Stelco’s president is defending the company’s plan to lay off 500 workers, telling Industry Minister Mélanie Joly in a recent letter that continued foreign steel imports and a 58 percent drop in certain Canadian steel exports to the United States forced the decision.
In the seven-page letter, Stelco president Paul Simon said Canadian exports of cold-rolled and coated steel products to the United States fell by 226,000 tonnes in the second quarter of 2026, compared with the quarterly average in 2024, before the trade dispute began.
Meanwhile, Simon said imports accounted for 45 percent of Canadian demand for those products, despite Ottawa’s efforts to protect domestic producers by restricting steel imports. He also said U.S. tariffs and weakening demand had upended the industry.
Stelco, like Algoma and other Canadian steel manufacturers, has been affected by U.S. tariffs of 50 percent on Canadian steel imports, which have put pressure on sales to U.S. customers.
“Stelco cannot continue to produce cold-rolled and coated steel products without incurring significant losses that are not sustainable,” Simon said in the letter, which was first obtained by Global News. “As such, we will continue with the idling of Hamilton Works.”
Stelco’s Lake Erie Works in Nanticoke produces hot-rolled steel used in pipelines and manufacturing, while its Hamilton finishing operations produce thinner, smoother cold-rolled steel and corrosion-resistant coated products, such as galvanized steel, used in vehicles, appliances and building materials.
Union officials expect about 330 layoffs at Hamilton Works and another 40 to 50 at Lake Erie Works, along with cuts to co-op positions.
Simon argued that existing Canadian trade protections are “woefully inadequate” to create a sustainable market that can support two domestic producers of cold-rolled and coated steel. He also said disruptions affecting Canadian industries that use these products had contributed to a 10 percent decline in domestic demand.
“Through our regular contact, the government has had significant advance notice of the impact these unprecedented market conditions have had on our business, and in more recent communications dating back to July 2026,” the letter said.
“Our early September meetings with several senior government officials, including representatives from [Joly’s] office, led Stelco to believe that the government understood the market realities confronting Stelco’s Hamilton Works finishing lines.”
The letter came in response to Joly’s demand that Stelco explain how it would honour employment commitments made by its U.S.-based owner, Cleveland-Cliffs, when it acquired the company in 2024.
Ottawa has said its approval of the takeover was contingent on Cleveland-Cliffs maintaining at least the same number of unionized workers and the vast majority of non-unionized employees for five years.
Simon, who is also Stelco’s general counsel, said the company is proceeding with plans to idle its Hamilton finishing operations despite Joly’s warning of possible legal action.
He argued that the layoffs do not violate the company’s binding employment commitments, which he said do not prohibit layoffs or require employment levels to remain above a specified number every day throughout the five-year period. The federal government maintains that the commitments remain binding despite changes in business strategy or market conditions.
In a statement posted online on Oct. 10, Joly said the employment commitments remained in force and that all options remained on the table as government lawyers reviewed Stelco’s response.
Cleveland-Cliffs CEO Lourenco Goncalves has supported U.S. steel tariffs while advocating for a “Fortress North America” approach that would see Canada and the United States impose stronger restrictions on steel imports from outside the continent.
Joly previously said Stelco had “explicitly chosen not to seek support” from government programs designed to preserve jobs and maintain operations. Simon responded that Ottawa’s offer of financial assistance did not address the underlying reasons for the planned idling.
He said the government offered funding to offset maintenance and capital expenses in exchange for retaining workers, but argued that the assistance would not solve the company’s lack of orders for cold-rolled and coated steel.
Simon characterized the proposal as “a last-ditch effort to cover for an inadequate Canadian trade regime.”
The Canadian Press contributed to this report.
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