Stelco has moved ahead with layoffs at its Hamilton facility, according to a union official, setting the stage for a potential court battle with the federal government.
The company, owned by U.S.-based Cleveland-Cliffs, announced last week it would lay off up to 500 steelworkers at its Hamilton and Lake Erie operations because of U.S. tariffs and market conditions.
Ron Wells, president of United Steelworkers Local 1005, said notices were handed out last week and about 90 employees have already been laid off. He added they’re expecting roughly 80 more workers to lose their jobs at the end of this week, with more to come.
The office of Industry Minister Mélanie Joly said in a statement it expects Stelco to meet legally binding commitments to employees that were stipulated when the government of Canada approved the takeover of Stelco by U.S.-based Cleveland-Cliffs.
“These commitments were agreed upon as undertakings under the Investment Canada Act and do not cease to apply because of changing business strategy or market conditions,” Joly’s office said.
In a letter sent by Joly to Stelco president Paul Simon, Joly demanded that the company provide a plan within five days for how it will maintain jobs in Canada as promised. The minister said the approval stipulated the company would “continue to employ at least the same number of unionized employees and the vast majority of non-unionized employees as were employed when the transaction was announced.”
She noted the Investment Canada Act provides options for dealing with any breaches, and that includes resorting to a lawsuit in court “for orders that may include directing compliance, divestiture, or monetary penalties.”
“As our legal team reviews the Stelco letter, all options are on the table,” Joly’s office said in a statement.
Wells said he listened to Cleveland-Cliffs CEO Lourenco Goncalves defend the layoffs in a CBC interview, disputing that the company is breaching its commitments because of the tariff war and market conditions. Wells called the argument a “stretch.”
“I think they’re really playing with the wording to make an argument, because I don’t think they have an argument,” he said.
Officials from Stelco and Cleveland-Cliffs did not respond to a request for comment.
Business lawyer Nassira El Hadri said it’s unclear if Stelco has breached the agreement because it’s possible there was an exclusion in the agreement that hasn’t been made public.
She added she expects the matter to end up in court.
“The federal government has pressure, because this is not only a matter of law, it’s a matter of politics and it’s domestic politics and international politics,” said El Hadri, founder of Hadri Law in Toronto.
“They are pressured to take this further because they cannot just let it go. It’s impacting our economy, and it’s a very key industry, specifically in the areas of Hamilton and Nanticoke,” she added.
However, it’s possible the dispute could be resolved through negotiations, El Hadri said.
The actual text of the agreement between Cleveland-Cliffs and the Liberal government is not public, but a ministerial statement at the time summarized what then-minister François-Philippe Champagne said was the basis for the approved foreign takeover.
Those included what Ottawa then called a “significant package of binding, five-year-long undertakings.”
Wells said the federal government and Cleveland-Cliffs “assured us, the steelworkers, that the employment was basically guaranteed for five years.”
He said they want to see the government get a trade deal that protects Canadian steelmakers, for Stelco to maintain their commitments and for Ottawa to enforce those commitments.
With files from Tonda MacCharles.
