Steel summit: Challenge and opportunity
We say it all the time: according to the Conference Board of Canada, Hamilton has Canada’s most diversified economy. Creative industries, construction, goods movement, health care, education and agriculture are all helping fuel the Renaissance.
But manufacturing, and in particular steelmaking, is not just the foundation of our identity — it remains a significant part of our economy.
More than 40 per cent of the 5.8 million tonnes of steel exported from Canada to the U.S. is made in Hamilton. Steel directly employs 10,000 people in dozens of companies in our community and, through $2 billion in local procurement, supports up to 40,000 additional jobs.
Steel production remains an integral part of Canada’s world-class, advanced manufacturing economy. Today, Canadian producers generate over $14 billion in annual sales, while supporting over 22,000 direct and 100,000+ indirect jobs through 19 facilities across five provinces.
More importantly, the production of steel anchors a larger supply chain and ecosystem of secondary manufacturers in fabrication, construction, automotive, equipment, aerospace, natural resources, recycling, mining, goods movement, and research and development. In addition, a healthy domestic steel industry is critical to Canada’s national security.
For the last year, a dark cloud emanating from our southern border has loomed over our city’s prosperity. NAFTA, an agreement that has intertwined our economy with that of America’s, is being renegotiated. And, to build leverage in those negotiations, in June the United States government applied a 25 per cent tariff on Canadian steel and 10 per cent on Canadian aluminum.
Ottawa responded in kind, by placing ‘dollar-for-dollar’ tariffs on steel and aluminum products, along with other U.S. goods.
Even prior to the imposition of tariffs, however, the Canadian steel industry has been at a tipping point. We are proud to adhere to the highest labour and environmental standards, and to produce steel off one of the world’s cleanest electricity grids, but this translates into high input costs.
Tariffs wipe out any advantages we may have had from our lower dollar and, obviously, makes us our steel less competitive on the global market. If tariffs persist for a prolonged period, the Canadian steel industry, with our small domestic market, may simply not be able to survive.
The severe disruptions within our tightly integrated supply chains are being felt right now by the Hamilton Chamber of Commerce’s steel industry members. Hamilton companies are absorbing the increased costs or having orders cancelled on them. And as North American industry optimistically holds out for good news, the phones on the Canadian side have stopped ringing.
That is why we are encouraged that the federal government has started to discuss providing aid to the industry and its workers. Our provincial government, especially related to worker retraining, and our municipal government, especially as it relates to local regulations, have to be prepared to provide support where they can.
Nonetheless, I remain an optimist. In fact, an agreement on NAFTA that eliminates steel and aluminum tariffs and protects the North American automobile supply chain could ultimately end up with the Canadian steel and automobile industries being placed on firmer footing.
The U.S. is reportedly insisting that automobiles have more North American steel than was previously required. As well, Mexico has agreed to high-wage quotas. Both developments would be positive for our steel and automobile manufacturing industries.
Domestically, we’ve taken significant steps to shore up our border. We’ve long been competing with cheap, nonmarket, overseas steel being dumped into this country, much of it bound for the United States. The federal government recently committed to provide the Canadian Border Services Agency with the authority and resources to prevent a glut of steel entering our domestic market and supply chains. This will go a long way to mollifying the U.S. as we seek a deal on NAFTA.
Finally, there is now a greater appreciation for domestic steel production and its underpinning of our broader manufacturing sector. There is also a greater appreciation for Canada within the United States. Outside of the White House, Americans are more aware of how important Canada is to the U.S. economy because of how integrated we’ve become since the advent of NAFTA.
As we look ahead to the upcoming Steel Summit, hosted at city hall on Sept. 7, the Hamilton Chamber of Commerce will share the challenges of our members and their optimism for a NAFTA deal that provides certainty for many years to come. We hope the summit highlights the steel industry’s continued importance in this city, province, and country.