Business & Finance

Ontario steel company loses $200 million dollar Alberta project to China

The owner of Atlas Tube, an Ontario steel company is frustrated after being left out of an Albertan solar project worth $200 million.

Quinn Patrick Montreal, QC
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The owner of Atlas Tube, an Ontario steel company is frustrated after being left out of an Albertan solar project worth $200 million. The contract for the Claresholm solar project was instead given to a company from China, according to the Windsor Star.

In the past Atlas Tube has supplied Alberta as well various other parts of the country with solar projects by supplying them with 'screw piles,' a steel tubing that is needed to secure the solar panels into the ground.

“I said to (project contractors), ‘You are doing this at a time when millions are out of work in Canada, you have (steel) fabricators and mills begging for business, plus this is a solar project in Canada for green energy,’” said Barry Zekelman. “And still you give it to China.”

Zekelman's company spent over a year preparing a bid for the Claresholm project which would be primarily supplying the screw piles. The global company employs more than 200 people in Harrow, Ontario. Magna International is responsible for handling the final quote for the supplying the project with screw piles, which is intended to be completed before the end of 2020.

“They came back and said, ‘Your pricing is too high,’” said Zekelman referring to the final bid from Atlas Tube. “We know the price of steel. We know where the numbers should be.

“Then they said we were high compared to China. The hair on the back of my neck went up. They said, ‘We are going to China unless you get your prices down, down.’ I don’t blame Magna, they were polite about it, but they said business is business.”

Atlas Tube's final bid was approximately $15 million and the final decision went to a Chinese company who placed a bid for $12.5 million.

Should the bid have gone to Atlas Tube, it would have provided about one week's worth of work at the plant in Harrow however Zekelman said either way the project was not "going to make or break me."

What frustrates Zekelman is the fact that the supplies with now be shipped in from China amid a pandemic where so many Canadians are already out of work. The federal government is also encouraging Canadians to buy more at home and support the local economy. Zekelman would like to see that major domestic infrastructure projects come with some more government regulations so that cheaper supplies from foreign countries can't always undercut the local businesses.

“You have a local business paying taxes, employing local people and ready to buy Canadian steel when mills are in trouble right now,” said Zekelman. “This is a green energy project in Canada and the spoils go to China. This just smells. The only way to stop this is legislation.”

The federal ministry has currently been putting all of its focus onto dealing with the pandemic, said MP Brian Masse (NDP-Windsor-West). Prior to the pandemic, steel and aluminum products have been the focus US-Canada related tariffs and the new North American free trade deal. Masse believes that is also part of the problem that a companies like Atlas Tube are facing.

One way to remedy this problem is monitor countries with low labour costs and poorer environmental standards that provide cheap products and instead bring forward a Green Energy strategy that emphasizes the use of home-made products that employ Canadians.

“You could direct it to include lower greenhouse gases, provide new skills employment and job development,” said Masse. “You could include auto (industry), identify national goals and you are not violating any trade agreements.”

International trade issues are handled by the The Ministry of Small Business, Export, Promotion and International Trade however Masse doubts that the federal government will take the time get involved at the moment since it has become so preoccupied by the pandemic.

“When you find such a differential in labour costs and environmental shortcuts (in foreign nations) that still gives them such an advantage to ship across an ocean and be cheaper, you can’t have a laissez-faire approach and leave things twisting in the wind.”

“We did an in-depth analysis of our costs and couldn’t really figure out how to get it down,” said George Rabideau, who was responsible for assembling the bid for Atlas Tube, which amounted to a year's worth of work. “We submitted the best bid we could on steel costs, freight and fabrication cost.

“To lose out on that work for our employees is really disheartening.”

Despite strong international competition, this is the first time Atlas Tube saw their company lose a bid to an international company for a domestic job.

“Even if we didn’t get the work and it stayed in Canada, that’s a win for our economy,” said Rabideau. “It would be nice if more than price was a determining factor and people thought about keeping these jobs in Canada.”

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