Energex Tube shutting down

Every worker at Energex Tube will be laid off within two months. It's uncertain if they'll ever return to their jobs.

Employees at the Dain Ave. plant - formerly Lakeside Steel - were told Monday a decision was made to idle operations "for an undetermined amount of time" due to market conditions and "unfairly traded imports into North America."

"This will result in the indefinite layoff of all hourly employees until business conditions change," said a layoff notice obtained by The Tribune.

The company provided eight weeks' notice of indefinite layoff, effective Monday. It will continue to extend health and insurance benefits for the duration of the layoff, the notice said.

Rick Alakas, president of Canadian Auto Workers Local 523, is trying to hold onto some optimism. But closure weighs heavily on his mind.

"I am very concerned about the future of that plant," he said Tuesday. "This setback is a real blow to us."

Alakas said the layoffs apply to everyone there - 126 hourly workers and 36 salaried employees.

"It's a very difficult period," he said. "It's emotional and it's difficult, not only for our members in the plant, but for their families."

He said a meeting is being planned to address workers and their spouses or partners next Tuesday about what will happen in the coming weeks and to give them a sense of what's happening with the North American steel industry.

He said workers for now will complete scheduled production jobs and then move into cleanup mode for the shutdown.

Energex Tube is owned by U.S.-based JMC Steel Group, which purchased the plant for $58 million in April 2012.

An announcement posted on the Energex Tube website Tuesday said: "Despite significant operational improvements within the Canadian plant, market conditions, primarily the influx of unfairly traded OCTG (oil country tubular goods) imports into North America, have greatly reduced the ability for our Welland, Ont., operation to be profitable. The company has decided to idle operations located at 160 Dain Ave."

It went on to say: "We expect that all layoffs will be completed by May 19, 2014. This announcement and timeline are based on the best information currently available but may be affected by various factors. Energex would like to thank our customers and employees for their continued support."

JMC Steel spokesman Jelani Rucker and Energex Tube president Randy Boswell could not be reached for comment Tuesday.

JMC Steel, too, blamed low-priced imported steel products for its decision to cut 110 Welland jobs in July 2012.

Work began last May to demolish more than half the buildings at the Welland plant. Demolition started with more than 50% of the structures there, and subsequent plans called for the demolition of buildings along Ontario Rd. that had been used for finishing 16-inch pipe.

In total, more than 37,000 square metres (400,000 square feet) of buildings were to be demolished.

The company announced in late 2012 that it was phasing out of the furnace review production of its eight-inch pipe and at that time permanently cut 94 jobs.

"The future is difficult. We are holding out hope that there is opportunities for that plant to resume operations," Alakas said.

"This isn't the first plant that's been idled" in the steel industry, he said. "What we're experiencing in Welland is nothing new."

He said the shutdown will cause a ripple effect in the community, be it for suppliers, transporters or restaurants and shops - "pretty much across the board."

"It's another sad day for the city," said Welland Mayor Barry Sharpe, "and I'm sure it's absolutely devastating news for the employees and their families."

He said the last time he was involved in a corporate call with the company was February 2013, "and it ended in a positive note" about plans for the future that included a stretch production mill and new furnace, some of those plans which were followed up on.

Sharpe said following a meeting with city manager Craig Stirtzinger Tuesday the municipality is willing to support any case put forward to support North American steel workers.

"We're prepared to step forward if there's a need to meet the minister of economic development," he added.

Still, the massive scope of the issue for which Energex appears a victim "makes you feel pretty powerless," the mayor said.

Dumping charges levelled by North America's steel industry go back well over a decade, and it seems nothing has been yet done to look after domestic jobs.

Welland MP Malcolm Allen said the Canadian government has left industry problems to be ironed out in courtrooms, but small- and medium-sized industries and related machine shops - and those shrinking big companies - don't have millions of dollars to throw toward uncertain outcomes.

Many finished steel products coming into Canada, he said, are arriving at prices lower than the international market price for the raw material.

"In my view, it's purely dumping - no doubt about it."

Trade agreements with countries where environmental control standards are lesser and labour costs are lower, but where it's also difficult to identify points of subsidization, need to be re-examined, Allen said.

"Welland is a microcosm of what has happened across the broader sector of manufacturing in Ontario," Allen said.

"It's extremely troubling," he said of the local Energex plant, "since they've done so many things over there to be competitive."

greg.furminger@sunmedia.ca Follow @GregAtTheTrib