of innovation super clusters, including advanced manufacturing, to accelerate economic growth. ArcelorMittal Dofasco looks forward to partnering with the government on both these initiatives.
Again, as a unit of a large, multinational corporation, we compete for capital within our own facilities. While our focus on innovation through continuous improvement differentiates us and keeps us at the forefront of our industry, we also require provincial and federal regulatory environments that maintain cost competitiveness, as well as policy that ensures a fair market with a fair trade, all factors that play into decisions for foreign direct investment.
While the Canadian budget has now been released, we are awaiting budget measures from the new U.S. administration, which have been suggested to have a potential negative effect on trade flows of North American supply chains, including steel.
Members have heard from previous testimony about the structure of the North American steel market. Let me reiterate that the Canadian steel industry is significantly intertwined with that of our U.S. customers and suppliers, and there is a balance of trade. In 2016, more than 10 million metric tons of steel, worth about $12 billion, was traded between our two countries. Canada and the U.S. trade fairly in steel, with no dumping or subsidy orders against each other.
Looking at ArcelorMittal Dofasco specifically, more than 25% of our shipments are to the U.S., with more than a half of those shipments to the U.S. auto industry. In addition, we are Canada's only tin plate producer. As major food can manufacturers have moved their operations from Canada to the U.S., most of our tin plate production is exported there.
Policy changes in the U.S. will impact Canadian manufacturers. Potential border adjustment taxes, expanded U.S. Buy America policies—particularly for private projects—as well as expansion of U.S. trade rules that may result in diversion of offshore steel into Canada are all of great concern in that they would disrupt efficient working supply chains.
In the renegotiation of NAFTA, Canada must be vigilant to ensure that our economy is not disadvantaged as a result of the renegotiation. We believe there is an opportunity for a North American approach that would increase the North American manufacturing base and the market share of supply chains, including steel.
