10/11/2013 Canada needs a steel strategy | Financial Post

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Canada needs a steel strategy
MARTY WARREN AND LEO W. GERARD, SPECIAL TO FINANCIAL POST | 05/11/13 7:30 PM ET
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Although steel consumption and imports are on the rise, Canadian steel production and exports have not kept
pace since the recession far from it
Last week, U.S. Steel announced that it will permanently end steel production at its Hamilton plant. Is steelmaking a smokestack
industry suffering from inevitable decline, or a strategic industry that Canada should seek to defend and develop?
Steel is an indispensable material for every aspect of our traditional economy, including bridges, buildings and cars, but also our
growing sustainable economy, from transit vehicles to wind turbines.
Canada needs steel and we have been importing more of it. Last year, our steel imports rose to $12.2-billion the highest level in
Canadian history except for $12.4-billion in 2008, at the height of the commodity boom.
Although steel consumption and imports are on the rise, Canadian steel production and exports have not kept pace since the recession
far from it. We imported $4.6-billion more steel than we exported last year, tying 2006 for the largest steel trade deficit in
Canadian history.
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U.S. Steel to shutter Hamilton steelmaking operations at end of year
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Akos Stiller/Bloomberg Ken Neumann and Leo W. Gerard: "Canada imported more than $1-billion of steel f rom China, $400-million f rom Japan and $300-million f rom South Korea last year. Does it make
sense to ship iron ore across the Pacif ic to these countries and then ship steel across the Pacif ic to Canada?"
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U.S. Steel locks out nearly 1,000 workers at Lake Erie Works in Nanticoke, Ont.
If it were more economically efficient or environmentally sustainable to manufacture steel elsewhere, it might make sense for imports
to replace domestic production. In fact, Canadian steel mills are close to iron ore mines and to North Americas steel consumers. Given
the large amount of energy needed to transport iron and steel, there is a strong economic and environmental case for making steel
close to these sources of supply and demand.
Yet Canada imported more than $1-billion of steel from China, $400-million from Japan and $300-million from South Korea last
year. Does it make sense to ship iron ore across the Pacific to these countries and then ship steel across the Pacific to Canada?
These Asian countries do not have a natural comparative advantage in steelmaking but they have used industrial policy, currency
manipulation and subsidies to develop their industries. In particular, China has gained an unfair competitive advantage by
undercutting internationally recognized labour and environmental standards.
Producing a ton of steel in Chinese mills emits three times as much greenhouse gas as producing it in Canadian mills. And that does
not even consider the emissions from shipping steel across the Pacific. One of the best ways to fight climate change would be to
replace steel imports from China with steel made in Canada.
Steel companies continue to bring trade cases against Chinese steel under Canadas
Special Import Measures Act. But unlike the comparable American legislation, it does
not allow Canadian workers and unions to participate in this process.
The Act allows countervailing duties against financial subsidies from a foreign
government, but not against the unfair cost advantage provided by a foreign
government violating labour rights and environmental obligations. Reforming our trade
law would help to level the playing field between Canadian steel mills and overseas
imports, enabling more domestic production.
Unfortunately, Harpers overall strategy of a low-wage economy, including the overuse
of temporary foreign workers, values shareholders interests over Canadian jobs and
has caused the Conservatives to ignore or make meaningless any concept of net benefit
to Canada.
Foreign investors took over every Canadian steel mill in 2006 and 2007. Another way to promote steelmaking in Canada is to enforce
the commitments that were made under the Investment Canada Act to gain federal approval for these takeovers.
When U.S. Steel took over Stelco in 2007, it pledged to employ 3,100 workers and produce 13 million tonnes of steel in Canada
through 2010. After much public pressure, the federal government took the company to court for violating these obligations.
However, the Conservative government dropped the lawsuit against U.S. Steel in exchange for further promises. Last weeks
announcement makes a mockery of that settlement and underlines the Conservative governments lack of commitment to Canadian
jobs.
Using Hamiltons coke oven to feed American steel mills rather than to produce steel in Canada may be a rational business decision for
U.S. Steels continental operations. But it is a bad decision for the Canadian economy and Canadian workers. That is why we have the
Investment Canada Act to reconcile the interests of foreign multinational corporations with Canadian interests.
Ottawas lack of response to U.S. Steel is not only deeply disappointing to Hamilton steelworkers, it sets a terrible precedent for other
foreign-owned enterprises in Canada. Since foreign investors recently took over every Canadian steel mill under the Investment
Canada Act, the federal governments willingness to enforce this legislation is crucial to the industrys future.
We should maintain and improve Canadas steelmaking capacity because there are real economic and environmental advantages to
manufacturing steel here rather than importing it from overseas. Revamping the Special Import Measures Act and the Investment
Canada Act would help to renew this strategic industry.
Marty Warren is Director for Ontario and Atlantic Canada and Leo W. Gerard is International President, United Steelworkers.
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TheBeaver 4 days ago

There is no doubt that China has practiced currency manipulation and our weak kneed governments at all levels do nothing to impose
strict duties on imports . The Chinese and Koreans are probably laughing at us as they take us for suckers
On the domestic (Stelco) issue , the union leadership has taken their membership down a path of joblessness- encouraging and
celebrating several strikes at their flagship HIlton Works. Union labour contracts that contain a ridiculous number of rules and regulations
that stifle growth, independence, and individual initiative. Management at Stelco gave in to these demands.. They could have also
diversified by bringing EAF technologies on line and expanded casting operations even further, Granted- these things are hard to do
when union leaders like Gerard and others are constantly shutting down operations which only results in a permanent loss of a customer
base and no investment capital.
You only have to look at next door Dofasco ( now A-M) a non union success story in the Canadian steel industry.
South of the border - non-unionized Nucor and Steel Dynamics are models in successful steel industry growth and viability- with their
workforce being very well paid.
Gerard and his socialist union leaders have only themselves to blame- they follow the same path to failure as the leaders of Detroit have
shown in the last 30 years. They don't give a darn for the hard working Canadian steelworker - and never have.

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pondus 4 days ago

Canada's steel industry is simply uncompetitive. Protectionism will only make our steel consumers less competitive. For solutions to the
problem, Ken Neumann and Leo Gerard should start by looking in the mirror.

2
Thi nkRi ght 5 days ago
Change the antidumping law so that a violation of it is defined as selling something here at less than the cost of production in Canada
rather than less than the cost in the exporting country. It will help with the joblessness in Canada that efficient global trade only worsens.
Yeah, I know......conventional wisdom is that things got worse due to protectionism in the past etcetera, but keep it in mind after we've
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Yeah, I know......conventional wisdom is that things got worse due to protectionism in the past etcetera, but keep it in mind after we've
been 20 years into deflation if not depression. This economy and that of Europe and the USA are not going to recover without some
major changes. The liquidity trap is here for a long, long visit.

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