Canada’s Steel Industry: High-Value Cornerstone of Our Manufacturing Economy – Ken Neumann/Marty Warren Op-Ed

By Ken Neumann and Marty Warren

With a perfect storm threatening Canada’s steel industry, many concerned Canadians are asking, “Will steel manufacturing still play a key role in our future economy?” Well, the answer can — and should — be: “yes.” To understand why and how, let’s look at the facts.

The livelihoods of tens of thousands of Canadian workers and pensioners are at risk and so are the communities that depend on the steel industry for jobs and economic activity. The current crisis is caused by low world steel prices, a sluggish oil and gas sector and dumping of subsidized steel from China and other jurisdictions with poor environmental, safety and working standards.

Like oil and gas, demand and prices for steel are very cyclical. Fifteen years ago, steel dropped to levels similar to today’s depressed prices — below $400 a ton for hot-rolled band steel — then rebounded dramatically. The financial meltdown of 2008 brought another plunge, but by 2011 the price of steel was up to $800 a ton.

Smart industry executives know that ultimately the supply and demand for steel will rebalance, the oil sector will pick up again and prices for standard and high-end steel will ultimately rebound.

In the meantime we have to work to preserve the industry. Canadian steelmaking is directly responsible for 20,000 jobs, with a payroll injection of $1.7 billion, as well as another 100,000 indirect jobs. The industry also purchases $9.3 billion annually in goods and services, supporting over 5,000 suppliers. That’s a lot of Canadian families and suppliers in a lot of Canadian communities.

Canada’s steel industry is a highly advanced, technically skilled, value-added, state-of-the-art sector. It produces some of the highest grades of steel products anywhere. But in the current crisis, even sophisticated operations are now under creditor protection as a result of the current crisis.

U.S. Steel Canada in Hamilton and Nanticoke, Ont., is under creditor protection and it operates North America’s newest Greenfield integrated steelmaking facility and has one of the most advanced zinc-coating facilities in North America. Essar Steel Algoma in Sault Ste. Marie is under creditor protection too and it has one of the most-advanced thin slab casting and rolling mills in North America.

These operations, and the many other globally competitive steelmaking facilities that are currently threatened, are all productive operations that employ highly skilled Canadian industrial workers and engineers, and have a history of innovation and investment in new technologies. Indeed, this is not your granddad’s steel. More than half of all types of steel made today did not exist 15 years ago.

So while these Canadian communities and families wait for global steel prices to rebound, our governments have a duty to play a strong, proactive role to defend the industry.

Unlike our resource-extraction industries, steel manufacturing can be simply moved out of the country. The loss of our domestic steel sector would have massive effects throughout industry-dependent communities and in the economy.

We need a thriving Canadian steel industry to provide our manufacturing sector with the steel to build cars, windmills, infrastructure, energy projects and others essentials for our 21{+s}t-century economy. If steel production were to move, we would lose a critical part of the supply chain for many associated industries.

This is why it is essential that governments play an active role to ensure this perfect storm doesn’t result in the disappearance of such a vital component of our economy and the livelihoods of so many Canadians.

The federal and Ontario governments must work with industry and labour to help these facilities withstand the current crisis. Adopting progressive, level-playing-field trade policies and providing supports and incentives for the restructuring will be essential to the viability of our high-quality steel industry. It’s important to protect viable, good jobs and to ensure fair treatment for the employees and retirees.

The bottom line is this — Canada needs a strong, domestic steel industry as a cornerstone of an advanced manufacturing economy, and many families, communities and suppliers will suffer if we don’t act.

– Ken Neumann is the United Steelworkers National Director. Marty Warren is the United Steelworkers District Director for Ontario and Atlantic Canada.

Op-ed column as published in the Hamilton Spectator

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