The steel company Stelco, located in Hamilton, says it will go ahead with hundreds of layoffs despite threats from the federal government about possible legal action.
In a letter obtained by , Stelco Inc., which is owned by Cleveland-Cliffs based in Ohio, states that it disputes Ottawa’s claims that it is not following employment commitments set under the Investment Canada Act (ICA).
“Your representation that Stelco’s planned layoffs cause it to breach its undertakings is false,” said Paul Simon, president and general counsel at Stelco Inc., in a letter addressed to Industry Minister Mélanie Joly.
Referring to the ICA guidelines, Simon further mentioned that “the undertakings do not stipulate a commitment to avoid layoffs, nor do they include a requirement that employment levels be above a certain amount on each day of the five years of the undertakings.”
This letter follows an ultimatum issued last week by Joly: provide a plan for saving up to 500 jobs potentially affected at the Hamilton plant or risk facing legal consequences.
WATCH | Up to 500 Stelco employees impacted by layoffs:
Stelco layoffs start despite Ottawa’s legal threats
Stelco has begun laying off workers at its Hamilton plant even as the government demanded a job-saving plan within five days or else face possible legal actions.
Ron Wells, president of United Steelworkers Local 1005, expressed his feelings in a statement to saying he was “not surprised with Stelco’s convoluted response.”
“The bigger problem is that the union representing affected workers was not part of the agreement in the first place,” he noted. “As those most at risk, we weren’t consulted or [given] an opportunity to review the undertakings.”
Cleveland-Cliffs bought Stelco in a $3.4-billion cash-and-stock deal that aimed to prioritize “national interests” while acknowledging the “importance of the workforce.”
According to Joly’s letter, these terms included “undertakings to continue employing at least as many unionized employees and most non-unionized employees as were employed when the transaction was announced.”
Joly’s office stated on Saturday that they still expect Steclo to “meet its legally binding commitments to employees.”
“These commitments were agreed upon as undertakings under the Investment Canada Act and don’t cease due to changing business strategies or market conditions,” said their statement. “As our legal team reviews Stelco’s letter, all options are on the table.”
WATCH | Carney says feds will pursue legal action if needed against Stelco:
Stelco ‘betrayed’ Ontario workers with layoffs, Carney says
Prime Minister Mark Carney mentioned Canada would ‘use all powers available’ ensuring that Stelco fulfills its ‘legal obligations for employment.’ The company announced plans Monday for idling some production at its Hamilton plant affecting hundreds of workers.
Last week Prime Minister Mark Carney added Ottawa would “use all powers we have” against Cleveland-Cliffs while pursuing them “to the fullest extent of law.”
Back in 2009, Industry Canada sued Stelco’s previous owner U. S. Steel over job protections which settled out of court in 2011.
Stelco Claims Ottawa Was Aware of Its Plans
In their letter addressed to Joly, Stellcos stated “Stelco’s situation is caused by factors beyond its control” – pointing out U. S. President Donald Trump’s tariffs and ongoing trade conflicts.</PThe federal government has indicated that Stelc o turned down financial support before announcing plans for idling operations at its Hamilton facility.
In its letter , St el co alleges th at “the government’s offers o f financial assistance did not effectively address th e issues faced and failed t o tackle th e core reason behind St el co’s decision t o indefinitely idle i ts H amilton Works finishing lines.”
The company also asserts tha t th e industry minister misled Canadians when she claimed Ottawa only recently became aware o f St el co’s intentions.
St el co contends it was regularly communicating with th e federal gove rnment regarding financial concerns. “By not mentioning these regular communications , your lette r creates a false impression tha t we’ve been un-cooperative and lacking transparency.”
St el co presented a plan addressing ICA job commitments as requested by J oly.
The company reaffirmed its intention t o move forward with lay offs i n H amilton , again citing extensive external factors making production an d profitability difficult for those steel products.
It also mentioned laid-off wo rkers may have chances fill open roles at i ts Lake Erie plant. St el co will keep engaging with th e federal government.
As for what they expect from O ttawa , they wrote : “The most important step could be imposing more restrictions on cold-rolled and coated steel product imports into Canada , limiting import substitutions , and removing remissions for steel products which Canadian manufacturers like S tel co can produce.”
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