Good afternoon, I’m Sean Donnelly, President and CEO of ArcelorMittal Dofasco, Canada’s largest flat rolled steel producer. I am also Chair of the Canadian Steel Producers Association, a member of the Board of Directors of the American Iron and Steel Institute as well as a member of the Canadian Automotive Partnership Council.
Let me start by saying that ArcelorMittal Dofasco welcomes the Government of Canada’s Budget 2017 commitment to improve its ability to defend Canadian manufacturers against dumped and subsidized imports by implementing measures that effectively modernize the Canadian trade remedy system. These legislative and regulatory amendments will improve the enforcement of trade remedies, address the circumvention of duties and better account for market and price distortions. These measures received widespread support from manufacturers and business associations across Canada.
In addition, the Government’s creation of a national Advanced Manufacturing Economic Strategy Table with a commitment to increase value-added exports by 30 per cent by 2025, as well as the establishment of innovation superclusters (including advanced manufacturing) that will accelerate economic growth, are both welcomed actions. ArcelorMittal Dofasco looks forward to collaboration and the Government on these initiatives.
I have been monitoring the Committee’s proceedings over the past weeks and appreciate the time and effort of everyone involved. I am pleased to also add comment and context to the study.
To answer the question being asked, whether the Canadian steel industry can compete internationally…for ArcelorMittal Dofasco, the answer is a resounding yes. In fact, Dofasco is one of the top performing businesses within ArcelorMittal, the largest steel company in the world with a presence in sixty countries. In Canada, ArcelorMittal has more than 9,500 employees across seven business units that include mining as well as steelmaking and finishing for flat carbon, long and tailored blanks steel.
Transforming tomorrow with steel
Steel is a capital and technology intensive industry. In fact, at ArcelorMittal Dofasco we often say that we are a technology company that makes steel. We rely on process and product innovation to be successful in the North American and Global steel industry.
Having said that, we also know people are our competitive advantage. You likely know our longstanding motto: “Our product is steel. Our strength is people” – we continue to live by this belief. In Hamilton, we have 5,000 employees and are responsible for another 20,000 indirect jobs.
We continue to experience a wave of retirements and are in the marketplace hiring, and have been for the past five years. Nearly 30 per cent of our work force has five years or less experience with the company and we will continue to bring on 300 new employees over the next number of years. These new employees soon realize that Learning and Development is a core commitment at ArcelorMittal Dofasco – whether on the job, in the classroom or even outside of the workplace. In fact, ArcelorMittal Dofasco operates the only North American campus of the global ArcelorMittal University.
In terms of capital expenditure, between 2013 and 2015, Dofasco invested more than $1.3 billion in the Hamilton facilities. Between 2016 and 2018 we will invest more than $1.5B. These investments are in both product and process, including new finishing lines as well as restoration work and they demonstrate our commitment to innovation. Innovation which is driven through collaboration with our global colleagues, our Global R&D facility in Hamilton and the contributions and strength of our people.
We have implemented a world class continuous improvement system at Dofasco, that we call Action2020, which brings a structured approach to eliminating waste and seizing opportunities. This affects our bottom line and ensures that we can compete against anyone.
On the product side, we are continually making improvements and working with our customers to design and develop the next grades of steel in the automotive, construction and manufacturing, energy and industrial packaging markets.
Effective government policy and the NAFTA
As a unit of a large multinational corporation, we compete for capital investment in our facilities.
While our focus on innovation through continuous improvement differentiates us and keeps us at the forefront of our industry, we also require provincial and federal regulatory environments that maintain cost competitiveness as well as policy that ensures a market with fair trade – all factors that play into decisions for foreign direct investment.
While, the Canadian budget has now been released, we are awaiting budget measures from the new U.S. Administration, which have been suggested to have a potential negative affect the trade flows of North American supply chains, including steel.
Members have heard from previous testimony about the structure of the North American steel market. Let me reiterate that the Canadian steel industry is significantly intertwined with that of the U.S. and there is a balance of trade. In 2016, more than 10 million metric tonnes of steel ($12 billion) was traded between our two countries and Canada and the U.S. trade fairly in steel with no dumping or subsidy orders against each other.
Looking at ArcelorMittal Dofasco specifically, more than 25 per cent of our shipments are to the U.S., with more than half of those shipments to the U.S. auto industry. In addition, we are Canada’s only tinplate producer and as the major food can manufacturers have moved their operations from Canada to the U.S., most of our tinplate production is exported there.
U.S. policy changes in the U.S. will impact Canadian manufacturers. Potential Border Adjustment Taxes, expanded U.S. Buy America Policies, particularly for private projects, as well as expansion of U.S. trade rules that may result in diversion of offshore steel into Canada, are all of great concern in that they would disrupt efficient working supply chains.
In terms of the renegotiation of NAFTA, Canada must be vigilant to ensure that our economy is not disadvantaged as a result of the renegotiation. We believe there is an opportunity for a North American approach that would increase the North American manufacturing base and the market share of supply chains, including steel.
ArcelorMittal Dofasco will continue to be a leader
In summary, we are a global leader in process and product innovation and will remain focused on continuous improvement – those things within our control. We will also continue to advocate for the right trade and economic policies that create an environment for all manufacturers to effectively compete. Together, these will ensure foreign direct investment for our business and Canada.
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