Sanctions against Russia | Effects as far as Saguenay

(Ottawa) The economic sanctions imposed on Russia by Western countries following the invasion of Ukraine are having a negative impact on some Canadian businesses. And barring a financial boost from the federal government, some of them could be forced into layoffs.

Joel-Denis Bellavance
The Press

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 does business in 40 countries, is on track to lose $10 million in revenue this year. One of its customers, Rusal, one of the largest aluminum producers in the world, cannot pay its bills, which currently total 2.5 million for work already carried out, because the banking institutions of Russia have been excluded from the SWIFT transaction system 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 makes it possible to communicate quickly and securely on transactions.

Rusal has the means to honor its financial obligations, but the company cannot do so without going through SWIFT.

And the projects that were underway in Russia, which normally span 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’ current turnover and could endanger the very future of the company, according to its CEO, Louis Bouchard, who confided in The Press.

The COVID-19 pandemic had already affected the company’s revenues, which fell from 60 million before the health crisis to 35 million today. The number of employees has increased from 220 to 125.

Simultaneous crises

“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. They continued the big projects that were underway. Rusal has proven to be our most stable client during the pandemic,” explained Mr. Bouchard.

“But war broke out and the Canadian government decided to impose sanctions on Russian banks,” he added.

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.

It has been three months since the war in Ukraine broke out. And nothing indicates that the conflict is about to end. Mr. Bouchard asserts that democracies had to react to Russian aggression. But we must also analyze the economic fallout in the country, he said.

Federal aid

Mr. Bouchard pleads for the federal government to set up a targeted aid program to keep businesses like his that are affected by the economic sanctions imposed on Russia afloat.

Joined by The PressBloc Québécois MP Mario Simard said that Ottawa should give a boost to companies that find themselves in difficulty because of economic sanctions.

“Companies like STAS must be given access to cash. This is a company that has expertise in the aluminum sector that is not found everywhere. Losing the expertise of STAS would be catastrophic,” he said. STAS is well established in its riding of Jonquière.

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 unjustified and illegal invasion of Vladimir Putin’s regime,” said Laurie Bouchard, spokesperson for the Minister of Innovation, Science and Industry, François-Philippe Champagne. .