Evidence of meeting #123 for International Trade in the 44th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was tires.
A recording is available from Parliament.
Liberal
Conservative
Ryan Williams Conservative Bay of Quinte, ON
Thank you very much, Madam Chair.
Mr. Parks, thank you very much for coming in today. It is quite alarming to hear that we have a major industry—another industry—that's again threatened by China, its mercantilism and its unfair practices.
Just tell us again how big this industry is. How many jobs are there, and what's happening right now from China?
President, Kal Tire
The industry is quite large. Overall, the tire industry is about $7.1 billion here in Canada. The TBR business is only about $2.3 billion of that, but they're related industries. You have to have one to service the other. Businesses like ours have a passenger and light truck business and a commercial business, and the commercial business is a relatively low-margin business compared to the more dynamic consumer business.
When you harm materially the truck and bus side of the business, you harm the entire industry. We think the import of these tires is driving.... We don't think this; we know it's driving our remanufacturing ability down almost to a break-even scenario whereby we're closing plants or we're talking about closing additional plants.
We know the vast majority of the people in this business—we make about 300,000 of 1.2 million tires manufactured annually—are mom-and-pop shops that are selling these tires against tires that are, frankly, far below the raw material cost. We think it's a very real threat—not just to our business, but to the entire industry that represents tire manufacturing.
Conservative
Ryan Williams Conservative Bay of Quinte, ON
These tires are coming in and they're cheaper. Is that correct?
Conservative
President, Kal Tire
Without the data, we can't tell you they're inherently less safe. I can tell you they're made with a smaller belt package. That's what we call it. When we break these tires down to try to retread them, they cannot safely hold a retreaded tire.
These tires are not tires you would stick on the steer axle of a vehicle, because they're lightweight and poorly manufactured. The heavier-duty, premium tires go on the steer axle, so they put these on trailers where they can fail and not cause an accident, but they fail at an alarming rate compared to a high-quality tire. That part we do know.
Conservative
Ryan Williams Conservative Bay of Quinte, ON
They probably end up in landfills more often. Is that correct?
President, Kal Tire
They do. We have tried repeatedly to retread these tires. They're not safely retreadable, so largely, we view these as disposable tires in our market.
Conservative
Ryan Williams Conservative Bay of Quinte, ON
When we look at cheaper tires.... We've been studying Chinese steel and aluminum, and then, of course, we're studying EVs and batteries.
When these tires are dumped into the market, are they taking away Canadian jobs? Are they threatening the jobs in the $7-billion tire industry?
President, Kal Tire
Yes. Absolutely, they are. We saw a dramatic increase in the dumping of these tires in 2023 as we were coming out of the pandemic. During the pandemic, we didn't have a whole lot of shipments coming from China, because the cost of a sea can was in the $25,000 to $35,000 range. Now that it's back to a normal price, these tires are being dumped into our markets. We are not able to compete against them.
We don't carry these tires. They're often dropped off to brokers and sold off the backs of trucks. They're sold to both the Canadian industry and the U.S. industry. Transporter shippers will come to Canada, buy these cheap tires they can't buy in the U.S., and head back. We know that because when they show up at our shops to have their tires repaired, they're tires that we don't sell and that are banned in the U.S.
Conservative
Ryan Williams Conservative Bay of Quinte, ON
We've talked about a ban in the U.S. Have the U.S. and other nations banned this, put a tariff on it and ensured that there's a measure to counter the tire dumping?
President, Kal Tire
Yes, sir. As I mentioned, it depends on where the tires are made. When the U.S. went through the ITC process, it ended up with these tariffs that range from.... I can't remember the low end, but the top end was a 90% tariff based on the dumping and the findings they had regarding the cost of these tires versus the sale price into the U.S.
Conservative
Ryan Williams Conservative Bay of Quinte, ON
Have you approached the Canadian government? If so, what has its response been so far?
