Don Cayo: In my opinion
Tariff s likely: Observers are concerned the solution to Eastern Canada’s issue will create a new series of problems
A spat between foreign- owned steel mills in Canada and off shore threatens to cripple construction in Vancouver and other parts of Western Canada.
Aspat between steel mills that are owned by foreigners but located in Eastern Canada, and steel mills that are owned by other foreigners but located offshore, is threatening to cripple construction in Vancouver and other parts of Western Canada.
The battle is triggering a serious shortage of rebar, stemming from an anti- dumping complaint that has led to a high probability of high tariffs — but nobody knows how high, which is part of the problem.
On the face of it, it is odd to talk about shortages and anti- dumping complaints in the same breath. Such a complaint implies a surplus — a flood of underpriced offshore goods choking the market for what is, or could be, produced at home.
But in big, sprawling Canada, such a linkage can make sense.
Eastern Canada has several steel mills that produce much, but not all, of the metal rods Eastern contractors use to reinforce concrete structures. But Western Canada has no such mills. And distances and rail- shipping costs make it impractical for West Coast builders to buy from Eastern Canadian shippers, even if they produced enough to meet the demand.
So Western Canada relies on imports, and its rebar supplies are directly impacted by the Canada Border Service Agency’s preliminary determination — this is bureaucrat-speak for the best guess until they check it out further — that mills in China and Korea are dumping product on the Canadian market.
Anoop Khosla, president of Midvalley Rebar, one of a half- dozen companies that cuts, bends and installs rebar for concrete used in Lower Mainland buildings, says in other circumstances, American mills — a handful of which are much closer to Vancouver than the Canadian ones — might offer an alternative. But since Mexican producers have been squeezed out of the U. S. market by an unrelated anti- dumping ruling, U. S. customers are taking virtually all of the American production, and little is left for Canadian customers.
This means rebar from Chinese and Korean mills is required, and soon, to prevent the region from running out, Khosla said. Even though these mills are much farther away than the eastern Canadian ones, water transportation is so much cheaper that it can be landed in Vancouver for only about 40 per cent of the shipping cost.
One further complication is the fact that American builders buy in imperial measures, and Canadians require metric measures.
Another is that the level of provisional duties is both hefty and uncertain. Depending on the Asian mill in question, it varies from 14.8 to 58.1 per cent, but these numbers could change, possibly dramatically, when a final ruling is made, probably not until December.
Meanwhile, Khosla said, the Asian mills won’t take orders from companies like his because they don’t know what their liability will be.
Rebar is heavy and comes in long lengths before local companies custom cut and bend it for each job, which means shipping is expensive — typically 10 to 15 per cent of the final cost to contractors. And rebar accounts for roughly eight per cent of the cost of concrete structures. So the duty, if confirmed, will add significantly to the cost of building in B. C.
In the meantime, the provisional duty makes it almost impossible for companies like Khosla’s to bid on jobs when they don’t know their costs, or even if they can get enough rebar for the job.
Eastern producers may or may not have a worthy case at their end of the country, but there was no problem here until the current one was created by the CBSA’s one- sizefitsall approach to the easterners’ complaint.
Regional rebar fabricators have no association to speak for them, but Khosla’s company is making a submission to Finance Minister Joe Oliver in advance of the final ruling, and the Canadian Federation of Independent Business and the Independent Contractors and Businesses Association of B. C. are also weighing in. Their message — one the CBSA needs to heed — is that their one size doesn’t fit this end of the country at all. So, assuming it finds merit to the easterners’ complaint, it needs to find a solution that also works in the West.