(Ottawa) The economic sanctions imposed on Russia by Western countries after the invasion of Ukraine are having a negative impact on some Canadian companies. And barring a financial boost from the federal government, some of them could be forced to lay off.
This is the case of STAS, a Saguenay company that supplies high-tech equipment and solutions to giants in the aluminum industry.
The company, which operates in 40 countries, is on track to lose $10 million in revenue this year. One of its clients, Rusal, one of the world’s largest aluminum producers, cannot pay its bills, which currently total 2.5 million for work already carried out, because Russian banks have been excluded from the transaction system. SWIFT in the early days of the war in Ukraine.
SWIFT is an interbank system that has become an essential cog in global finance. In particular, it allows fast and secure communication about transactions.
Rusal has the means to meet its financial obligations, but the company cannot do so without going through SWIFT.
And the projects that were underway in Russia, which normally have a period of 18 to 24 months, have been stopped. Result: revenue losses will approach 10 million this year. This sum constitutes a third of STAS’s current turnover and could jeopardize the very future of the company, according to its general manager, Louis Bouchard, who entrusted Press.
The COVID-19 pandemic had already affected the company’s income, which fell from 60 million before the health crisis to 35 million today. The number of employees has increased from 220 to 125.
“We have to face several simultaneous crises: the labor crisis, the economic crisis, the war and the pandemic. During the pandemic, everyone stopped their investment projects, except the Russians. The great projects that were underway continued. Rusal has proven to be our most stable customer during the pandemic,” explained Mr. Bouchard.
“But war broke out and the Canadian government decided to impose sanctions on Russian banks,” he added.
Now we are in a whirlwind. We can no longer send anything to Russia and we can no longer receive anything from Russia. And besides, the customer can no longer pay us for the penalties. We have been trying to find a solution for three months.
The situation is so critical that STAS has taken steps to close its French subsidiary in recent weeks. Forty jobs could thus disappear.
“If nothing is done, we will have to lay off people, we will have to restructure, we will have to try to recapitalize the company. Our French subsidiary will probably fall in battle. That in itself is a loss of 5 million,” he said.
Three months have passed since the war broke out in Ukraine. And nothing indicates that the conflict is about to end. Mr. Bouchard says that democracies had to react to Russian aggression. But you also have to look at the country’s economic consequences, he said.
Mr. Bouchard advocates that the federal government establish a specific assistance program to keep businesses like his that are affected by the economic sanctions imposed on Russia afloat.
We believe that the impact of this crisis on the workforce and production will be felt in our company for two to three years. Therefore, it is a very important crisis.
joined by PressBloc Québécois deputy Mario Simard said Ottawa should give a boost to businesses that are struggling due to economic sanctions.
“Companies like STAS must have access to cash. This is a company that has an experience in the aluminum sector that is not found everywhere. Losing the STAS experience would be catastrophic,” he said. STAS is well established in its Jonquière riding.
However, the Trudeau government seems reluctant to loosen the purse strings. “Our government appreciates the support shown to Ukrainians by many companies and by Canadians because they know this is the right thing to do. We will continue to support Ukraine in the face of the unwarranted and illegal invasion of Vladimir Putin’s regime,” said Laurie Bouchard, spokesperson for Minister of Innovation, Science and Industry François-Philippe Champagne.
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