Glass Talk #73 (processed)

Welcome to Glass Talk, Canada's podcast for the architectural glass industry.
Now here's your host, Patrick Flanery, ladies and gentlemen.
We're back once again with Adrian Edge, Director of Codes and Regulatory affairs at Fenestration Canada.
Adrian, how are you?
I'm doing great.
How about you, Patrick?
It has been an absolutely insane week, and couple of weeks, worse for you than for me, and, I had to get you on, of course, for the, tariffs update.
you did a great job explaining things, back when we did our last one a couple of months ago.
And I think it's definitely time for an update in light of what has happened, and I think more importantly, not happened, just, this week on, Liberation Day.
April.
April 2nd.
Are we sure we don't want to be thoughtful and call it Termination Day or any other mockery of Liberation Day?
The day Americans got liberated from, what, 3 billion.
$3 trillion of stock value?
I believe it was something along those lines.
Yeah.
Anyways, it's all going great down there.
Adrian, as we said before, let's do it this way.
Tell me what you were afraid you might hear on April, second, and then tell us what you did here.
So I will open it up with a concept I've been concerned about in the background that the US Was going to use, was.
Was going to use Canada in a similar way that oftentimes chicken, farmers will use a particular chicken that's really pissing them off, that they will put them in the middle of the.
The yard and chop off their head and just let them run in circles so that it warns the rest of the chickens that if they misbehave, then, you know, there are consequences.
I was genuinely concerned that's where we were heading.
the dialogue that was leading up to that conversation, Liberal in lib Day, was, Was pretty, in Trump's words, nasty.
so I thought we had, at the very minimum call it 20% tariffs coming, more likely 25.
And then worst case scenario, he was going to concoct some equation that was going to be whatever he felt was going to be punitive.
so that's.
That's what I was afraid was going to happen for Canada specifically.
Right.
And instead, instead we got exemptions for all of the, Canadian, U.
S.
mexico trade agreement items for our members.
Know that that covers everything in your supply chain with the exception of any steel and aluminum product derivatives.
So the problem we have is when that went through, that came through as A national emergency, which, trumps the, the free trade agreement we have with the U.
S.
right.
So that would be actually help me out on those steel and aluminum tariffs.
So it's definitely basically raw steel and aluminum and I think extruded profiles, things like that, being exported from Canada to the U.
S.
correct.
So that's not bothering us.
Does Canada have reciprocal on American steel and aluminum coming back?
Okay, we do.
Right.
So that's still in place.
So all the steel and aluminum products that you buy out of America are 25% more, or there's a 25% charge at the border.
or if you're trying to sell your aluminum windows and doors completed because it's a derivative of steel and aluminum that will get a 25% duty at the border.
Right.
You've got U.
S.
projects that you've been selling aluminum windows to.
That's going to get smacked.
Right.
And so that's ongoing.
That has not changed.
well, and it basically, on April 2nd for Canada, nothing changed.
Which, which, which was the shocker.
I mean, except for automotive.
Except for automotive, which went into place on the third.
The third.
Yeah, yeah.
And that's, and, and I mean, that's very complicated.
I still don't know.
Maybe, you know.
well, we don't want to go too down the road on automotive.
We're not talking to an automotive audience here.
Just for our benefit, though.
it wasn't materials on automotive, so like say glass or certain hardware that we might have had kind of mingled in ours from.
That isn't impacted.
It is completed vehicles.
Okay.
Yeah, yeah.
It was foreign cars.
And then I think Trump had some parts in there or something about the parts.
but then Carney left that off entirely, explicitly saying, saying, no, we're not touching parts in retaliatories.
whatever.
It's going to be a mess, to be honest.
I don't know how they're going to untangle what part of a car is American and what part is Canadian anymore.
Because having worked in that industry for 10 years of my life, I can tell you it's impossible to tell the difference, anymore.
But, anyways, they'll figure out whatever they figure out.
But anyways, nothing much changed.
