Madam Speaker, the finance minister has a tradition that when he makes his first budget speech, he has a new pair of shoes. Since this is my first speech to the budget, I have decided to implement a new tradition and I have a new tie, which was created by Inuit artist Aoudla Pudlat from Cape Dorset and it is called “The Imperial Bird”.
I am pleased to stand today to reflect on the budget measures our government is putting in place to carry out our plan for Canada.
In the brief time I have, I would like to highlight aspects of the budget that relate solely to the Canadian steel industry and the 22,000 Canadians who are direct employees along with 100,000 others indirectly employed in this fundamental sector of the Canadian economy.
There are 19 basic steel facilities in five provinces with annual sales of $14 billion, a big number. Let me put it in terms of my city of Hamilton.
ArcelorMittal Dofasco has a payroll of 5,000 employees in Hamilton whose average wage is $75,000. Let us do the math. This is an injection into our city's economy every year of $375 million, not including pensions and benefits. Furthermore, the company has never been busier. Thanks to advanced manufacturing innovations, it makes 450,000 tonnes of steel a year, which is more than twice the tonnage with less than half the employees than when I worked there years ago. This is world-class, environmentally sound, well-paid manufacturing second to none that supports Hamilton's middle class.
Hamilton's other steel plant, Stelco, is currently being restructured under the CCAA process, which allows it to continue operations and maintain employment. When this process concludes, Stelco's management is predicting a very positive future for its Hamilton operations, thanks in part to the measures we are introducing in budget 2017. These measures are intended to strengthen Canada's trade remedy systems by amendments to the Special Import Measures Act and related regulations, and I will described them briefly.
On circumvention, domestic producers will be able to file a complaint regarding trade and business practices that are intended to avoid duties. The Canada Border Services Agency will investigate complaints and apply duties to goods that are found to have circumvented our regulations.
On scope, specific products can be investigated by border services to determine if they fall within the scope of a trade remedy measure.
On particular market situations, unfair trade often involves price distortions by exporting countries. I will give an example of how they can get around the rules. Sheet steel that would otherwise be subject to tariffs might be chemically treated with a boron coating, which would then allow the steel to be re-categorized as an alloy product and thus not subject to the duty.
Another way of circumventing Canadian tariffs is shipping Chinese coils to finishing mills in Vietnam. Re-rolling that material and shipping it to Canada from Vietnam allows the Chinese producer to avoid Canadian duties.
These are simple examples. The process can get very complicated when foreign currencies are manipulated to hide the true cost of exported products, so we have created the tools industry needs to fight these practices.
The trade remedies we have introduced have already had a profound effect on the steel industry in Canada. In Calgary, Tenaris has just reopened a manufacturing plant and is in the process of recalling about 100 unionized employees. In Grande Prairie, Tenaris is moving ahead with a $20 million service centre, creating 20 jobs.
In testimony before our international trade committee, the company's representative stated that part of the reasons for these actions was the federal government's crackdown on dumping by countries like China that had depressed prices and forced layoffs and plant closures.
Sean Donnelly is president and CEO of ArcelorMittal Dofasco, chair of the Canadian Steel Producers Association, and a board member of the American Iron and Steel Institute. Here is what Sean had to say to our Standing Committee on International Trade:
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.
There is a very similar American perspective.
Thomas J. Gibson is president and CEO of the American Iron and Steel Institute. I met with Tom in Ottawa, and again recently in Washington, when I attended congressional hearings on the American steel industry. He said:
Congress recently passed legislation to improve enforcement at our borders to try to catch those who evade tariffs by deliberately mislabeling where the steel comes from, in addition to other clever tricks that are undermining the American steel industry....Congress gave the Commerce Department new tools last summer when it enacted legislation that made improvements to the trade remedy laws, and now it is critical that the department aggressively use them.
Budget 2017 also recognizes that labour unions have an important perspective to bring to trade remedy investigations. Therefore, regulatory amendments will be made to ensure unions have the right to participate as interested parties in trade remedy proceedings.
During my visit to Washington, I also heard from Tom Conway, the vice-president of the United Steelworkers, who acknowledged his Canadian guest and stated, “Buy America is about fighting our enemies and not our friends”, in reference to Canadian unionized steelworkers.
As co-chair of the parliamentary all-party steel caucus, I can report to the House that planning is under way for a joint meeting of our caucus and the American congressional steel caucus sometime in the next couple of months. Our American counterparts have made it clear that they will be taking strong measures against dumping of foreign steel in the American market. They will be encouraged that Canada is following suit with the measures I have outlined to keep our trade policies aligned with our NAFTA partners.
Canada cannot be seen as an easy entry point for cheap foreign steel produced without regard to modern environmental standards, working conditions, and compensation. The language I heard at the steel congressional hearings was explicit. “We are at war with China”, was the statement made by Ed Vore, who is the CEO of ArcelorMittal's tubular products division in Pittsburgh. The executives I met in Washington were aware of Canada's initiatives regarding trade remedies, which will go a long way toward ensuring a positive relationship in steel manufacturing between our two countries.
The measures I have just outlined did not make many headlines. However, virtually every stakeholder in Canadian steel has responded in the most positive fashion, not only by the supportive comments but by the actions already taken, as shown by the Tenaris announcements in Alberta.
Of course I am happy for my city of Hamilton but also for Regina, Edmonton, Calgary, Winnipeg, Contrecoeur, Quebec, and every place in Canada within the steel supply chain. These were the measures big steel asked for, and these are the measures that we provided.
Budget 2017 also includes investments in automotive and aerospace. Our infrastructure investments in transit and transportation will require vast amounts of steel for projects all across Canada, from rail cars to rebar, because steel is a basic building block of our nation, and our steelworkers make the best in the world, with the highest environmental standards.
My emphasis on the budget measures related to steel is in part to dispel the myth that this is an industry of the past, associated with rust belts, old manufacturing, spoiled environments, and lost jobs. The company I know best, my old employer, Dofasco, has been steadily hiring for the past five years, and 30% of the workforce joined the company in the past five years. Young people are getting jobs in steel.
In terms of investing in its facilities, Dofasco has already spent $1.3 billion in the plant over the past two years, and another $1.5 billion in the capital budget between now and 2018. These expenditures are in step with the government's creation of a national advanced manufacturing economic strategy plan that commits to increasing value-added exports by 30% by 2025 and the establishment of innovation superclusters.
Members of the House and Canadians need to know that Canadian steel is world class, innovative, and advanced manufacturing is providing wages, benefits, and opportunity for thousands of Canadians. It is our duty as a government to provide the legislative and regulatory tools that steel needs to survive and flourish. That is what we have done in budget 2017.