President, Kal Tire
This will mark our third time here in Ottawa, after 70 years of not being here at all, so I would say we've approached a variety of MPs to try to at least make this position known so that we can go on the record and try to.... It's a very emotional issue for our company. We have folks who have really good careers, both in the retreading business and in the tire repair and installation business, and they see this business shrinking in a way that they can't fairly compete. We've tried to share that with the government as best we can to try to make it aware.
At this particular moment in time, we've been trying to get ourselves into this most recent study so that you can see what the U.S. has seen and what the European Union and others have found, which is that these tires are absolutely being dumped into Canada.
Conservative
Ryan Williams Conservative Bay of Quinte, ON
You'd like to see the government put a 109% tariff on that.
Again, these are the same questions we asked in the EV and Chinese steel studies. Are the tires that are being made there made with forced labour? Is it uncompetitive? Are they fully subsidized?
President, Kal Tire
It's certainly uncompetitive. We don't have any particular knowledge of the forced labour issue. We're aware of a very particular data study that was summarized in a New York Times article on forced labour specifically related to tires out of China. We're aware of that. We don't have any of our own internal knowledge. I'd leave that to others to determine.
However, there's no way these tires can be made at $141 a piece, which is what they're currently being sold into Canada at. It's impossible to reach that price point with just the base commodity prices that we know everyone in the world is paying. You look at steel, natural rubber, carbon black and oil, and you add up how much it takes to make a tire. You can't make it for $141.
October 28th, 2024 / 12:30 p.m.
Liberal
Terry Sheehan Liberal Sault Ste. Marie, ON
Thank you very much for your testimony and for your commitment to your industries. They're both remarkable.
I usually don't make predictions, but in eight days, the United States is going to have a new president, regardless. How important was it for us to work so closely with the United States, our number one trading partner, in putting 100% on the EV cars, as well as 25% on steel and aluminum?
I'll start with Mr. Loomis first.
President and Chief Executive Officer, Canadian Institute of Steel Construction
It is imperative. It is everything for us as a domestic industry. We don't do a lot of fabrication outside of North America, so, besides our own domestic market, the U.S. is our biggest market by far, and we want to maintain access to that market. We get a lot of steel from that market as well brought into Canada on our projects, so we want to ensure that the Americans have confidence that we're harmonized when it comes to trade and that we're not a back door for Chinese steel.
Again, the tariffs certainly caused a price increase for our members. We buy the raw steel on the global market, and, of course, tariffs imposed by our American counterparts did increase the price of steel. Tariffs on Canadian steel also did—not as much, obviously, because it's not as big a market—but we understand that, and we accept that, because we're willing to pay a premium to continue to maintain access to the American market.
Liberal
Terry Sheehan Liberal Sault Ste. Marie, ON
Thank you.
I'm going to drill down a little bit before I turn it over to Mr. Parks. Do you work with steel associations in the United States? What kind of work do you do there?
President and Chief Executive Officer, Canadian Institute of Steel Construction
Yes, we do. We have good relationships with our counterparts in the U.S., the AISC, the American Institute of Steel Construction. We do a lot of standards development work in both countries. That's primarily been our purpose. That was our whole reason for being, to create the standards for building with steel in this country.
As an organization, we're expanding into advocacy, for sure, and working with our American counterparts. As you can imagine, it's harder to get their attention, and it's harder for them to understand how important the Canadian market is, but we certainly want to push this “fortress North America” type of agenda with our American counterparts, if they'll listen and pay attention to what we have to say here in Canada.
Liberal
Terry Sheehan Liberal Sault Ste. Marie, ON
Mr. Parks, can you answer that question, too, about the integration of the market, I suppose, between the United States and Canada and your industry? Obviously, you are proposing a bumper-to-bumper approach, if you will, on tariffs.
President, Kal Tire
Yes, we are proposing that. We think that the harmonization of the tariffs is pretty critical.
I'm sorry; do you have more to say?
