Saint John’s Ocean Steel makes 'tectonic shift' away from U.S. after losing most U.S. customers

Saint John’s Ocean Steel makes 'tectonic shift' away from U.S. after losing most U.S. customers

Ocean Steel exports to south have dwindled from 100 per cent of its output to 5 per cent

A steel-fabrication company that employs 200 people in Saint John was working away on a project Wednesday for a mine in B.C., a sign of the shift away from the U.S. that at one time accounted for 100 per cent of its market.

Hans Klohn, the president of Ocean Steel and Construction Ltd., which was founded by his father and K.C. Irving in 1955, said the company exported 100 per cent of its products to the U.S. in some of the years around 2000.

By 2021, exports to American customers was still 70 per cent of the business but that has plummeted to five per cent this year amid on-again off-again tariffs on Canadian steel products.

“It has been a tectonic shift for our company to move our product mix away from the United States,” Klohn said at a media event at Ocean Steel.

“But we're going to do that. That's what we have to do.”

To help facilitate its growth in the Canadian marketplace, Ottawa announced a $750,000 contribution to modernization efforts at Ocean Steel.

Ocean Steel makes a variety of steel products such as girders and trusses for buildings and bridges, and chutes and bins for industries like mining.

John Irving, the president of Ocean Capital, the parent company of Ocean Steel that his grandfather once ran, said the ongoing threat of U.S. tariffs has forced the company to look elsewhere for markets.

"America is next door, and it's a very big customer," Irving said. "We want them as a customer, but there are other people too, and we have to go find them."

"We're implementing new advanced software and robotic welding capabilities that will improve consistency, reduce material waste, and allow our skilled employees to focus on higher-value, more complex work,” Klohn said.

Saint John–Rothesay MP Wayne Long said the federal government has to help industries in cities like Saint John that were hard-hit by tariffs.

Irving-owned Ocean Steel gets $750,000 from feds for tariff relief

“We know economic challenges related to tariffs, rising input costs, and supply chain disruptions are forcing Canadian businesses to adapt quickly to a changing global economy,” Long said.

“Saint John was the number one city impacted by tariffs that have profoundly affected our country and how we do business. But it's also a wakeup call for our country. It's a wakeup call for industry that we need to pivot, look inward, and invest in Canada.”

Klohn said the company is looking to grow its business in Canada, and also its supply chain here to lessen its reliance on the U.S.

The company is buying more flat-rolled steel through companies such as Algoma Steel that can be processed using some of its new equipment and software.

“It's about shifting our mix of products to items that use Canadian steel,” Klohn said. “That's what we really want to do.”

Irving and Klohn both emphasized the opportunities for growth in the defence sector, with Irving harkening back to the 1980s when the Saint John shipyard built frigates for the navy.

"Saint John Shipbuilding built nine of those ships,” Irving said. “It's just been a long time since the government ordered that stuff. If they're ordering, we can make it."

Klohn sees opportunities in the planned growth at Base Gagetown and a potential submarine base in Halifax.

“We've built a lot of defence and military buildings over the years,” he said. “We're very familiar with working with defence contractors. For us, it's a great opportunity to grow in that area.”

Nonetheless, Irving acknowledged that it’s not easy to pivot away from the U.S. and build new markets here.

"Is it particularly fun? No," Irving said. "But I'm confident that this is a great place to live, it's a great place to work, and we're going to get through this."

Mark Leger is a reporter based in Saint John. Send him story ideas to: mark.leger@cbc.ca