This week saw a stunning announcement that steelmaker Stelco, a Hamilton institution for decades, was indefinitely idling its operations at its Hamilton Work plant. About 350 workers are expected to be laid off, with total layoffs likely to be about 500 between the Hamilton plant and the Nanticoke Stelco plant. This came as a big shock to workers, their families and politicians in the region. At the same time as Stelco was closing down in Hamilton, the Mesabi Metallics U.S. steel mill announced plans for a $15 billion plant in Iowa. The Iowa plant is expected to provide 1,750 jobs and be operational by 2030. Quite a different tale of two steel plants.
Politicians that weighed in mentioned issues such as more subsidies should have been provided to Stelco to prevent this, or that Stelco – U.S. owned since 2024 – should be ashamed of doing this. As Canada’s political scene these days is dominated by politicians that favour giving subsidies from taxpayer dollars to corporations rather than establish a business environment that is competitive with other jurisdictions, the reaction was not surprising. Prime Minister Mark Carney even threatened to bring legal action against Cleveland-Cliffs, the U.S. parent company of Stelco.
Surely Carney is aware that government threats will not be helpful in forcing companies to remain in Canada when there is no business case for them to do so. In fact, such threats can easily be seen to further discourage corporate investment in Canada. You may recall Liberal Industry Minister Mélanie Joly threatening automaker Stellantis when that company, which had received billions of our tax dollars in subsidies, did not follow through with its commitments and pulled vehicle production out of Ontario, moving it to the U.S. It’s interesting as we haven’t heard anything about that since the threats were initially made by Joly.
Of course, the major culprit blamed for Stelco’s fate was U.S. President Donald Trump and his tariffs. Although tariffs would certainly have some impact on Canada’s steel industry, it was not the major factor. It has long been the case that China has very actively broken international trade rules and dumped steel into Canada at prices less than cost as the Chinese Communist government heavily subsidizes its industries to unfairly compete with those in other countries. A number of Canadian companies have been put out of business or lost revenues because of this unfair competition. Frequently this dumped product is relabelled and sold into the US market as a Canadian product, undercutting U.S. producers. The federal government should be cracking down on this practice but has been overly lenient because of its affinity for China and its desire to move closer to that country, at the expense of Canadian businesses.
Cleveland-Cliffs CEO Lourenco Goncalves stated that Canada’s inability to reach a trade agreement with the U.S. was also a key factor due to the importance of the U.S. market to the industry. Despite Carney’s weak threats to bring legal action, Goncalves stated that when his company bought Stelco a couple of years ago, it was assumed there would be a trade agreement with the U.S. in place as there was at that time. The fact that negotiations have broken down, and that Canada chose to break off the negotiations, was not anticipated when Stelco was purchased.
Whenever a large company like Stelco hits the headlines, it is also likely that many smaller firms are also struggling, shutting down or being bought out. When a small firm with 10 employees goes under, it will never show up in a headline but still represents job and economic loss for Canada. Economic data in recent years has shown that small firms have indeed been struggling, with many moving to the U.S., actively looking at moving to the U.S. or going bankrupt. Needless to say, these are very bad trends for Canada’s future prosperity.
No matter what governments like to think, the only enduring way to attract and retain companies in any country is to provide a competitive business environment. Such an environment requires competitive tax levels, both for corporations and individuals, streamlined and transparent regulatory processes, clear government policies and a skilled workforce. Canada’s current high-tax, intrusive and confusing regulatory environment and secretive federal government does not fit the bill. Interestingly, at the same time Stelco was announcing its shutdown, Carney was asked about the big Phase II LNG Canada project in B.C., and if Canadian steel will be used in that undertaking. Carney responded that it will be up to the project owners, virtually all of whom are foreign companies. In other words, once again it appears our federal government will not be sticking up for Canadian business.
As Canada’s economy continues to slide, one would think that something has to penetrate the Trump hysteria that is possessing so many Canadians and bring them to realize that although Trump is indeed a pain in the butt, he is by no means our major problem. Will it be the Stelco factor, or will we need to see the demise of many more once-solid businesses and the good jobs they provide before Canadians smarten up?
Catherine Swift was President of the Coalition of Concerned Manufacturers & Businesses Canada from 2022 to 2026. She was previously President of Working Canadians from 2015-2021 & President & CEO of the Canadian Federation of Independent Business (CFIB) from 1995-2014. She was Chief Economist of the CFIB from 1987-1995, Senior Economist with TD Bank from 1983-1987 & held several positions with the federal government from 1976-1983.
She has published numerous articles in journals, magazines & other media on issues such as free trade, finance, entrepreneurship & women business owners. Ms. Swift is a past President of the Empire Club of Canada, a former Director of the CD Howe Institute, the Canadian Youth Business Foundation, SOS Children’s Villages, past President of the International Small Business Congress and current Director of the Fraser Institute. She was cited in 2003 & 2012 as one of the most powerful women in Canada by the Women’s Executive Network & is a recipient of the Queen’s Silver & Gold Jubilee medals.
