Ottawa has given a deadline of five business days to the U.S. owner of Stelco to present a plan ensuring the retention of jobs at the steelmaker in Hamilton. Failure to comply may result in potential legal action.
Cleveland-Cliffs, based in Ohio, announced intentions to lay off up to 500 workers and halt specific steel production operations at Stelco. This move breaches commitments made during the company’s acquisition in 2024, as stated by the federal government.
Industry Minister Mélanie Joly sent a letter to Stelco’s president, Paul Simon, emphasizing the seriousness of compliance with agreements under the Investment Canada Act. Legal action could be pursued to enforce the terms of the agreement, including measures such as directing compliance, divestiture, or financial penalties.
Cleveland-Cliffs acquired Stelco in a $3.4 billion cash-and-stock deal, highlighting a focus on national interests and the importance of the workforce at the time of the acquisition.
According to Joly’s letter, the commitments include maintaining employment levels for both unionized and non-unionized workers as agreed upon during the acquisition. Cleveland-Cliffs CEO Lourenco Goncalves justified the layoffs citing the impact of the Canada-U.S. trade war on Stelco’s steel sales to the U.S.
Prime Minister Mark Carney expressed the government’s determination to utilize all available powers to hold Cleveland-Cliffs accountable to the fullest extent of the law.
The government’s actions under the Investment Canada Act typically cover a five-year period following a foreign takeover, ensuring compliance with investment levels, headquarters location, and employment levels. Failure to meet these commitments could lead to court intervention.
In a previous case in 2009, Industry Canada sued Stelco’s former owner, U.S. Steel, over job protection commitments, which was later settled out of court in 2011.
United Steelworkers Local 1005 President Ron Wells expressed skepticism regarding Stelco’s decision to proceed with layoffs despite pressure from Ottawa, indicating a broken trust between the workforce and management.
Ontario’s government pledged over $200,000 in collaboration with Ottawa through the Canada-Ontario Workforce Tariff Response to support steel and manufacturing workers in Hamilton with skill development and career transition opportunities.
Goncalves, the CEO of Cleveland-Cliffs, has voiced support for Trump’s steel and aluminum tariffs. He emphasized backing Canadian steelworkers and the importance of a balanced approach between national interests and international trade.