Stelco layoffs a ‘huge blow’ for Canadian manufacturing
‘When I think about what's keeping me up at night, I think for example about the fate of the Canadian auto industry, which is caught in a triple bind,’ says Nicolas Lamp, associate professor and director of Queen’s University's Institute on Trade Policy. / SUBMITTED PHOTO
The news of hundreds of layoffs this week at steel manufacturer Stelco in Hamilton, Ont., is a “huge blow” to the industry and the consequences could extend well beyond the workers directly affected, says Nicolas Lamp, associate professor and director of Queen’s University's Institute on Trade Policy.
“Those are significant layoffs,” he told Means & Ways in an interview. “It calls into question the future of the entire plant.”
The layoffs come amid ongoing trade tensions between Canada and the U.S. Lamp said issues around steel and auto tariffs are not traditional ‘trade disputes,’ but rather a fundamental shift in how the U.S. views Canada. “This is essentially an attempt by the United States to create a new trade order in North America, in which Canada is in a decidedly subordinate position,” he said.
“What the Trump administration's approach amounts to is essentially an attempt to create an asymmetric relationship — instead of a balanced relationship — where the U.S. gets to produce everything, we get to supply potentially raw materials like potash and oil, but we don't get to keep any of the higher value-added activities like manufacturing,” he said.
About 330 unionized workers at Stelco’s Hamilton plant are expected to be laid off, with more cuts anticipated at its Lake Erie Works facility in Nanticoke. United Steelworkers Local 1005 president Ron Wells said the company is describing the layoffs as indefinite, although the union considers them temporary under its collective agreement. Stelco’s U.S.-based owner, Cleveland-Cliffs, has cited trade tensions, weak demand and import pressures for the cuts. Industry Minister Mélanie Joly has threatened legal action unless the company outlines how it will honour the job commitments made when it acquired Stelco in 2024.
With the future of Stelco's operations uncertain, Lamp suggested the federal government should consider temporary intervention, including the possibility of nationalizing the company to preserve its workforce and production capacity in addition to help retrain and reskill affected workers.
“It would be a temporary solution because it's probably not a good time to make long-term decisions about the makeup of the Canadian industrial base,” he said. “The problem is, if you let workers go, they move away, find other jobs. Those workers have collectively hundreds of years of steel-making experience. You're not going to easily get that back.”
The following Q&A was edited for length and clarity.
M&W: You also talked about retraining workers. What would they be retrained in and would they be able to stay in Hamilton and Nanticoke?
NL: It's highly unlikely that they would all find jobs in Hamilton, and so they would need to move to other parts of the country where there is demand for their labour. But that would, of course, be hugely disruptive to the families and their communities. If there is no prospect of these steel jobs coming back, if the government is not willing to step in, then, of course, we need to help the workers. The government should be open about the fact that it would be very painful for the workers, their families and the communities, and also that it would present a huge loss to the Canadian economy in terms of expertise and skill.
M&W: How do you see Canada going back to the negotiating table with the U.S.? Is there any deal that we could actually sign?
NL: The problem is that the Trump administration is a hugely irrational negotiator. From what I've heard, you don't make any headway with rational arguments. It's a question of how much are you willing to swallow? And the problem for Canada is that if it settles for a bad deal, it will be very hard to reverse that deal in the future, even for a Democratic president or a Democratic Congress. So if we're hoping that at some point, we will have more rational negotiating partners, then, it might make sense to leave some parts of the trade relationship unsettled until we have the more rational negotiating partners. Will it ever go back to the way it was before Trump 2? No, it won't. Does it have to be as bad as it is right now? No, it doesn't, but it's also not clear that there's any discrete thing that Canada could do in the situation to magically come up with a great deal for Canada. All the options on the table are bad and it’s really a question of how to choose between these bad options.
M&W: Do you see the worst-case scenario and think this is where we're headed? What's the outlook?
NL: I think the approach the Canadian government has, which is to focus on what we can control, is the right one. For my taste that focus is too narrow. Just to give one example, we have a lot of focus on commodities, on defence, much less focus on services. We basically have to keep in mind when we're talking about higher education, that higher education exports were our fastest growing non-U.S. export. What we're currently doing is we're voluntarily cutting off our ability to export by limiting the number of foreign student permits. … So these huge opportunities for services exports, we’re leaving them on the table just due to lack of imagination. And so I wish that the Carney government would apply the same energy and willingness to do big things when it came to tackling these problems in the services sector rather than just when it comes to commodities or defence.
M&W: Is there anything keeping you up at night?
NL: The fact that we’re dealing with a negotiating partner who is not rational on the one side and on the other side we have a huge challenge when it comes to manufacturing in the form of China, which we barely talk about anymore here in Canada. … When I think about what's keeping me up at night, I think for example about the fate of the Canadian auto industry, which is caught in a triple bind because it's dependent on exports to the U.S. market. At the same time, the Chinese are coming to dominate the electric vehicle production and the U.S., which is the only chance for us to have an auto industry, is single-handedly trying to preserve the internal combustion engine.
While China is heading one direction, the U.S. is moving the other direction and the U.S. is not even letting us be part of their system anymore, so it's a triple challenge that the Canadian auto industry is facing.
M&W: Sorry, are you hopeful then?
NL: I don't know. I mean, it's hard to be hopeful. The big question is going to be, what is the long-term damage to the U.S. body politic and the Canadian body politic from this episode, and are we going to be able to recover? We’ll never recover fully. They're never going to regain the kind of trust that we used to have in the U.S., but hopefully, there will also be some lessons learned in the United States from this experience, which will result in additional safeguards for the future. That's the only hope I have.