Nothing much changed for the, for, for, for, for the window and door industry.
Anything that is exported to, the U.
S.
that falls under Kuzma.
The Free Trade Agreement, is, does not have any tariffs on it.
Correct.
If it, if it does not fall under Kuzma, it's, it has a 25% tariff.
On it, just as it has ever since the start of March.
Right.
So the difference is now, the one thing I wanted to get you to talk to a little bit is how do you know?
the only way to avoid the tariffs and be notified under Kuznet is you have to have your country of origin paperwork filled out and have all of that documentation done, when it gets shipped.
a lot of companies haven't bothered to do that.
They've just exported under the most favored nation status because the tariff was very small, I think possibly even less than 1%. and they said, well, it's not even worth it to do that, or their broker took care of it.
So, Adrian, what, if anything, are you going to have to change with how you ship your products across the states now?
Well, I'll just say when your broker comes to you and says, I need some additional paperwork, don't resist.
Say, thank you so much for going through a little bit of additional work to make sure I'm not getting tariff today.
that, you know, send your broker a gift basket as long as they're doing their job well.
that ultimately is kind of going to be my.
My give to the listeners is work, with your broker to make sure you're going through that process.
It's not that complicated to do.
it is going to be a little bit more paperwork, so your shipping department probably has a little bit more work on their plate.
If you've been managing some of that, it's good for you to review the requirements for what paperwork you need to have.
But again, I argue it's not that complicated to go through this additional step, just based on the limited information I've had and a couple brokers I've talked to.
but yes, the favored nation thing was really easy.
Like, that was just such a.
Like the reason why we accepted the additional 2% is because it wasn't worth the value of the 2%. Yeah, so.
So, yeah, there's going to be a little bit more paperwork now.
but, you know, really, that's going to be between your shipping department and the border.
Your shipping department and the broker.
and if.
If your shipping department doesn't want to deal with it, a good broker, and I recommend that anyway, at this point, just because we are now in the middle of a trade war, figuring out how to manage our border is going to be really critical.
I had been talking about this in the background with a variety of members.
There is almost nothing better you can do than to reach out to A handful of good brokers gather intel from them.
I'm here as a resource from Fenceration Canada.
I'm happy to help where I'm learning, but, you know, it doesn't.
It will help a lot to have somebody you trust on that side that now a stakeholder, I would say is much more critical than they used to be.
Interesting.
Yep.
And that's important advice.
I think that's good stuff.
Now, the reason people, may not realize that we got exempted, from this is because you're having high level meetings in Ottawa and pulling the levers that pull the world and you managed to, you know, you've been just guiding this whole process, right, Adrian?
I mean, this is your ability to inflate.
My importance is very concerning, you know, how hard I work with my wife to beat down my ego.
I don't need it.
Oh, God.
That being said, we have put some, I think, good effort and in support of our members to ensure float glass as a risk is very clear to, our various government counterparts.
so speaking jokingly to all of that, that is, it has been a serious effort to bring a lobbyist in, work through what paperwork was necessary, how we got into the right doors in Ottawa.
but I also want to give thanks to all the members that supported talking to your MPs that showed up.
Like some of these conversations from downstream were showing up at the Department of Finance.
And so I cannot thank the members enough and encourage you to continue that fight.
The grassroots efforts show up so fascinating.
I, it's like I said, I cannot thank the members enough for both the support for the money that it cost us to go after a lobbyist and to get in to the right doors, but also all of this grassroots efforts.
you know, I kind of want to stray a little bit into.
You know, we've got obviously good news here, right.
We have exemptions for most of the products that are in our repertoire.
we don't have counter tariffs that are impacting us yet.
But, we're about to see a public comment come out ideally today on what things the government of Canada will consider for retaliation the next time this happens.
And so we're going to get a new list.
And I am hopeful that the conversations with the Department of Finance and with the Department of Housing and all of the different parties that have now gotten involved, have met their mark.
so my hope is that list comes out and float glass isn't on it.
