Ottawa gives Cleveland-Cliffs 15 days to respond
Ottawa is threatening legal action against Cleveland-Cliffs over alleged breaches of employment guarantees tied to its 2024 purchase of Stelco, after 175 workers were laid off in Hamilton.
Industry Minister Mélanie Joly put the U.S. steelmaker on notice last week to address alleged violations of its Investment Canada Act commitments, CTV News reported. She has warned the company could be forced to sell Stelco if it fails to meet them.
Joly’s 11-page October 22 letter gives the company 15 days to respond. It disclosed that Cleveland-Cliffs agreed to maintain an annual average of at least 1,766 full-time-equivalent unionized workers and 603 full-time-equivalent salaried workers.
Cleveland-Cliffs said a review of each of its 34 undertakings found it in “full compliance.” It has asked to meet Joly about recalling the 175 Hamilton workers, whom it describes as temporarily laid off.
Recall plan comes first
On Wednesday, Joly said she would not meet CEO Lourenco Goncalves until the company provides a concrete plan and timeline for recalling employees.
“We need a real plan from them to show us they are working in good faith,” she said. “The clock is ticking.”
Goncalves said Stelco is counting on Canadian customers, not tighter import restrictions, to restore jobs.
“If our plan works, my intention is to call back all the 175 workers before Christmas,” he said in a statement to The Canadian Press.
He added that Stelco will not be sold for at least a year, and he would only consider selling after higher production and the return of all 175 workers.
CEO remarks under legal review
Ottawa is also consulting lawyers over Goncalves’ televised comments. “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,” he told CBC’s Power & Politics on Tuesday.
Liberal MP Yasir Naqvi, a former international trade lawyer, called the commitments “ironclad obligations.”
Union says workers used for leverage
A September 28 internal letter, issued roughly two years after the acquisition, warned up to 500 workers at Hamilton Works and Lake Erie Works could be affected, citing U.S. tariffs, weak demand and imports.
Ron Wells, president of United Steelworkers Local 1005, confirmed 175 layoffs in Hamilton and none yet at Lake Erie Works.
Wells accused the company of using the layoffs to pressure Ottawa on imports. “Obviously, we’re against using our members as pawns,” he said.
The union is treating the cuts as temporary layoffs under its collective agreement. Stelco has idled its Hamilton cold-rolled and coated operations indefinitely.
Implications for HR leaders
Under Ontario’s Employment Standards Act, a temporary layoff can last up to 13 weeks in any 20 consecutive weeks, or less than 35 weeks in any 52 consecutive weeks if certain conditions are met, before it becomes a termination.
Unionized employees can be laid off longer if recalled within their collective agreement’s timeline.
Nadia Zaman, senior associate at Rudner Law, said Investment Canada Act commitments and employees’ individual rights are separate obligations, and workers should not assume an undertaking guarantees their jobs. She advises HR leaders to involve employment counsel alongside the investment-review team before workforce commitments are finalized.
The Globe and Mail reported that by citing 12-month average employment, Cleveland-Cliffs appears to have room to lay off workers and still meet the annual minimum.
Ottawa has gone to court over Stelco before, suing US Steel in 2009 over broken employment and production promises tied to its 2007 purchase.
The layoffs follow a September in which Canada shed 68,000 jobs, lifting unemployment to 6.5%.
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