Steam rises as water is poured over hot steel at the Direct Strip Production Complex at Essar Steel Algoma in Sault Ste. Marie, Ont., on March 14, 2018.Justin Tang/The Canadian Press
Multiple employers are laying off workers as the impact of the U.S.-Canada trade war seeps into the labour force, while other companies are scaling back their hiring plans because of the upheaval.
Over the past three weeks, numerous businesses from furniture manufacturers to steel producers have announced layoffs to cope with the uncertainties brought about by U.S. tariffs on Canadian exports, and subsequently, Canada’s retaliatory tariffs on some American imports.
Algoma Steel Group Inc. ASTL-T, based in Sault Ste. Marie, Ont., said last Friday that it had laid off 20 employees because of the trade war. United Steelworkers Canada, the union representing Algoma employees, warned that more job cuts could be coming to the steel production plant, which employs approximately 2,500 people.
Another steel manufacturer in eastern Ontario – the Canada Metal Processing Group – said on Feb. 24 that it was cutting 140 employees because of the “actions by the United States” that will result in cancellations or delayed orders.
The Canadian unemployment rate held steady at 6.6 per cent in February, but economists are cautioning that the unpredictability of U.S. President Donald Trump’s tariff actions could force businesses to cut costs. A recent report from TD Bank economists warned that a flare-up in “tit-for-tat” tariffs between the U.S. and Canada could push the Canadian economy into recession and cause the unemployment rate to spike by 2 per cent.
“We have definitely started seeing manufacturing job postings starting to slip,” said Brendon Bernard, senior economist at the job search company Indeed.com. ”It is still very early days, but the knock-on effects of slipping demand will mean companies may hire a little less or hold off on putting up new positions," he added.
On Wednesday, Bank of Canada Governor Tiff Macklem said that many businesses have scaled back hiring and investment plans as they price in a dimmer sales outlook as a result of the trade tensions.
The consequences are acute for townships where many local jobs are linked to the U.S. Stéphanie Lacoste, the mayor of Drummondville, Que., issued a statement on Thursday saying that 3,000 jobs in her town are at risk because of the trade war. Manufacturing accounts for a third of Drummondville’s economic output and it is home to three medium-sized metals manufacturing companies.
In Delta, B.C., furniture company Prepac Manufacturing Ltd. abruptly announced plans last month to shut down one of its factories and terminate 170 employees.
Prepac makes ready-to-assemble furniture for large retailers such as Walmart Inc. WMT-N, Amazon.com Inc. AMZN-Q and Canadian Tire Corp. Ltd. CTC-A-T and sells most of its products to stores in the U.S. In a Feb. 13 memo to Unifor, the union representing Prepac workers, the company’s director of operations, Shane Fortin, stated that the closing was due to an “altered economic environment” and that the plant would shut down over a number of weeks.
The company was acquired by Toronto private equity firm TorQuest in 2019, and opened a new manufacturing and warehousing facility in North Carolina in 2021. Prepac plans to centralize its operations in North Carolina, leaving no Canadian footprint. Prepac was founded in Vancouver in 1979.
In a statement to The Globe and Mail, Prepac’s chief executive officer Nick Bozikis said that the decision to centralize production in North Carolina was made long before any tariff risks to its business arose.
But Unifor’s western regional director, Gavin McGarrigle, told The Globe that he believed the closing was directly related to the economic uncertainty sparked by the trade war, and that it “came out of nowhere.”
Mr. McGarrigle said the union had just finished negotiating a new two-year contract with Prepac in December that guaranteed annual wage increases of 3 per cent for employees and at no point during those discussions did Prepac mention plans to wind down operations.
A similar scenario has played out at South Shore Furniture, a Quebec furniture maker. In early February, the company said it was cutting 115 jobs because of tariff threats, noting that 70 per cent of its products were sold in the U.S. and American purchasers have sought out merchandise from Asia because of the trade war.
Last week, the federal government introduced measures to aid businesses and workers affected by the trade uncertainty. Specifically, Ottawa announced a $6.5-billion package comprising a variety of loans to help businesses manage decreased demand from the U.S. and branch out to new international markets.
The government also said it would be expanding its existing work-sharing program, a federal benefit that allows employers to cut employee hours and have those employees collect partial employment insurance for lost wages.
Barry Eidlin, a sociologist at McGill University, said that in times of uncertainty, unionized jobs with contractual agreements add much more protection to workers.
“There is a degree to which changing market conditions place actual constraints on employers and they do need to act. But the decision to engage in mass layoffs is not necessarily the only option,” he said.