As Stelco reports soaring earnings, how solid is their layoff legal case?

U.S.-based steel company Cleveland-Cliffs reported a surge in earnings for the third quarter, reaching $612 million, compared to $286 million in the previous quarter. The company's CEO, Lourenco Goncalves, attributed the strong financial results to the acquisition of Stelco in 2024. Cleveland-Cliffs CEO Goncalves stated, "Third quarter was our strongest quarter in three years," adding that the figure exceeded their guidance of $575 million.

Industry Minister Mélanie Joly spoke out against the layoffs, expressing the government's support for a legal case against Stelco. She cited the CEO's recent favoritism towards American tariffs against steelworkers, arguing that the federal government possesses "rock solid" evidence. Legal experts believe that the government's case is strong and should seek injunctive relief against the layoffs, recalling the workers.

Stelco, facing pressure from U.S. tariffs, relocated its steel production to Lake Erie Works in Haldimand, Ontario, while closing its plant in Hamilton. Although some workers were offered positions at the Haldimand facility, hundreds are expected to be out of work. The U.S. tariffs, including a 50% duty on various Canadian steel products, have significantly impacted Stelco's sales.

Legal experts scrutinize the complexities of the situation. The federal government's stance claims that Stelco's use of tariffs to justify laying off workers breaches the binding agreement made during Cleveland-Cliffs' acquisition of Stelco. The agreement stipulates that the company must continue employing at least the same number of unionized employees as when the deal was announced.

However, Stelco maintains that the tariffs are beyond their control and poses a significant threat to their business. They argue that their layoffs are a result of unforeseen consequences stemming from the tariffs and the government's failure to advance an effective 'Fortress North America' trade regime. Stelco's president, Paul Simon, refuted the accusations of breaching the agreement, stating that the company has submitted its annual report confirming compliance.

The union, however, treats the layoffs as temporary, while Stelco describes them as indefinite. The employment lawyer, Christopher Achkar, suggests that Stelco's argument may hinge on a technicality, as the company is still technically employing the same number of workers, despite the layoffs.