In the event that it does, there is a remission Process and FEN Canada is in the background right now putting together the remission paperwork necessary for us to do this on behalf of the entire industry.
That even if we see this on the list, that is the next step.
So.
So there is another little process.
So.
So, what form did this take, Adrian?
You actually went to Ottawa.
You had, you had meetings with some of these people.
Yeah, so that was my ask.
But you, can imagine they might have been a little busy the last two weeks.
so my meetings with, the Department of Finance's director was like this.
And we had 15 minutes to make our call.
Okay.
so it was short and sweet, very positive, that I, the feedback we got from him was this is an ideal case for the removal as it, it isn't something we produce and we do have issues with importing it from other countries.
So, you know, he couldn't tell me, yes, they were going to remove it because that's not his role.
Right.
His role was to take that suggestion and give it directly to the ministers.
so that was how close we got.
We got to the gatekeeper before the ministers.
and then we also sent our letter to the chief of staff, for LeBlanc and champagne and Jolie.
So they, their, their chief of staff had those letters.
we didn't get any additional feedback from them after that letter.
so hard to say where that went.
the, the message from the Department of Housing was direct from their, their minister that they have received the letter, they have reviewed it, they are flagging this as a significant problem, and they will be reaching back out to us in the near future.
Oh, that's just tremendous.
Good stuff.
Tell me more, tell me more about how the, how you heard about the feedback from the grassroots, from the, from the, the little letter writing campaign that you ran.
What did that come out in the form of comments?
Did they, they show you emails or something?
Like what?
So you'll.
I think the listeners will find this funny.
we got a message yesterday from Doug Ford's camp.
Their, their, their chief of staff, and they had heard from our members in Ontario this issue.
And so a couple of our members managed to get that letter into their hands.
so that discussion came back through their channel.
Okay, okay.
Okay.
Yep.
But anyways, listen, folks, it works.
it's surprising, how much it works.
the MPs, and even getting fairly high up, they, well, they're not where they are because they're not responsive to what the public thinks.
And when they get one letter, they assume that there's, 10,000 people thinking the same thing.
So that's basically the theory behind it.
and it's a great thing to do.
So whenever Fenestration Canada asks you to write a letter, write a letter.
And I just want to leave this because this has been kind of my running dialogue in the background.
And I think it's really impactful for, you know, listeners understanding where Fenestration Canada is sitting.
We make up, about 400 members, and that is roughly 60,000 employees across our stakeholdership.
And that is $7.
6 billion of revenue in Canada.
That is the impact that we can have by having your voice concentrated like this.
It is impactful.
Yeah, it's, it's a lot better than trying to do things on your own or trying to do things regionally.
At least when it comes to federal matters.
And even, and even in provincial matters, they're more likely to listen to the, to the big group.
So don't stop.
I, not only do I need your input, but again, that input at the ground, it will flow upstream, but it needs persistence.
Okay, it's time.
We're going to watch a little TV here, Adrian and I, and you all get to listen along because honestly, I think these, I think what we're about to hear here were honestly historic.
comments.
really nothing like this has come out of the mouth of a Canadian politician in my lifetime.
and, so, here's Mark Carney, after the announcement.
Yesterday's actions by the US Administration, whilst.
Not specifically targeting Canada, will rupture the.
Global economy and adversely affect global economic growth.
The global economy is fundamentally different today.
Than it was yesterday.
The system of global trade anchored on the United States that Canada has relied on since the end of the Second.
World War, a system that, while not.
Perfect, has helped to deliver prosperity for our country for decades, is over.
Our old relationship of steadily deepening integration.
With the United States is over.
The 80 year period when the United.
States embraced the mantle of global economic.
Leadership, when it forged alliances rooted in trust and mutual respect and champion the.
Free and open exchange of goods and services is over.
Well, this is a tragedy.
It is also the new reality.
Point being, Carney said, I can almost quote it, I've watched it so many times.
