Stelco says Ottawa is wrong, proceeds with layoffs

Stelco told the federal government on Friday that its planned layoffs in Ontario do not breach its Investment Canada Act commitments and that it is proceeding with them, The Globe and Mail reported Oct. 10.

The response came in a letter from Paul Simon, Stelco’s president and general counsel, answering an ultimatum from Industry Minister Mélanie Joly. She gave Stelco’s U.S. owner, Cleveland-Cliffs Inc., five business days on Monday to explain how it would meet its job guarantees or face possible legal action.

“Your representation that Stelco’s planned layoffs cause it to breach its undertakings is false,” Simon wrote, according to the Globe. He argued the undertakings do not require the company to avoid layoffs and that “changes in circumstances may necessitate the non-enforcement or renegotiation of undertakings.”

Bloomberg reported Oct. 10, citing the Globe, that Canada has reaffirmed its legal threat. The Globe said Joly’s office did not immediately respond to a request for comment on the letter.

Ottawa attached binding conditions when it approved Cleveland-Cliffs’ $3.4-billion acquisition of Stelco in 2024. They require the company to keep at least the same number of unionized employees in Canada for five years, and most of its non-unionized workers.

Stelco announced on Sept. 28 that it would lay off up to 500 workers in Hamilton and Nanticoke, Ont., saying it can no longer make galvanized steel profitably. BNN Bloomberg reported Oct. 8 that layoff notices began going out in Hamilton that week, with the first cuts taking effect Sunday.

Simon wrote that the most important step Ottawa could take is to “impose further restrictions on imports of cold-rolled and coated steel products into Canada,” the Globe reported. He also called for limits on import substitution and an end to remissions for products Canadian producers can supply.

He disputed the government’s suggestion that it was blindsided. Simon wrote that Cleveland-Cliffs had been in contact with Ottawa since July and had told investors layoffs were coming, according to the Globe. He called the suggestion that Ottawa only recently learned of the idling “inaccurate and misleading to the Canadian public.”

The company blames a 50 per cent U.S. tariff on Canadian steel exports, which it says was beyond its control. Cleveland-Cliffs chief executive Lourenco Goncalves has said laid-off Canadian workers would be recalled if Ottawa reaches a “Fortress North America” trade pact with the United States, BNN Bloomberg reported.

Laid-off Hamilton workers can apply for openings at Lake Erie Works in Nanticoke, but the local union says only 46 positions are available there, the Globe reported.

Ron Wells, president of United Steelworkers Local 1005, said he was “severely disappointed” but not surprised. He said the company is “trying to weasel out of the agreement” and wants Ottawa to sue, saying the government “would prevail” in court, according to the Globe.

There is precedent. U.S. Steel bought Stelco in 2007 and made Investment Canada Act commitments on jobs and production. After layoffs during the 2008 financial crisis, the federal government sued the company, and a 2011 settlement brought new commitments on production levels and investment in Canada, the Globe reported.

Prime Minister Mark Carney has said Ottawa will pursue the company “to the fullest extent of the law.” Canada News Media has not seen Simon’s letter or Joly’s original demand and is relying on the Globe’s account of both. This story is developing.

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Via The Globe and Mail (original), Bloomberg and BNN Bloomberg. This updates our Oct. 7 story on Ottawa’s ultimatum.