Stelco Inc. is proceeding with hundreds of layoffs at its Ontario plants despite a legal ultimatum from the federal government. The parent company, Cleveland-Cliffs, rejected allegations from Ottawa that the job cuts violate binding commitments made under the Investment Canada Act.
The Bottom Line
- Stelco has begun issuing layoff notices to up to 500 workers across its Hamilton and Lake Erie facilities, citing weak demand and trade pressures.
- Industry Minister Mélanie Joly previously gave the steelmaker a five-day deadline to submit a job-saving plan or face potential legal action from Ottawa.
- The company maintains its undertakings do not forbid layoffs, setting the stage for a potential courtroom battle.
Legal Clash Over Investment Commitments
According to correspondence, Stelco president Paul Simon wrote to Industry Minister Mélanie Joly rejecting claims that the company breached its regulatory undertakings. When Cleveland-Cliffs acquired Stelco in a $3.4-billion acquisition in 2024, Ottawa imposed legally binding conditions. These terms required maintaining at least the same number of unionized employees in Canada for five years, alongside the vast majority of non-unionized staff.
Simon argued in the letter that the regulatory undertakings do not prohibit layoffs. Furthermore, he pointed to established Investment Canada Act administrative guidelines stating that shifting business circumstances can necessitate the renegotiation of undertakings. Steel acquired Stelco in 2007, which ultimately concluded with an out-of-court settlement in 2011.
Production Idling and Trade Pressures
Stelco began issuing individual layoff notices in Hamilton, affecting roughly 90 workers in the initial wave, according to Ron Wells, president of United Steelworkers Local 1005. Roughly 330 Hamilton workers face impacts over a three-week span, alongside additional cuts at the Lake Erie Works in Nanticoke, Ontario. The company plans to idle cold-rolled and galvanized steel finishing lines at its Hamilton Works.
Cleveland-Cliffs chairman and chief executive Lourenco Goncalves stated the Canadian market lacks sufficient order volume to profitably run operations alongside rival ArcelorMittal Dofasco and foreign imports while operating at 50% to 55% capacity. Goncalves asserted that the current cuts are temporary and that affected staff would be recalled if Canada and the United States reach a trade deal.
| Facility Location | Estimated Affected Workforce | Operational Status |
|---|---|---|
| Hamilton Works | Up to 350 workers | Finishing lines idling |
| Lake Erie Works (Nanticoke) | 40 to 50 workers | Partial adjustments |
Political Reactions and Proposed Alternatives
Political pressure mounted as Conservative Leader Pierre Poilievre unveiled a five-point plan in Burlington, Ontario, urging Ottawa to initiate legal proceedings against the American owner. Poilievre’s proposal calls for forcing the company to resume production, eliminating the industrial carbon tax, cracking down on Chinese steel imports, accelerating liquefied natural gas projects, and negotiating a tariff-free trade agreement with the United States.
Stelco countered that Ottawa’s proposed financial assistance packages failed to address the root cause of the slowdown: U.S. President Donald Trump’s 50 per cent tariffs. Stelco maintained that it remained in constant communication with regulators and argued that the industry minister’s claims of being blindsided were misleading to the public. The company’s correspondence emphasized that the most effective action Ottawa can take is to impose stricter import controls on cold-rolled and coated steel products entering the Canadian market.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