The international trading system is over.
The relationship where Canada and the United States become ever more integrated economically and diplomatically is over.
something along the lines of the bonds of trust and cooperation, are over.
it was nothing less than a declaration of, if not the complete end, then the, you know, a complete transformation of the relationship between the two countries.
and he was blunt.
I'm sure everyone's heard the clip anyways.
He was, incredibly blunt, incredibly clear.
And tragically.
And he called it a tragedy.
He said, it's a tragedy, but it's reality.
And tragically, I think he's right.
so rather than dwell on the unbelievable geopolitical politics of all of this, let's just talk about, our corner of the woods.
Adrian and, Can.
Can our window.
Can our window and door industry survive, I guess, bluntly, without, some form of free trade with the United States?
Not in any way that we see as normal.
It will take.
I'm going to say this, and it comes more with.
It's very difficult to explain how integrated our two markets are together.
I've been spending a lot of time, obviously, in standards and codes before we got into tariffs.
My role is codes and regulatory affairs.
our standards are almost impossibly tied together in such a way that untethering them requires us to reevaluate all of our base assumptions.
So let's just take water.
penetration, for instance.
We.
Currently there's the 440.
8 out there that, Terry Admonson is chairing, and they're working through a Canadian version of the standard.
It is, nearly impossible to believe that we are going to be able to decouple E1105 or an ASTM standard from our CSA standard.
In order to do that, we will have to go back to E1105 and reevaluate the methodology that we were using to test windows in order for us to completely decouple from E1105.
That is such a small example in the big drop of the bucket that is our industry.
But I think it represents a very real challenge we have, you know, looking outside of.
Call it the economics of our industry.
That's just the foundational structures of it.
So things like that.
I think in the.
In the near future, we will have to take a deep and hard look at.
And then there is, obviously, the economics of it.
We have built an industry that has explicit value to North America with very strong boundaries and have loosened, as we've been talking about compliance problems have loosened over the last handful of years in such a way that we are now seeing that our boundaries have been breaking down.
And now we've got industries that are coming in from other countries that may or may not be fighting the same battle we're fighting.
So with this breakdown that all needs to be rethought.
And that means as an industry that we need to be thinking about what it means for us to be competitive in other markets.
We haven't had to worry about that, float glass.
We kind of talked about it.
What Europe would like is low iron float glass.
We don't get it out of the US and currently we don't manufacture any of it.
So if we want to compete on the same playing field in other countries, we're going to have to create new manufacturing.
Right.
That's, you know, and I feel like this was such a big question and I'm so appreciative that you precursored me on this before we got here because it is something that I have been thinking so much about in the background.
And honestly I think the answer is we as an industry are going to need to, you know, we as an association will be looking at kind of a core strategy.
And I think we talked about this the last time we talked is that we'll have kind of these four pillars that we will be focused on.
And I think that question gets at the core of what we need to be focused on, which is what does it mean for our industry to survive?
And then what things could we be doing that are both short term and long term benefits?
What are the win, win situations here?
So we're working on it.
I'm working on it and I can't wait to have more conversations like that when we get out of this tariff response conversation.
But that's where we need to be looking next is what is the reevaluation of our market look like in the next 10, 20, 30 years?
Well, to your standards point, I mean, how long did those, what were they?
Cga, CSG standards, languish.
There was a Canadian, glass standard.
CGSB.
yep, thank you.
CGSB standards, they languished for 30 years, because our friends listening to us today, couldn't scrape together the money to continue to fund, the development and updating of those standards.
and eventually poor Margaret Webb, in her great frustration, threw up our hands.
But then it went on, to fgia, again, there you go.
Merger with an American Association.
and some things have been able to happen with that since, which is great.
but this is the kind of thing.
And the reason that was allowed to happen of course was because there were other standards out there.
There was ama.
You didn't need to, you know, what why, why are we doing, you know, a second one?
Why are we remaking?
