The chief executive of Algoma Steel has stated that both the Ontario and federal governments were fully aware the company planned significant layoffs before approving a half-billion dollar loan of taxpayer money.
Governments Were Informed of Business Strategy
In an interview with CTV News this week, CEO Michael Garcia said it has been common knowledge for months that job cuts were inevitable at the Sault Ste. Marie plant. The facility is undergoing a major retooling, shifting from traditional blast furnaces to new electric arc furnace technology. This transition means the company will ultimately require only about half of its current workforce to operate.
When questioned directly about whether officials knew layoffs were coming, Garcia expressed confidence they did. "The government certainly knows our business strategy, knows the pivot we had to make," Garcia told CTV's Power Play host Vassy Kapelos. He added, "It knew very well the extreme pressure the company was under. I don't think anybody would loan the company half a billion dollars without asking very detailed questions about what our business plan was."
A "Sobering" Week Follows Government Support
The revelation follows what Garcia called a "very challenging and sobering week" for Canada's last major independent steelmaker. On Monday, December 2, 2025, the company issued layoff notices to approximately 1,000 employees, representing roughly 40% of its workforce. The layoffs are set to take effect in March 2026.
This drastic action comes less than a month after Algoma Steel secured a $500 million financial package to help it weather a crisis caused by U.S. tariffs. The funding includes $400 million from the federal Large Enterprise Tariff Loan Program and an additional $100 million from the Government of Ontario.
Garcia explained the direct link between the tariffs, the loan, and the job losses. "The entire company has known for a few months now what our strategy would be if these tariffs are not removed," he said. "We had to accelerate our pivot to electric arc steelmaking that encompasses an accelerated shutdown of our blast furnaces and coke ovens — that drives the amount of jobs we announced."
Loan Intended for Long-Term Resilience
In a statement dated September 29, 2025, Federal Industry Minister Melanie Joly framed the substantial loan as an investment in the future. She stated the funds were intended to "build resilience" in Canada's steel industry for generations.
"By supporting Algoma Steel, we're securing the long-term viability of a cornerstone operation in Sault Ste. Marie and reinforcing thousands of good-paying jobs that form the backbone of the community," Joly said at the time.
The company's troubles are largely attributed to 50% tariffs imposed on Canadian steel by U.S. President Donald Trump, which have placed immense financial pressure on its traditional operations. The shift to electric arc furnace production is seen as a necessary, albeit painful, strategic move to ensure the company's survival in a changed trade landscape.
