Algoma Steel’s Planned Layoffs Confirmed by CEO Amid $500M Loan

Algoma Steel, based in Sault Ste. Marie, Ontario, is set to lay off approximately 1,000 employees, representing about 40% of its workforce, as the company transitions to new production methods. This announcement comes shortly after the firm received a $500 million loan from the federal and provincial governments to assist in its retooling efforts.

Government Acknowledgment of Layoff Plans

During an interview with CTV News, Algoma CEO Michael Garcia revealed that both the provincial and federal governments were aware of the impending layoffs prior to the financial support. Garcia stated that it has been understood for months that these layoffs would occur as the company shifts from traditional blast furnaces to more modern electric arc furnaces.

“The government certainly knows our business strategy, knows the pivot we had to make,” Garcia told CTV Power Play host Vassy Kapelos. He emphasized that the government was fully informed about the pressures the company faced and that it would be unlikely for them to approve such a significant loan without understanding Algoma’s business plan.

According to Industry Minister Melanie Joly, the purpose of the loan is to “build resilience” in Canada’s steel industry. In a statement on September 29, 2023, Joly affirmed that support for Algoma Steel is aimed at ensuring the long-term viability of this critical operation and safeguarding thousands of jobs essential to the local economy.

Challenges Faced by Algoma Steel

Algoma Steel is currently Canada’s last independent steelmaker and has faced significant challenges due to tariffs imposed by the United States. The company has been particularly affected by the 50% tariffs introduced by former President Donald Trump. These tariffs have created a difficult environment for the company, leading to the need for drastic operational changes.

Garcia described the past week as “very challenging and sobering” for Algoma. He noted that the company has been preparing for this shift for some time, indicating that the layoffs were a necessary step in response to the continuing pressure from tariffs. “The entire company has known for a few months now what our strategy would be if these tariffs are not removed,” he said. The transition to electric arc steelmaking will require a significant reduction in workforce, as the company will no longer need its full staff to operate.

The layoff notices are set to take effect in March 2024, marking a pivotal moment for both Algoma Steel and its employees. As the company moves forward with its retooling, the impact of these layoffs is expected to resonate throughout the Sault Ste. Marie community, where many depend on jobs in the steel industry.