The wheel is like the ongoing conversation in the background and it totally makes sense.
Yeah, but, but we've been tying ourselves to a country's requirements that may not be our own.
Like in a very real way.
The window and door industry in the US is made up of mostly larger companies.
That is very different than all the small to medium sized companies that make up the majority of our members in Canada.
Those are two very diametrically opposed requirements.
absolutely true.
Well there's things like that.
the other thing.
Yeah, I'll jump on the board here and make my recommendations for fenestration Canada, obviously, trade junkets, to Europe, to Australia.
I've had conversations with friends in Australia who are in the window and door industry.
they have a very less performing building in general their windows are.
Because it's not so cold.
So in general a lot of places still have monolithic, you know, or very low performing, doubles.
but now they're like, they're starting to say well we should control our cooling loads and therefore we should have more insulating windows.
And so there's some standards coming in.
And the Australian window and door manufacturers are not, you know, they're not as far along as we are with this stuff.
So are there opportunities in somewhere like Australia, speaks the same language, part of the Commonwealth, to sell some stuff there?
I don't know.
It's an excellent question.
In previous experience with one of my manufacturers, we had that conversation about whether or not we wanted to sell into Australia, that we had had a couple opportunities show up and the issue that we're going to have looking at other countries is the same problem that other countries have looking at us.
How do I meet your standards?
It is specific and typically boxed in in such a way that it allows for their local manufacturing to be protected from unfair trade practices.
You know, be wary of the monsters you fight for.
If you stare in the abyss too long, the abyss will stare back.
Exactly.
so you're absolutely right.
And it's like those trade routes, I'm going to call them trade routes for now, but those trade routes to other countries and call it the, the governance required for us to become compliant in their market is, should be a real consideration at this point.
And I can't believe I'm saying that because honestly shipping over the border to the US was easy.
And that's, that's why that's ultimately why, you know, like you just said that you're gonna sit around the boardroom and, you know, it's the end of a meeting and somebody goes, you know, what about Australia?
Everything?
You're looking at Australia.
And everybody goes, oh, yeah, that seems like a neat idea.
You know, yeah, we could do that.
And then nothing ever comes of it because there's no urgency and you know, it's still always easier and cheaper, you know, and then somebody looks into it and goes, I don't know, I.
Don'T want to manage the ship.
I don't want to manage breakage in Australia like that.
It becomes this really challenging thing to be working so far away from your manufacturing centers on glass, specifically.
It breaks.
Yeah, that's true, that's true.
So you'd have to be, it'd be more a case of, well, at least your glass.
You'd have to probably get over there.
but, at any rate, it's, it's.
But that's, you know what, but I guess what I'm saying is the urgency may be on depending, what happens here.
we're definitely.
Well, and let me get your input on this.
we're definitely headed for a general recession, global recession.
I mean, again, unless Trump pulls all of this off, next week, which he could do, but that's coming.
we're probably gonna have a 5 point GDP drop in this country and the Americans are gonna see at least two.
maybe worse though.
Actually, actually, honestly, those numbers came from just.
Canada.
U.
S.
tariffs, with what Trump has done with it, like, how do you.
34% on Chinese.
What, What?
They buy everything from China.
How can.
And that's compounded with the tariffs already in place.
How can it.
Yeah, that's right.
It's 50.
That's right.
It's over 50% with the tariff tariffs that are already in place.
Yeah, they, they, they're essentially boxing the Chinese market out of the U.
S.
at this point and, you know, go broke.
They're going, their whole economy is going to crash.
Also, even if that wasn't the case, going back to Mark Carney's comments, the trust has been broken.
Yeah.
Like if, if I go down the store and the, the shop owner screws me, I'm probably not buying from them anymore.
So that trade in that community shifts.
We just saw that at a country to country level, with the US Breaking trust with the trade environment, there is no way this doesn't turn into a recession because our biggest buyers of literally everyone's goods were US consumers.
What are you hearing from members?
How worried are people about the economic climate going forward this year?
it's really hard for me to be as clear about how scared I hear members are about this.
And of course please take this in context to the counter tariffs and the tariffs that were supposed to be put into place.
But I've been hearing members talk about needing to lay people off.
I've already heard layoffs started actually.
on a personal note, my brother in law got laid off from his construction companies in Ontario.
It's like that happened two weeks ago and the owner explained, he's like this is due to the tariffs.
Like I, I can't maintain people with the uncertainty.
so it, it's already happening.
Like we're already in kind of the, the, the walk that it takes to get to recession.
so you know, and I don't want to be a self proclaiming, how do I say I don't, I don't want to put negativity here and that actually drive the direction either, because I think that's a risk, is that we could actually find ourselves farther down this rabbit hole because we view it negatively.
Right.
but there's just reality pieces here.
We've got companies that are reacting and shifting their supply chain and they're going to lose money and it's going to be a hard end of the year.
I don't think there's a way around that.
but if we can keep in perspective that almost nothing has change for our industry, then ideally we can kind of turn around and still stay focused on what matters for us.
But the building market's going to shift.
The investments behind that have shifted, the banks have shifted.
It is going to be challenging to kind of navigate that.
But stay focused.
And like this whole conversation, even about Australia and about export.
I agree, good idea.
But stay focused.
There is nothing more important than probably trying to gain more market share within our own backyard because we're going to lose the market share from the US like their US is going to have a harder time competing in our backyard.
I think it's time for us then to make sure we don't lose it to call it Asian markets or European markets.
So little ray of sunshine maybe to end it off, if we can even call it that.
reading, I mean the Economist, the magazine, the Economist, their editorial, board came out with an absolute bomb drop on Trump today.
I Mean, they're using words like pathetic, deluded, and of course, the Economist, that magazine.
Sorry, as a magazine guy, I'll go off on the tangent.
That magazine started, as an opposition to the corn laws in Britain in, like, the 1700s.
Like, opposing tariffs is their whole.
That's their whole reason to exist.
Bonkers was the word that caught me that I thought was hilarious.
Oh, yeah, they.
Absolutely.
And if you ever read the Economist, they do not use that language.
so they went absolutely apeshit on Trump.
but a nugget that was in that was that globally, Oh, how was it?
The US net imports is only something like 15%. It's a way smaller proportion of the world market.
Everyone thinks that everyone is trying to sell stuff to the U.
S.
it is, in fact, their whole market, their whole giant rich market is only 15% of the exports that are sent around the world.
Okay.
So from a very macro level, it should be entirely possible for the rest of the world to just turn their backs on the US and sell their stuff somewhere else and let them stew.
I know I've said this before, and it's probably not a good thing for me to continue to repeat, but in the immortal words of Mike Bruno, what if we did nothing?
Yeah, right.
Just let him go.
Yeah, exactly.
Listen, Adrian, this has been a great conversation.
Thanks for catching us up on, on everything that's going on with the tariffs and what the impact's going to be on the industry.
people can, email you at Fenestration Canada if they have questions.
They can.
Though I will warn you, I am trying my best to get people.
Get back to people as fast as I can.
But as you can appreciate, it's a bit of an overflow on my inbox at the moment, but don't hesitate.
I really, I make it a point to respond to everyone, especially when it comes to these topics because I know how stressful it is.
Okay, what's the general address at Fenestration?
So Lane can deal with it?
no, I'm going to give you mine.
You guys can email me directly.
It's AdrianenestrationCanada CA.
Okay, do not email Lane.
She's gonna forward it to me.
So you just have added additional administrative work in the background.
I'm not doing that.
Adrian, thanks a ton for, joining me and explaining everything.
My pleasure.
Thanks for having me.
Pat.
Thanks for listening to Glass Talk.
You can find this episode at, glasscanadamag.
com or on the major podcasting services.
Glass Talk is a presentation of Glass Canada Magazine and Annex Business Media.