Stelco begins Hamilton layoffs amid legal dispute with Ottawa

Stelco has begun laying off hundreds of workers at its Hamilton plant, a move that has triggered a legal dispute with the Canadian government. The steel manufacturer has rejected accusations from Industry Minister Melanie Joly that it breached its agreement with the federal government, calling the claims "false" and stating it "stands ready to protect its interests."

Layoffs Begin Despite Federal Warnings

The layoffs affect up to 500 workers at Stelco’s Hamilton Works finishing lines. According to the Toronto Star, union officials reported that about 90 employees were out of work as of Oct. 11, 2026, with 80 more expected to be laid off that week. The cuts come after the federal government gave Cleveland-Cliffs, the U.S.-based company that acquired Stelco in 2024, five days to respond to concerns about job preservation.

Stelco attributes the layoffs to "unprecedented market conditions," specifically U.S. tariffs of 50 per cent on Canadian steel imports. The company stated these tariffs led to a steep decline in sales to U.S. customers. In a letter to Joly, Stelco’s president and general counsel, Paul Simon, wrote that the government had "significant advance notice" of the impact on the business, dating back to July 2026.

Government Asserts Legal Commitments

Industry Minister Melanie Joly responded to Stelco’s letter on Oct. 10, 2026, maintaining that the company must honor its legally binding commitments. "The Government of Canada continues to expect Stelco to meet its legally binding commitments to employees," Joly said in a statement. "These commitments were agreed upon as undertakings under the Investment Canada Act and do not cease to apply because of changing business strategy or market conditions."

Joly noted that Canada’s approval of the Cleveland-Cliffs acquisition was contingent on maintaining the number of union jobs and the majority of non-union positions. She highlighted a contradiction in Cleveland-Cliffs’ position, noting that while the company cited trade disruptions, its chief executive officer had publicly supported the Section 232 tariff measures.

Company and Union Responses

Stelco denied wrongdoing, arguing that its undertakings "do not stipulate a commitment to avoid layoffs." The company stated it remained in compliance with the 2024 agreement and submitted an annual report in November 2025 confirming this, while highlighting challenges from U.S. tariffs and Canada’s trade regime.

Cleveland-Cliffs Chairman and CEO Lourenco Goncalves described the decision as purely market-driven. "I’m not shutting down, I’m not dismantling," Goncalves said in an interview with Global News on Sept. 30. "There’s no market in Canada for the amount of galvanized steel we produce in Canada. We need to export… to the United States."

The United Steelworkers (USW) Local 1005, which represents the affected workers, said it was not consulted on the undertakings. Union president Ron Wells stated, "We were assured by both Cleveland Cliff’s and the Federal Government that bargaining unit employment levels would remain the same for 5 years. In other words no layoffs."

Why it matters

This dispute highlights the tension between foreign investment agreements and economic realities in the Canadian steel sector. The outcome could set a precedent for how the Investment Canada Act is enforced when market conditions shift due to international trade policies. With Ottawa threatening legal action and Stelco preparing to defend its position, the case underscores the complexities of protecting domestic jobs in a globalized market.

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Sources

• globalnews.ca: Stelco pushes back on Ottawa amid threats of legal action over layoffs | Globalnews.ca
• thestar.com: Stelco layoffs could trigger court fight with Ottawa

This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.