Ottawa has issued a demand to the American owner of Stelco, providing a five-day window to present a strategy to uphold job retention at the steel manufacturer based in Hamilton. Cleveland-Cliffs, headquartered in Ohio, announced intentions last week to reduce its workforce by up to 500 employees by pausing specific steel production operations at Stelco, contravening commitments made during its 2024 acquisition. In response, Industry Minister Mélanie Joly conveyed in a letter to Stelco’s president, Paul Simon, the government’s readiness to pursue legal action under the Investment Canada Act to enforce the agreement.
Joly emphasized the seriousness of complying with commitments, citing potential remedies for breaches, including court orders mandating compliance, divestment, or monetary penalties. Cleveland-Cliffs’ acquisition of Stelco in a $3.4 billion transaction was intended to prioritize national interests and respect the workforce, as per a previous news release.
The commitments outlined by Joly encompass maintaining the same number of unionized and non-unionized employees as at the announcement of the acquisition. Cleveland-Cliffs’ CEO, Lourenco Goncalves, justified the layoffs citing the Canada-U.S. trade war, where Stelco’s ability to export steel to the U.S. was a critical condition of the deal. Prime Minister Mark Carney expressed the government’s resolve to utilize all available legal measures against Cleveland-Cliffs.
Regarding potential next steps, commitments under the Investment Canada Act typically span five years, covering aspects like investment levels and employment. Sandy Walker, co-chair of a legal group at Dentons, mentioned that failure to meet commitments could lead to a demand letter from the minister, followed by potential court action by the attorney general.
In a previous case, Industry Canada sued Stelco’s former owner, U.S. Steel, in 2009 over job protection, ultimately settling out of court in 2011. United Steelworkers Local 1005 President Ron Wells expressed skepticism about Stelco reversing the layoff plans despite government pressure. An internal memo attributed the layoffs to stiff competition from imported steel products.
Ontario’s government pledged over $200,000 in collaboration with Ottawa to support steel and manufacturing workers in Hamilton through the Canada-Ontario Workforce Tariff Response. The initiative aims to assist workers in enhancing skills for transitioning to in-demand careers. Goncalves has voiced support for Trump’s tariffs on steel and aluminum imports, emphasizing backing for Canadian steelworkers and a belief in fair trade principles.
Lastly, amid news of Stelco’s layoffs, President Trump highlighted a significant investment plan by a Minnesota steelmaker as evidence of the effectiveness of tariffs on imported steel under his administration.