In a letter to Industry Minister Mélanie Joly, Paul Simon, president and general counsel at Stelco, stated that the company’s planned layoffs do not violate the Investment Canada Act (ICA). “Your representation that Stelco’s planned layoffs cause it to breach its undertakings is false,” Simon wrote, arguing that the agreement does not stipulate a requirement to maintain a specific daily employment level over the five-year period of the undertakings.
The dispute follows an ultimatum issued by Joly last week, which demanded a plan to save the at-risk jobs or face potential legal action. Prime Minister Mark Carney stated that Ottawa will use “all powers that we have” to pursue the company to the “fullest extent of the law” if the undertakings are found to be violated. In response, Cleveland-Cliffs CEO Lourenco Goncalves said on Sunday that he is prepared to fight the Canadian government in court. “There is no provision in the contract that I have to keep employment at a certain level every single day of the five years,” Goncalves said, noting that if such a strict imposition had existed, the company would not have accepted the terms.
The layoffs are being attributed by company leadership to the economic strain caused by U.S. tariffs on Canadian steel. Goncalves described the trade war between the two nations as having made aspects of the business untenable. However, the CEO’s public support for these tariffs has drawn sharp criticism from union representatives. Ron Wells, president of United Steelworkers Local 1005, which covers the Hamilton plant, described the situation as a “political game,” suggesting the company is acting in the interests of its U.S. operations rather than its Canadian workforce.
According to union leaders, the layoffs are being implemented in phases over three weeks. Wells expects 300 to 350 workers to be affected in Hamilton, with notices being delivered in batches over the next fortnight. At the Lake Erie Works in Nanticoke, an additional 40 to 50 layoffs are anticipated, with notices expected to begin in late October. Under Ontario’s Employment Standards Act, the company is not required to provide advance notice for temporary layoffs lasting less than 35 weeks, allowing for same-day notifications.
Cleveland-Cliffs communications director Pat Persico stated that total steel output would not be impacted, as production would be consolidated at the Nanticoke facility. She claimed that a “significant number” of affected Hamilton employees would be absorbed by the Nanticoke plant. However, John McElroy, president of Local 8782, disputed this, stating that the company is only offering 20 production jobs to more than 400 laid-off workers, a claim he described as “100 per cent untrue.”
The escalating conflict has prompted calls for more drastic government intervention. Nicolas Lamp, an associate professor of law at Queen’s University, suggested that Ottawa should consider the nationalization of Stelco. Lamp argued that nationalization would provide the time and transparency necessary to act in national interests, particularly given the “conflict of interest” presented by a CEO whose U.S. operations may benefit from the very tariffs causing the Canadian layoffs. “The key question, ultimately, is could different management do better,” Lamp said. Union leader Ron Wells expressed openness to the idea, citing other Canadian crown corporations as potential models for such an arrangement.
For the workers affected, the immediate impact is severe. Jordan Williams, a 31-year-old father of two who received a layoff notice, described the atmosphere as “catastrophic,” stating that the workers feel “sold out” despite promises of job protection during the acquisition. While the company maintains the layoffs are a temporary measure until a trade agreement is reached, the legal and political standoff has left hundreds of employees in uncertainty regarding their long-term employment status.
