Ottawa demands firm timeline to meet acquisition job guarantees
Cleveland-Cliffs' plan to recall 175 laid-off Stelco workers before Christmas faces federal scrutiny over employment guarantees made during its 2024 acquisition of the Canadian steelmaker.
The proposed recall depends on stronger domestic steel sales, but Industry Minister Mélanie Joly has demanded a firm timeline as Ottawa considers legal action over alleged breaches of the company's binding commitments.
“It will depend on Canadian customers buying Canadian steel, made by Stelco. If our plan works, my intention is to call back all the 175 workers before Christmas,” CEO Lourenco Goncalves said in a statement to The Canadian Press.
Employment guarantees complicate layoff plans
The dispute centres on job guarantees Cleveland-Cliffs made under the Investment Canada Act when it acquired Stelco in 2024. The legality of the Stelco layoffs remains contested, with federal acquisition commitments and provincial employment obligations governed by separate legal frameworks.
Under the Investment Canada Act's enforcement provisions, Ottawa can seek compliance with binding undertakings, with unresolved breaches potentially leading to court proceedings, financial penalties or divestiture orders.
Joly has warned that Cleveland-Cliffs could be forced to sell Stelco if it fails to honour its commitments: “We need a real plan from them to show us they are working in good faith. The clock is ticking.”
Separately, Ontario's Employment Standards Act rules on temporary layoffs generally allow layoffs of up to 13 weeks within 20 consecutive weeks, or less than 35 weeks within 52 weeks under specified conditions.
Unionized workers may also have recall rights under collective agreements. Compliance with these provincial requirements does not necessarily satisfy federal employment guarantees.
Stelco confirms 175 layoffs at Hamilton plant
Stelco initially warned on September 28 that up to 500 workers could be affected by layoffs at its Hamilton Works and Lake Erie Works facilities, citing U.S. tariffs, weak demand and competition from imported steel.
Cleveland-Cliffs later confirmed that 175 employees had been laid off, all at Hamilton.
Ron Wells, president of United Steelworkers Local 1005, confirmed the figure and said no layoffs had occurred at Lake Erie Works. He accused the company of using the reductions to pressure Ottawa into tightening steel import restrictions.
“He just caused a lot of pain and grief for 175 people. Obviously, we’re against using our members as pawns,” Wells said.
The dispute also highlights the separate legal obligations employers face during temporary layoffs, including recall rights and potential termination entitlements.
Cleveland-Cliffs defends workforce decisions
Goncalves said Cleveland-Cliffs had expected stronger Canadian demand for cold-rolled and galvanized steel following the acquisition, but sales had fallen short.
“We believed that we could sell cold rolled and galvanized steel within the Canadian domestic market, and that part did not materialize and has not improved yet,” Goncalves said. The dispute intensified after he told CBC News that the acquisition was intended to limit Stelco's competition with Cleveland-Cliffs' U.S. operations.
“I bought Stelco because I could not afford anymore having Stelco flooding the market here in the United States to the detriment of my own company.”
Joly said federal officials were consulting lawyers about the potential implications of those remarks.
Meanwhile, Goncalves maintains that Cleveland-Cliffs is complying with its commitments and has ruled out selling Stelco over the next calendar year.
