Shercom Industries sues provincial government, TSS for $10 million

Saskatoon’s Shercom Industries has filed a statement of claim against the Province of Saskatchewan, as well as Tire Stewardship of Saskatchewan and its CEO Stevyn Arnt, alleging breach of contract and “injurious falsehoods.”

The Tire Stewardship of Saskatchewan (TSS) is a non-profit organization that oversees all scrap tire processing in Saskatchewan.

The statement of claim filed on November 8 seeks $10 million in damages against the province, and unspecified “punitive and/or exemplary damages” against the TSS and Arnt.

The province and the TSS have 20 days from the filing of the statement of claim to file a statement of defence.

The lawsuit alleges the province failed to honour a commitment to Shercom for a long-term contract, assurance of tire supply, and a voice in the future of the industry after a fire occurred at the facility in 2016 and a $10 million investment was subsequently made to re-build a state-of-the-art business where scrap tire recycling could take place.

“Up until Shercom’s contract was effectively cancelled by TSS,” the cleaim read, “it was recycling approximately $50 million pounds of used tires per year at its facilities north of Saskatoon, Saskatchewan.”

Initially, about 40 of the company’s 140 employees were laid off, and another 79 are scheduled to be laid off on December 2 after a notice was sent to the labour minister late last month.

This week in the legislature, the Saskatchewan NDP’s Aleana Young said Premier Scott Moe needs to step in.

“If I were the premier, I would be working day and night to fix this,” she said.

“This is 130 families, 130 workers in Saskatoon, Martensville, Warman who are facing pink slips right before Christmas.”

Young said the court filing is “telling.”

“It is not common, even in Saskatchewan politics, that we get a court filing by a major company… that names the sitting premier as being intimately involved in their decision to rebuild and then pulling the rug out from underneath them,” she added.

Young said that decision left the company with millions in stranded assets after they were actively excluded from bidding on new recycling contracts by the TSS.

Moe didn’t speak about the lawsuit, but said the government’s role in tire recycling is to set up a regulatory board like the TSS in order to govern how tires are recycled in the province.

“I think that there are tires that are still going to be recycled by either Shercom or somebody in this space, so the job opportunities here I think would remain, largely,” Moe said.

“But I would say that the program is one that was asked for by municipalities a number of years ago to ensure that we don’t have tires going into our municipal landfills.”

The lawsuit also alleges that California-based Crumb Rubber Manufacturing, which now collects all scrap tires in the province, is simply “shredding tires for size reduction (and) shipping them out of the province,” rather than recycling them in Saskatchewan and creating value-added products like playground rubber and landscaping tiles with the recycled materials, as Shercom does.

None of the claims have been tested in court.

The full statement of claim can be read below: